Statement - Independent inquiry report into DFRDB scheme

The Government acknowledges the release of the Commonwealth Ombudsman’s independent investigation into the Defence Force Retirement and Death Benefits (DFRDB) scheme.

The Government listened to the concerns of the ex-service community in initiating an independent review of the DFRDB scheme, which focused on the accuracy of information provided about commutation by the Department of Defence (Defence), the Australian Defence Force (ADF) or the scheme administrators, such as the Commonwealth Superannuation Corporation (CSC).

While the investigation found that some information provided by Defence in the 1980s and 1990s regarding commutation was incorrect, the Ombudsman concluded that the decision to commute was, and still is, the more financially beneficial option.

In reaching this conclusion, the Ombudsman requested separate independent actuarial reports from the Australian Government Actuary and KPMG, considered a range of investment scenarios, which determined that it is highly unlikely any ADF members who commuted through the DFRDB scheme would have incurred a financial loss. For these reasons, the Ombudsman has determined that a specific compensation scheme is not appropriate.

The investigation also found that efforts had been made since 2004 by Defence and CSC to correct the information provided, and this report now reinforces the steps taken to provide clearer information on the decision of commutation.

While the report acknowledges that it is unlikely any members who commuted would be financially worse off, we recognise that the provision of misinformation has caused confusion and distress over many years with some ADF members believing their retirement pay would increase once they reached their notional life expectancy.

If anyone believes they did incur a financial loss they can apply for Compensation for Detriment caused by Defective Administration. Eligibility criteria and information on how to apply is available on Defence’s website.

The Government has no plans to make changes to the DFRDB scheme. Further information, including the report, is available on the Commonwealth Ombudsman website.