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DFRDB COMMUTATION IP: 203.219.138.85 Posted on 20/6/2018 at 08:53:48 AM by Mick Mcewen
DFRDB COMMUTATION: Salient points on how we are affected:
A Class Action case is being considered against the Commonwealth of Australia and the Defence Force Retirement and Death Benefits authority of the Commonwealth Superannuation Commission.
• This proposal could potentially involve a Class of some 55,000 Retired Defence Veterans belonging to the DFRDB Superannuation Scheme.
• The majority of these personnel accepted a cash advance by means of a commutation of 4 years of pension benefit on retirement.
• This was calculated on the basis of the Notional Life Expectancy of each individual.
• For many years this was communicated to superannuants ambiguously and without clarity or honesty.
• Veterans interpreted this reference to NLE as being the milestone whereby this advance of benefits would be fully repaid and discharged.
• In actuality, the Authority and the Commonwealth applied these repayments to veterans for whole-of-life, and beyond where a veteran is survived by a spouse, until the time of their demise.
• The quantum of these repayments has been influenced by indexation with original advanced commutation benefits being fully repaid years before the NLE milestone has been met.
• These repayments were also biased by the use of outdated Life Expectancy data (~c1961) thereby shortening Life Expectancy and inflating the calculation of the repayment quantum for each individual, had current LE data been used at time of Commutation - in my case 25 years out of date.
• The quantum of reimbursements also varies individual-to-individual Veteran, but repayments in the range of $2,000 to $5000 are understood to be common. Accordingly, returns to Consolidated Revenue after the commutation debt is expended are massive, with the DFRDB Scheme having been in operation over the period 1972 - 1992 under the provisions of the DFRDB Act.
• Any formal notification of the repayment period being applied for life (and then transferable to spouse) was not declared (it is understood) until the late 1980s.
• Although the DFRDB Authority provides no information of the progressive amount repaid annually, in my personal case I believe that my advance was fully reimbursed in my 65th year.
• My NLE point was 72.25 years. I am currently in my 75th year and estimate my repayments beyond the point of fully expending my original commutation benefit is in the order of $30,000 with the indexation-inflated annual reimbursement now being $3050 and inflating.
• The proposed action would seek to impose a cut-off date for reimbursement payments to be at the point where full reimbursement of the commuted advance is fulfilled.
• It should be noted that nowhere within the Act does any mention of interest charges applying on the reimbursement of commutation advances, being applied.
• Litigants would seek a full reimbursement of all monies collected by the Commonwealth following the full repayment point of the commutation advance being exceeded and that such monies be refunded in full to the litigants affected by these overpayments.
• There are other matters of similar ilk applying to DFRDB Superannuants that would potentially require to be dealt with within the primary case. These matters involve imposts made on individuals who did not take up the commutation benefit available but still suffered monetary disadvantage, as well as imposts levied on a surviving spouse.
IF YOU ARE CONCERNED ABOUT THIS ISSUE AND WISH TO REGISTER AN EXPRESSION OF INTEREST IN THIS MATTER, PLEASE CONTACT ME by email DIRECT at marganken@bigpond.com. Please spread the word to your colleagues and associates. - Ken Stone