DFRB Rorted Again

Over 55,000 Veterans misunderstood DFRDB Legislation of 1972 and consequently the majority accepted a lump sum superannuation benefit, as a Commutation, that was unbeknown to them, repayable multiple-times over – for life.

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The term Commutation was never defined in the legislation, or subsequent formal written and oral advice to Veterans until 35-years after DFRDB was introduced. DFRDB was a compulsory, contributory, superannuation scheme applied to the Armed Services under a contract, devoid of small print.

The Commonwealth did not disclose, that the DFRDB Authority interpreted the term, Commutation, as an Exchange of entitlements, applying whole-of-life. This in return for a lump sum payment of just four- years of pension benefits, with repayments calculated on Notional Life Expectancy (NLE) using actuarial tables some 11-years out of date. This redundant data was then applied throughout the life of the scheme.

Veterans understood, and were not advised to the contrary, that Commutation meant a lump sum payment of 4-years of pension benefits as an advance, fully repayable by fortnightly deduction by DFRDBA, until the recipient’s NLE point was reached.

The quantum repayable by each Veteran was inflated by the outdated NLE data used, with repayments also escalating over time by indexation. Accordingly, most veterans repaid the original lump sum received from their benefits long before they reached their NLE, and then faced increasing deductions until death.
Countless appeals to governments by Veterans and their Associations have each failed because Ministers always deferred to the CSC and DFRDB for advice.

Successive Ministers were never correctly informed that DFRDBA’s undisclosed definition of Commutation was not even revealed to Veterans. The fact that the word Commutation was undefined also escaped the responsible-Ministers, who reasonably deduced that Veterans were aware of what they had committed to.
Not only were the lowest Naval ratings, soldiers and airmen misled by DFRDBA, but across the three Services, Generals and their equivalents, were misinformed too by the DFRDBA’s omission to define Commutation.

Remediation of this matter needs to ensure that benefit deductions cease when an individual’s NLE point is reached and that all over- subscriptions to Consolidated Revenue be repaid to each Veteran that has reimbursed the Commonwealth in excess of the benefit originally received as a lump sum commutation.

Permanent link to this article: https://vietnamvetssc.org.au/dfrb-rorted-again/

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