Excerpt from Camaraderie Vol 36, No 1, p4

ADVOCACY MATTERS

DFRDB MEMBERS OR FORMER DFRDB MEMBERS WITH A COMMUTABLE PENSION ENTITLEMENT FROM A PREVIOUS SUPERANNUATION SCHEME

The Defence Force Retirement and Death Benefits Act 1973 (DFRDB) allows joining members to pay lump sum entitlements from previous superannuation schemes into the DFRDB scheme as transfer values, subject to certain qualifications, in order to obtain a commensurate credit of contributory service. Many members with such entitlements took advantage of this facility to increase their DFRDB benefits or to advance their DFRDB pension entitlement date.

Until 1983 however the policy of the DFRDB Authority was not to accept lump sums derived from partial or complete commutation of pre‑existing pension entitlements. A 2003 decision by the Court of Appeal of the ACT Supreme Court established beyond doubt that the Authority's pre‑1983 policy was in error and that such sums indeed qualified as transfer values. The litigation proceedings derived from incorrect advice given by the Authority in 1979. The Court found that the Authority had breached its duty of care and was liable in negligence. While damages were awarded on the basis that the plaintiff had lost the chance to enter remunerative civilian employment at an earlier date a case for loss may also have been made based on a simple comparison of benefits.

Ex‑NZ service personnel joining the DFRDB scheme between 1973 and 1983 were particularly affected by the Authority's erroneous policy although the transfer value entitlement is generally applicable. It is also probable that members who joined subsequent to 1983 may have done so without an awareness of the transfer value option as little publicity was given to the policy change. Whether or not a loss can be demonstrated in a particular case would still of course depend upon an analysis of the circumstances of the individual concerned. Even members who did not in fact commute any of their pre‑existing pension entitlement may be able to argue that they would have done so, and paid in the resultant lump sum as a transfer value, had they known that the option was available.

DFRDB members who subsequently elected to transfer to the Military Superannuation and Benefits Scheme (MSBS) may still have grounds for seeking redress, as the service credit gained through payment of a transfer value to the DFRDB scheme would have carried over to MSBS.

Eric Glass

Note:      The writer was the plaintiff concerned in the litigation and represented himself throughout the proceedings. Eric is happy to receive enquiries from other members who believe they may also have been disadvantaged by the Authority's erroneous policy. He can be contacted at edglass@webone.com.au or PO Box 242, MAWSON ACT 2607.