User:Mary-ann martinek/Dfrdb

Defence Force Retirements Benefit Scheme (DFRDB)is a scheme which commenced in 1973. It followed the DRFB and was considered an improved scheme.

Accessing a DFRDB pension entitlement for invalidity benefits required the completion of a DM42 Form obtained from Comsuper and a MECR. A MECR was the outcome of the Medical Employment Classification Review Board (MECRB) which was a medical review set of steps that was introduced by the Australian Defence Force (ADF) in or about 1996 following the Blackhawk accident where several SAS died and some were left permanently injured. The 1996 Blackhawk incident sparked a wave of reviews by the ADF into their own practices to classify injury sustained from Peacetime operations. Consequently, the Minister for Defence Industry, Science and Personnel ordered a review of existing rehabilitation and compensation arrangements for military personnel. The review was to investigate compensation arrangements for military personnel including the adequacy of the lump sum payments, ancillary benefits and supporting services for dependants of deceased personnel.

CPI indexing of the DFRDB pension became a Fair Go! Campaign topic advocated amongst DFRDB pension recipients and on 28 July 2010 a Press Conference was called on the lawns of Parliament House Canberra by several veterans groups have banded together to demand the government increase military pensions to put them on a par with welfare beneficiaries.

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THE DEFENCE FORCE RETIREMENT BENEFIT ARRANGEMENT A HISTORY OF DECEIT AND POLITICAL DUPLICITY - by J A Treadwell 1 DFRDB 165(a)(1) Reference "A" - 1972 - Parliamentary Paper No 74 - Report, dated May 1972, by a Joint Select Committee on Defence Forces Retirement Benefits (DFRB) Legislation set up in 1970 to review the operation of the Defence Forces Retirement Benefits Act 1948. EXECUTIVE SUMMARY The object and purpose of the Defence Force Retirement and Death Benefit Legislation, enumerated by Parliamentary Paper No 74 (report to the Parliament from the Joint Select Committee on Defence Forces Retirement Benefits Legislation dated May 1972) and as accepted by the Whitlam Government on 22 December 1973), is not fully reflected in the DFRDB Act 1973. The DFRDB Authority is employing an ambiguous, confusing, definition of a term, "Notional Rate of Pay" (ref Section 98B(5) of the DFRDB Act), to reduce the quantum of DFRDB widow, widowers and children’s' benefits. The information, set out in DFRDB Authority Brochure "Widows Widowers and Children's Benefits, dated October 1973, clearly states that commutation should have no effect on pensions payable to eligible Military Service dependants. This same information is also set out in at least two other brochures published by the DFRDB Authority. Yet, current DFRDB Authority practise is to reduce widows' widowers and children's payments in the event of commutation. Thus, for whatever reason it is apparent that the DFRDB Authority, as a consequence of its published brochures, has engaged in deceptive and misleading conduct directed at the families of deceased Veterans who qualified for DFRDB retirement pay Benefits. When a Veteran exercises his/her right to obtain an advance of retirement pay, by electing to commute a portion of his/her pension benefit on leaving one of the three military services, he/she does not receive a full Section 23 retired pay entitlement. Even after the full amount of the retirement pay advance has been withheld, and effectively acquitted to the Commonwealth, the DFRDB Authority continues to pay the reduced post commutation rate of retirement pay. As a consequence of the dissemination of misleading information, published in brochure form by the DFRDB Authority, the Commonwealth is reneging on condition of service commitments made to service men and women at the time of their enlistment/appointment. In October 2008 a suggested amendment to Section 24 of the DFRDB Act to fix the current inequitable situation, regarding commutation, was made to the Chairman of the DFRDB Authority and to the responsible Minister. However, no action has ever been taken to amend the legislation. INTERPRETATION Pension Benefit - in accordance with Section 3 (interpretation) of the DFRDB Act, "pension benefit" means retirement pay payable under Section 23 of the DFRDB Act, i.e. in accordance with years of service expressed as a percentage of final rate of pay. Pensioner - not defined in Section 3 (interpretation) of the DFRDB Act. But defined in Sect 98B (1) as "a person to whom a pension benefit was payable immediately before the commencement of that prescribed half year". Accordingly, as used in Section 98B the term means a person with an entitlement to receive retirement pay in accordance with Section 23 of the DFRDB Act, and a person with an entitlement to receive a spouse's pension in accordance with Section 39 of the DFRDB Act. 2 Notional or Current Pension - no mention is made of either "Notional or Current Pension" in Section 3 (interpretation) of the DFRDB Act. The same applies to Part XA of the DFRDB Act yet both terms are used in Section 98B of the DFRDB Act. BACKGROUND The Defence Force Retirement and Death Benefit (DFRDB) scheme came into effect for full time members of the Australian Army, Navy and Air Force on 1 October 1972. The new arrangement replaced the Defence Force Retirement (DFRB) scheme which dated from 1948 - Ref "A" paragraph 21 The DFRB scheme was a compulsory actuarially based superannuation arrangement financed partly by member's contributions, and partly by government subsidy - Ref "A" paragraph 22. The new DFRDB scheme was the product of the endeavours of a Joint Select Committee (the Jess Committee) appointed by the Parliament on 2 September 1970 to review the operation of the DFRB Act 1948. The committee produced a report setting out guidelines for the introduction of a new defence force retirement and death benefit arrangement subsequently called the DFRDB scheme. Under the new arrangement to qualify for DFRDB retirement pay a service man/woman had to complete twenty (20) years effective service with the quantum of retirement pay relating to years of effective service expressed as a percentage of Military Pay on the date of retirement (Section 23 of the Act). The Jess Committee report, Reference "A " dated May 1972, was accepted by the Whitlam Government on 22 December 1972. Thus, in terms of Section 15 AA of the Acts Interpretation Act 1901 the Jess Report is the legal basis regarding "purpose or object" underpinning the DFRDB Act 1973. Legislation was put before, and passed, by the Twenty-Eighth Parliament in 1973. The Act received Royal Assent on 19 June 1973. On 1 October 1991 the Military Superannuation and Benefits Scheme (MSBS) came into effect to replace the DFRDB arrangement. DFRDB SCHEME At first glance the DFRDB Scheme appears to be a generous arrangement in consideration of what Veterans, who qualify for DFRDB retirement pay, receive in financial terms compared to their monetary contribution to the arrangement. However, this is not to say that the Veterans involved have not contributed, in full measure, in other ways. As a group, within the Australian Community, Veterans have served the government with honour and dedication over many years and continue to do so. They did what was asked of them, (which was right and proper) stuck their necks out when required, and when directed, without choice, dragged their families around the world and back again, or were required to leave them to fend for themselves, often in a foreign country without extended family support, then to be faced with forced retirement at an early, awkward, age. These were the reasons why the Jess Committee recommended that a commutation provision be included in the DFRDB Act to enable Veteran Retirees to obtain an advance of a portion of their retirement pay entitlement for re-settlement purposes. To ensure that the total amount paid thereafter did not exceed a Veteran's legal retirement pay entitlement; after receiving a lump sum advance retirement pay was reduced each fortnight by an amount related to predicted life expectancy. However, no suggestion was ever made that a long term financial penalty would be involved with the commutation arrangement. Commutation simply provides a retiring Veteran with an advance on his/her intended retirement pay entitlement. Accordingly, there was never any need, or reason, for the Government to impose a financial penalty on the lump sum advance. More so as the commutation arrangement has the added advantage of minimizing expenditure associated with Government responsibilities regarding Veteran re-settlement. 3 Commutation - Current Situation If a Veteran exercises his/her right to obtain a lump sum advance of retirement pay by electing to exercise the commutation option: One - he/she does not receive a full Section 23 retirement pay entitlement because he/she is still paid at the reduced post commutation rate even after the DFRDB Authority has recovered, in full, the amount the member received as a lump sum advance, and Two - his/her spouse does not receive a full DFRDB Spouses pay entitlement, in accordance with Section 39 of the DFRDB Act, fully adjusted for indexation, following the death of their Veteran husband/wife. However, if a Veteran declines to exercise his/her right to commutation on leaving the service: One - he/she receives reduced annual indexation adjustments, based not on the actual retirement pay received, but on a lesser amount calculated as if commutation had been paid to the Veteran, and Two - his/her spouse does not receive a DFRDB Spouses pay entitlement, in accordance with Section 39 of the DFRDB Act, fully adjusted for indexation, following the death of their Veteran husband/wife. This presents a disturbing, indeed scandalous, picture of deceit, more so when the information made available to the members of the Australian Defence Force (ADF) is considered. Plus the fact that the DFRDB arrangement is an integral part of a contract of trust between the Australian Government and each service man/woman when they were accepted into the ADF. But how did this situation come about? Are the Prime Minister and the members of Federal Parliament in favour of defrauding the people who served, and continue to serve, the country in time of need? But who then, or what Government instrumentality, is responsible for the day-to-day management of the DFRDB Retirement arrangement. The answer to this question is set out at Sect 8 of the DFRDB Act 1973. Sect 8 of the DFRDB Act states: (1) There shall be a Defence Force Retirement and Death Benefits Authority, which, subject to the directions of the Minister, shall have the general administration of this Act. (2) The Authority shall consist of: (a) the Commissioner for Superannuation, who shall be the Chairman of the Authority; and (ab) the Deputy Chairman of the Authority who is to be appointed by the Minister; and (b) 3 other members, who shall be appointed in accordance with this section. (3) The members referred to in paragraph (2)(b) shall be appointed by the Minister and: (b) one shall be appointed on the nomination of the Chief of Navy; (c) one shall be appointed on the nomination of the Chief of Army; and (d) one shall be appointed on the nomination of the Chief of Air Force. Section 8 sets up a DFRDB Authority as a Board of five members appointed by the Minister. Section 8 also delegates clear responsibility to the DFRDB Authority for quote… "general administration of this Act". 4 "Accordingly, responsibility for DFRDB commutation rests squarely with the DFRDB Authority. Thus, unless current Government policy is to deliberately defraud Veteran retirees, and their spouses (which is most unlikely) it must be concluded that the DFRDB Authority is not being held to account by the Government. However, the underlying cause that has enabled this unfortunate situation, re commutation, to occur is the fact that the DFRDB Act is deficient in structure and open to misinterpretation. In addition, the Act does not fully reflect the objectives and purpose of the DFRDB scheme as expressed by the recommendations made by the Jess Committee, and accepted by the Government in 1972. THE DFRDB ACT Section 15AA of the Acts Interpretation Act 1901 Act reads: (1) In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object. Section 15 AB (2) ( c) - Use of intrinsic material in the interpretation of an Act reads: "any relevant report of a committee of the Parliament or of either House of the Parliament that was made to the Parliament or that House of the Parliament before the time when the provision was enacted The Parliamentary Library has advised that no Explanatory Memorandum associated with the introduction of the DFRDB Act to the Parliament in 1973 can be found. This is possibly due to the fact that there was no requirement for Explanatory Memorandums until 1983. Thus, in accordance with Section 15AB (2) ( c) of the Acts Interpretation Act 1901 delineation of the "purpose or object" of the DFRDB legislation rests solely with the Jess Report - Parliamentary Paper No 74 dated May 1972. Summary of Jess Committee Legislative Requirements Re Retirement Pay/Commutation One - "the needs of the members once retired are different from those of civilian employment "- Reference "A" - paragraph 51. Two -- "a serviceman often has a requirement for a capital sum on retirement to assist resettlement" - Reference A" - paragraph 106. Three -"to provide an annuity type of benefit as a supplement to civilian earnings for those retiring early" - Reference A" - paragraph 110. Four - "the conclusion reached is the retirement pay recipient should have an option to take a portion of his retirement pay entitlement as a lump sum provided under general conditions of service" - Reference A" - paragraph 112 & 114. Five -"no discretion to disallow the application or reduce the amount available would be vested in the administering authority" - Reference A" paragraph 112. Six - "Commutation should be an unfettered right" - Reference A" paragraph 112. Seven -"That for the purposes of determining a widow's entitlement commutation should be disregarded" - Reference A" paragraph 112. Eight - "The Committee considers that it is essential that retirement pay should be adjusted automatically with increases in average weekly earnings. Unless the payment made to retired members is kept abreast of rising community standards its real value is quickly eroded - paragraph 116. THE DFRDB ACT - INTENT Commutation - DFRDB Act Section 24 Section 24 reads - inter alia: (1) A person who is, or is about to become, entitled to retirement pay may, by notice in writing given to the Authority, elect to commute a portion of his or her retirement pay in accordance with this section. (3) Where a person makes an election under this section, then, subject to subsections (8) and (9): (a) there shall be paid to him by the Commonwealth an amount equal to the amount specified in the election as the amount that is to be payable to him by virtue of the commutation; and (b) the amount per annum of the retirement pay payable to him, on and after the day on which the election takes effect, is the amount per annum that, but for this paragraph and subsection 98K(1), would be payable reduced by an amount calculated by dividing the amount referred to in paragraph (a) by the expectation of life factor that, having regard to the age and sex of the person on the day on which the election takes effect, is applicable to him under Schedule 3. Unfortunately, the public official who drafted the legislation, either through incompetence or by deliberate omission, did not include a clause to limit the total amount of the reduced retirement pay to the quantum of the "portion" elected under Sect 24 (3) (a) - i.e., "the amount specified in the election". Whether or not the omission was a consequence of incompetence is a matter of conjecture. However, public officials who draft legislation are normally selected for their ability to produce, clear, unambiguous text and are unlikely to have made such a glaring omission. Thus, it must be concluded that the use of the wording "on or after this day" with no limiting caveat was a deliberate ploy by the public official's involved to reduce military retirement entitlements. Apart from the moral consideration involved, and possible deception as a result of miss-information distributed to the Veteran Community, common wisdom and decency would imply that when a person has forfeited the quantum of an advance of a legal financial entitlement, full restoration of the entitlement should follow. For many years the DFRDB Authority Secretariat has been using the omission of a caveat as its excuse to not restore retirement pay to the full entitlement level once an advance has been fully acquitted. This is graphically illustrated by the reply I received when I wrote to the Chairman of the DFRDB Authority in March 2008 after the full amount of the lump sum advance I had received had been deducted from my fortnightly retirement pay. I requested the DFRDB Authority to: One - increase my annual retirement pay to the correct entitlement level allowing for Cost of Living adjustments over the period from my retirement in 1967, and Two - make good the amount that had been withheld from my retirement pay entitlement over and above the quantum of the lump advance I received (this was a figure in the order of $40,997.79) at the time). On 8 April 2008 the DFRDB Authority replied to my request. The reply was signed by Mr Ray Curtis. However, Mr Curtis, did not communicate a definitive decision on either one of my two requests. However, he did provide an elucidation on the DFRDB commutation arrangement as follows: "Quite simply, commutation is a prepayment of, and not borrowings against, part of a member's future retirement pay. Secondly, there is no requirement for any part of the commuted amount to be repaid; it is the member's entitlement. The fact a member lives for a longer or a shorter period than the factors used to calculate the reduced retirement pay after commutation is irrelevant." On page 3 of his letter Mr Curtis's went on: "The Administrative Appeals Tribunal has determined that there is 'neither ambiguity nor obscurity in the relevant legislative provisions' in the case of Re Reynolds and Defence Force Retirement and Death Benefits Authority (2001) 64 ALD 704. In that case, the Tribunal confirmed that the legislation did not provide for retirement pay to revert to precommutation levels when/if a person reached life expectancy". Comment: One - equally the Tribunal did not determine that retirement pay should not revert to precommutation levels when a person had forfeited the amount of retirement pay advance he/she received as a lump sum after exercising the commutation provision of the legislation. NB: because the reduction in the level of DFRDB retirement pay post commutation is based on out-of-date Life Expectancy Data (DFRDB Act Schedule 3-Commutation of retirement pay and Class C invalidity pay-expectation of life factor) DFRDB Retirees forfeit the full amount of a commutation advance well before reaching their predicted/expected end of life. Two - the AAT decision quoted related to a particular case, that of Reynolds, whether or not the Reynolds matter, and the AAT decision, has application as a precedent applicable to other ex service DFRDB recipients in the wider sense has not been tested/established. Accordingly, until this is done the AAT decision has no relevance to my two 4 March 2008 requests to the Chairman of the DFRDB Authority. Because I had not received a definitive decision I again wrote to the Chairman of the DFRDB Authority (19 April 2008) requesting that a formal decision be made by a person with the necessary delegated authority, and that the authoritative basis underpinning the decision is made known to me. On 4 July 2008 I received a letter signed by the Chairman of the DFRDB Authority (Mr Leo Bator) dated 12 June 2008. The letter stated: Inter alia - "The authority has no discretion under the Defence Force Retirement and Death Benefits Act 1973 to increase your annual retirement pay to the pre-commutation value. As a detailed explanation of this was advised to you in our letter of 8 April 2008 I will not duplicate that advice here". Comment - in regard to Mr Bator's statement (third paragraph) - quote; "detailed explanation … was advised to you in a letter of 8 April 2008" this is not so and is, in fact, a complete misrepresentation of the facts. Comment - re the DFDRB Authority Chairman's claim - "no discretion to increase your annual retirement pay to pre-commutation value", If the DFRDB Authority has no discretion to increase post commutation retirement pay to full entitlement level after the amount of a retirement pay advance has been fully acquitted, begs the question how was it that the DFRDB Authority found lawful discretion to reduce DFRDB retirement pay in 1986 by reducing the annual indexation adjustment by 2%? Comment - even though the Full CPI figure was restored on 4 November 1989 no action has ever been taken to pay DFRDB Retirees the three years loss of retirement income involved. Amendment In a letter to the Chairman of the DFRDB Authority (DFRDB 8 dated 29 October 2008) I put to him that a simple amendment to Sect 24 of the Act would fix the current inequitable situation re lump sum acquittal. I indicated that an amendment would not impose an additional financial penalty on the Commonwealth. In other words the amendment would not provide a retiree with additional retirement pay over and above what they would have received had they not elected to commute. I suggested the following amendment, underlined in red, to Sect 24: "Make Sect 24 (3) (b) read: (b) the amount per annum of the retirement pay payable to him, on and after the day on which the election takes effect, is the amount per annum that, but for this paragraph and subsection 98K(1), would be payable reduced by an amount calculated by dividing the amount referred to in paragraph (a) by the expectation of life factor that, having regard to the age and sex of the person on the day on which the election takes effect, is applicable to him under Schedule 3. The reduced amount to revert to the full retired pay amount payable when the portion paid to the retiree on commutation is forfeited, in full, to the Commonwealth." The Letter was also sent for Information to: The Hon Kevin Rudd MP, Prime Minister of Australia The Hon Alan Griffin MP, Minister for Veterans' Affairs The Hon Warren Snowdon MP, Minister for Defence Science and Personnel The Hon Joel Fitzgibbon MP, Minister for Defence Ms Sharon Grierson MP, Federal Member for Newcastle No action has ever been taken by the Chairman of the DFRDB Authority or by the responsible Ministers of State. WORDING OF THE DFRDB ACT 1973 Apart from the fact that the purpose and object expressed by the Jess Committee Report, regarding commutation, is not fully reflected in the DFRDB Act, the wording of the DFRDB Act itself, as drafted by the public officials involved, is confusing and ambiguous. An example of confused and ambiguous wording currently used by the DFRDB Authority Secretariat to fiddle/reduce DFRDB entitlements is associated with Section 98B. DFRDB Act Section 98B The use of the phrase "pension benefit" in Sect 98B (1) and (2) without specific reference to either one of the two possible pension benefit situations - post commuted or uncommuted - leaves Sect 98 B (1) and (2) open to misinterpretation and doubt. Unfortunately, this omission, deliberate or otherwise, has been, and is being, exploited by the DFRDB Authority Secretariat to reduce, at will, the DFRDB Spouses Benefit and DFRDB retirement pay below full Section 23 entitlement levels. An example of this blatant duplicity is contained in a letter, dated 13 May 2009, sent to me by Ms Francis Clear of the DFRDB Authority. The letter was in reply to a letter from me querying DFRDB Authority calculations relating to my wife's DFRDB Spouses entitlement in the event of my death, inter alia: "We have noted your calculation, however, full CPI does not apply to your uncommuted amount, only the notional amount or your current pension amount receives full CPI. Then, this portion amount (or the CPI figure) is added to your uncommuted pension. The information that "full CPI does not apply to your uncommuted amount" came as a complete surprise because this is CONTRARY to the wording of Section 39 of the DFRDB Act in force when I became part of the DFRDB scheme on 30 September 1972 as follows: 8 (1) Where a member of the scheme who is a recipient member dies and is survived by a spouse, then, subject to sections 47 and 75, the spouse is entitled to a pension at a rate equal to five eighths of the rate at which retirement pay or invalidity pay was payable to the deceased member or, if the member had commuted a portion of the member's retirement pay under section 24 or a portion of the member's invalidity pay under section 32A, at a rate equal to five eighths of the rate at which retirement pay or invalidity pay, as the case may be, would have been payable to the member immediately before the member's death if the member had not so commuted a portion of the member's retirement pay or invalidity pay, as the case may be. The wording of Section 39 is crystal clear…….." would have been payable to the member immediately before the member's death if the member had not so commuted a portion". This can only mean one figure, i.e. full retirement pay entitlement in accordance with Section 23 of the DFRDB Act. The introduction, and use, of the phrase "notional amount of your current pension by Ms Clear was not understood as there is no definition of notional pension/amount in Sect 3 or in Part XA - Pension increases - SECT 98A - Interpretation of the DFRDB Act 1973. The information she provided was not only contrary to Section 39 but also contrary to information disseminated by the DFRDB per brochure "Widows Widowers and Children's Benefits, dated October 1973", which reads, inter alia: 4. Commutation If a retired member in receipt of retirement pay had commuted (i.e. received a lump sum prepayment of a portion of future retirement pay) the pensions payable to eligible dependants are not affected in any way; pensions are assessed as if the retired member had not commuted. Future increases in these pensions that may occur are likewise not affected. Thus, in accordance with Sect 39 of the DFRDB Act and DFRDB Authority Brochure "Widows Widowers and Children's Benefits dated October 1973 the uncommuted figure on which a Spouse's entitlement is based should be the full Section 23 retirement pay entitlement figure adjusted for increase in cost of living from the date a person's retirement pay become effective up until the date of his/her death regardless of whether a service man/woman elected to commute or not. There can be no other meaning. Also it is certainly the meaning conveyed to, and as understood by, the members of the Australian Defence Force (ADF) covered by the DFRDB arrangement. Accordingly, Ms Clear's 13 May 2006 revelation came as a shock which prompted me to write to the Chairman of the DFRDB Authority, Mr Leo Bator. I wrote to him on 15 October 2009 pointing out that there is no clear definition of "Notional or Current Pension" in the DFRDB Act. In addition, I pointed out to the Chairman that no legal basis exists regarding the establishment of the level of spouses pay currently used by the DFRDB Authority as set out in the DFRDB Authority letter to me dated 13 May 2009. After some five months I received a reply from the Authority dated 23 March 2010. It was signed by Ms Kira Jorgensen not Mr Bator. For reasons best known to herself Ms Jorgensen ignored the factual information I had provided re DFRDB Authority Circular, 1973/7, dated 2 August 1973 and the information set out in DFRDB Authority Brochures published on 1 October 1972 and October 1973. Referring to Section 98B of the DFRDB Act she advised: "Under section 98B a CPI percentage increase is not applied to the full value of the uncommuted retirement pay. Instead, the CPI increase is applied only to "notional retirement pay" - this is a person's retirement pay had they elected to commute 4 times. The resulting dollar amount is then added to the uncommuted retirement pay to finalize the CPI increase. In your case the "notional rate of retirement pay" is the same as the actual pension you receive due to the fact you commuted?" 9 Another example of the way the current lack of precision regarding meaning is being used by the DFRDB Authority to confuse and mislead to their financial advantage is a letter, initiated by the DFRDB Authority on 30 May 2012, addressed to a DFRDB Widow in receipt of DFRDB Spouses Benefit (Mrs "X"). DFRDB Authority letter dated 30 May 2012 to Mrs "X" - NOTE- Mrs "X'"s name will not be revealed without her permission. On 26 April 2012 Mrs "X" requested the DFRDB Authority, in writing, to increase the quantum of her Spouses Benefit and to make good a short fall in her Spouses Benefit payments. The reply she received from the DFRDB Authority reads, inter alia: "(ex RAAF husband) …….'s uncommuted pension was comprised of two components, The larger component is equal to the amount of the reduced pension he actually received, after his commutation. This reduced pension component is indexed to the Consumer Price Index (CPI). The smaller component is the reduction amount, which is the difference between his original uncommuted pension and his reduced pension. This reduction amount is not indexed to the Consumer Price Index (CPI)". If (late husband) ……….. had never commuted his pension, this reduction amount still would not have been indexed." Comment - the proposition that DFRDB Retied pay consists of two components does not appear in any condition of military service brochure or definition in the DFRDB Act at the time her late husband was transferred to the DFRDB Scheme on 30 September 1972. Because of this fact, on 17 June 2012, in order to establish the legal veracity of the information Mrs "X "wrote to the DFRDB Authority. As a consequence of her query on 19 July 2012 the DFRDB Authority advised, in writing, as follows, inter alia, quote: 19 July 2012 DFRDB letter to Mrs "X" "One: "(late husband …………….'s uncommuted pension was comprised of two components': This statement was provided to explain the fact that not the entire uncommuted rate of pension is indexed, rather that only part of it is (the larger component referred to in our previous response). While the uncommuted rate of pension is the pension that would be payable to a member, had they not commuted, the larger portion is referred to in the Act as the "notional rate of retirement pay". Section 98B (5) (a) establishes the notional rate of retirement pay, which is referred to as an indexed portion in our previous explanation. The difference between the notional rate of retirement pay and the uncommuted rate leaves the smaller component referred to in our previous response." - end of quote. Although the DFRDB Authority advised Mrs "X" that - "uncommuted rate of pension is the pension that would be payable to a member, had they not commuted" they did not base her Spouses Benefit on this figure but on the level of her late husband's reduced post commutation retirement pay figure which was a much lower figure. That this is a deliberate DFRDB Authority ploy to reduce DFRDB Spouses entitlements is confirmed by the following statement - Two "the larger portion is referred to in the Act as the "notional rate of 10 retirement pay". Section 98B (5) (a) establishes the notional rate of retirement pay, which is referred to as an indexed portion in our previous explanation. 19 July 2012 DFRDB letter to Mrs "X" - continued Four: "if (late husband) ………….. had never commuted his pension, this reduction amount still would not have been indexed". The CPI treatment above applies when determining the uncommuted rate of pension, and applies to all members. As the legislative references above refer to a member who did not commute a portion of his retirement pay, the same references apply when answering this question. Pension increases are calculated by applying the CPI to the notional rate of retirement pay, rather than to the full uncommuted retirement pay, which is the basis for our statement that the reduction amount would not be indexed". This means that in accordance with the DFRDB Authority interpretation of the DFRDB Act people who do not/did not commute never receive their full Section 23 entitlement indexed for cost of living. They will always be short of the amount of the advance of retirement pay they would have received had they elected to commute. Further their retirement pay is not indexed against Section 23 figures which is contrary to the intent and spirit of the DFRDB arrangement as proposed by the Jess report accepted by the Government of the day and on which the DFRDB legislation was formulated and made law in 1972/3. SUMMARY - CURRENT SITUATION The object and purpose of the Defence Force Retirement and Death Benefit Legislation, enumerated by Parliamentary Paper No 74 (report to the Parliament from the Joint Select Committee on Defence Forces Retirement Benefits Legislation dated May 1972) and as accepted by the Whitlam Government on 22 December 1973), is not fully reflected in the DFRDB Act 1973. The DFRDB Authority is employing an ambiguous, confusing, definition of a term, "Notional Rate of Pay" (ref Section 98B(5) of the DFRDB Act), to reduce the quantum of DFRDB widow, widowers and children’s' benefits. The information, set out in DFRDB Authority Brochure "Widows Widowers and Children's Benefits, dated October 1973, clearly states that commutation should have no effect on pensions payable to eligible Military Service dependants. This same information is also set out in at least two other brochures published by the DFRDB Authority. Yet, current DFRDB Authority practise is to reduce widows' widowers and children's payments in the event of commutation. Thus, for whatever reason it is apparent that the DFRDB Authority, as a consequence of its published brochures, has engaged in deceptive and misleading conduct directed at the families of deceased Veterans who qualified for DFRDB retirement pay Benefits. When a Veteran exercises his/her right to obtain an advance of retirement pay, by electing to commute a portion of his/her pension benefit on leaving one of the three military services, he/she does not receive a full Section 23 retired pay entitlement. Even after the full amount of the retirement pay advance has been withheld, and effectively acquitted to the Commonwealth, the DFRDB Authority continues to pay the reduced post commutation rate of retirement pay. As a consequence of the dissemination of misleading information, published in brochure form by the DFRDB Authority, the Commonwealth is reneging on condition of service commitments made to service men and women at the time of their enlistment/appointment. In October 2008 a suggested amendment to Section 24 of the DFRDB Act to fix the current inequitable situation, regarding commutation, was made to the Chairman of the DFRDB Authority and to the responsible Minister. However, no action has ever been taken to amend the legislation. 11 NOTE - certified copies of all letters/DFRDB Brochures etc referred to in this paper are available on request. J. A. Treadwell (DFRDB - R37600) 29 November 2013