Benefit Payments
All applications for benefits from contributors and preserved benefit Members are processed in a timely manner and in accordance with relevant legislation.
There are services and performance standards relating to the payment of benefits. These apply to all benefit events such as resignation, retirement, invalidity and death.
The standards for the processing of military scheme benefit applications were monitored by the Authority throughout the year. Chart 4 shows the number of DFRDB Scheme benefit applications processed during 2008–09.
Chart 5 shows the average time to process benefits in each month of 2008–09. A comparison of the dollar value of benefits paid in 2008–09 with the previous four financial years is set out in Table 6.
Chart 4: benefit applications processed 2008-09
Chart 5: average time to process benefit payments 2008-09
| Benefit Type | 2004-05 ('000) |
2005-06 ('000) |
2006-07 ('000) |
2007-08 ('000) |
2008-09 ('000) |
|---|---|---|---|---|---|
| Pension Payments | 1,085,048 | 1,123,653 | 1,170,998 | 1,202,874 | 1,260,072 |
| Refunds of contributions | 532 | 669 | 565 | 462 | 0 |
| Commutation payments | 164,680 | 168,554 | 160,640 | 118,385 | 155,905 |
| Total Benefits paid | 1,250,260 | 1,292,876 | 1,332,203 | 1,321,721 | 1,415,977 |
gratuities
Certain Members who leave the ADF without an entitlement to a pension are entitled to a refund of their contributions plus a gratuity. A gratuity is a sum of money paid to some Members in the form of a one-off bonus. Although gratuities are usually only payable to other rank Members, some officers are also entitled to receive them. Once a Member becomes entitled to retirement or invalidity pay, he or she is not eligible to receive a gratuity.
Gratuities totalling $4 320 were paid to Members who exited in 2008–09.
commutation
Members retiring from the ADF are entitled to the early payment of part of their retirement pension in the form of a lump sum (commute). If they do so, their retirement pension is permanently reduced irrespective of how long they live. Retiring Members can receive a maximum commutation lump sum of up to five times their retirement pay. During the year, 532 Members elected to commute part of their pension.
preservation of rights
Under certain circumstances, Members who leave the DFRDB Scheme without a pension entitlement can elect not to receive a refund of their contributions. Instead, they may defer their benefit or transfer it to another eligible superannuation scheme. Members who elect to transfer their benefit must do so to a superannuation scheme declared as eligible by the Minister for Finance and Deregulation. ‘Eligible’ superannuation schemes are generally linked to government employment. Once a benefit is transferred to another scheme, the Member’s benefits are determined solely by that scheme.
Members who elect to defer their benefit must enter full-time public sector employment within ninety days of their exit date. When their combined Defence Force and Government service reaches twenty years, they become entitled to a reduced DFRDB Scheme pension. No Members elected to defer their entitlements in the DFRDB Scheme in 2008–09.
Reversionary benefits
All applications for reversionary benefits following the death of a pensioner (that is, eligible spouses, children and orphans) are processed in a timely manner and in accordance with relevant legislation.
Spouse benefits
At 30 June 2009, 8300 spouses were receiving pensions under the provisions of the DFRB and DFRDB Acts.
Child and orphan benefits
At 30 June 2009, 289 children and orphans were receiving pensions under the provisions of the DFRB and DFRDB Acts.
Pension increase/advice
Legislative provisions exist for DFRB and DFRDB pensions to be adjusted twice yearly in line with upward movements in the Consumer Price Index (CPI) as measured by the Australian Bureau of Statistics for the six months ending 31 March and 30 September each year.
For the July 2008 increase the rate was 2.3% and the rate for the January 2009 increase
was 2.7%.
Pensioners received a statement in July 2008 and January 2009 showing the rates of pension payable to them over the following six months. Their income tax payment summary and other relevant information was included with the July statement.
invalidity payments
The ADF retires serving ADF members on the ground of invalidity if they do not meet the required standard of fitness. They may still be capable of employment in the civilian workforce.
In determining invalidity benefits due process is followed. Claims are processed expeditiously, legislative requirements are met and guidelines issued by the Authority are followed.
invalidity classification
The determination of benefits payable to Members who retire from the ADF as medically unfit for further service is a major function of the DFRDB Scheme’s administration. Usually such persons will be eligible for invalidity benefits.
The Authority takes into account a Member’s skills, qualifications and experience, and their retirement impairment in determining their incapacity for civil employment and establishing the appropriate invalidity classification. An A, B or C classification of invalidity is determined dependent upon the extent of the Member’s loss of capacity to undertake appropriate civilian employment. Class A and Class B classifications denote, respectively, significant and moderate incapacity and attract different levels of pension. Class C classification reflects a comparatively small incapacity and a lump sum rather than a pension is payable to the Member. In practice, the classification of a Member retired on medical grounds is a decision taken either by the Authority’s Committee of Alternates or, in straightforward cases, under delegation held by officers in ComSuper.
From 1 July 2008 to 30 June 2009, 48 Members received initial invalidity classifications. Of those, 20 (17 Class A and 3 Class B) became entitled to an invalidity pension.
invalidity decision timeframe
Invalidity classifications took an average of 1.52 days to finalise during 2008–09.
invalidity classification review
The Authority or its delegates may, from time to time, review the classification of Class A and Class B invalidity pensioners. A Member who is, or has at any time, been an invalidity pensioner, can also initiate such a review at his or her own request.
The rate of invalidity pension payable to a recipient Member may be altered if the pensioner’s degree of incapacity to undertake appropriate civilian employment deteriorates or improves.
During 2008–09, 94 cases were examined, eight of which were reviews requested by Members. As a result of these reviews 16 classifications were changed.