Government Announcements
Merger of Trustee Boards
On 30 October 2008, the Government announced that they would be consolidating the Trustee Boards that currently manage the investment side of the main Australian Government superannuation schemes. This decision aims to simplify the administrative and governance arrangements surrounding government superannuation and deliver more efficient and effective outcomes for Australian Government superannuation scheme members. On 1 July 2010, the Australian Reward Investment Alliance (ARIA) Board, the Military Superannuation and Benefits (MSB)Board and the Defence Force Retirement and Death Benefit (DFRDB) Authority will merge to form a single Trustee Board.
ComSuper Scoping Study
In October, the Government also announced a scoping study to explore options for improving the administration and governance arrangements of the schemes ComSuper administers. A Government decision is expected in late 2009.
Additional Employer Super Contributions
On 1 July 2008, the Government introduced legislative changes which require the use of Ordinary Time Earnings (OTE) as the salary base for calculating superannuation. This legislative change may result in some scheme Members receiving additional employer contributions from Defence.
In addition to salary, OTE can include paid leave, disability allowances and completion bonuses. However, it excludes reimbursement type allowances and amounts that could be considered Fringe Benefits under the Fringe Benefits Tax Laws.
Additional employer contributions for the July-September and October-December quarters of the 2008-2009 financial year were made to Member accounts in February 2009. As the DFRDB scheme does not have a fund, these contributions were paid to ancillary accounts in the Military Superannuation and Benefits (MSB) Fund.
Not all Members are eligible for the additional employer contributions, nor does the receipt of additional contributions in one quarter indicate future eligibility. All enquiries regarding the calculation of entitlements and eligibility should be directed to pay unit representatives.
Same-Sex legislation changes
From 1 January 2009, the Family Law Act, the DFRDB Act and the DFRB Act were amended by the Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008 to provide for the equal treatment of same-sex relationships.
Changes included:
- DFRDB Act:for the purposes of determining eligibility for reversionary benefits, the definition of "marital relationship" was changed to "marital or couple relationship" and the expression "husband or wife" was changed to "husband or wife or partner".
- DFRB Act: Amendments provide for the payment of benefits to the same-sex partner, and to an eligible child who is the product of a same-sex relationship, of a deceased DFRB scheme member. The DFRDB Authority has been given the power to pay benefits to the same-sex partner (or child of a same-sex relationship) of a deceased DFRB scheme member if they satisfy the same requirements for payment under the DFRDB Act.
Amendments were also made to both Acts to expand the definition of "child" to include a broader definition of the term now provided for under the Family Law Act.
Family law changes
The Family Law Act 1975 was amended by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 with effect 1 March 2009.
The amending Act introduces significant reforms to allow de facto couples access to the Federal Family Law Courts on property and spouse maintenance matters upon relationship breakdown. The amending Act gives effect to an agreement between the Commonwealth, States and Territories made in 2002 and follows the enactment of legislation by a majority of states referring necessary powers to the Commonwealth.
Resulting changes for the DFRDB and DFRB schemes are that if de facto relationships breakdown, they may now enter into a split of DFRDB or DFRB scheme entitlements.
DFRDB medical reviews
As part of the 2009 Federal Budget, the Government announced a reduction in the number of employer initiated medical reviews of DFRDB invalidity recipients.
In recent years, there have been around 150 employer initiated medical reviews annually of DFRDB Members.From 1 July 2009 there will be no employer initiated reviews of DFRDB invalidity recipients.
This decision is not expected to result in Members' invalidity classifications becoming inappropriate, as historically 91% of DFRDB Members retained their status following review.
However, it is important to note that should a Member consider that their health has deteriorated, they retain their right to initiate a review to have their classification re-assessed.
New pay rates - retrospective
In 2008, the Department of Defence underwent a review of the pay structures for Defence Force personnel. The resulting change in structure came into effect on 4 September 2008.
In response to the change in some salaries, ComSuper has been making retrospective adjustments to the superannuation records of affected Members. All adjustments for current serving Members have been completed. Retrospective record adjustments for current serving reservists, or reservists who have served since 4 September 2008 (on continuous full-time service) are expected to be complete by the end of September 2009.
ComSuper is working closely with the Department of Defence and the DFRDB Authority to adjust payments, as necessary, for Defence Force members who have exited the scheme since September 2008, when the pay structure came into effect.
Members who have exited or accepted a full or part pension since September, can expect a delay in adjustment to their records, as these top-up payments require manual calculation. These adjustments will be completed within the 2009-2010 financial year.
Global Financial Crisis
The past two financial years have been difficult for the financial market and investors, with a number of major foreign economies having fallen into recession, in what is now commonly referred to as the Global Financial Crisis. The DFRDB Authority wishes to reassure Members that DFRDB entitlements are not affected by the adverse global financial circumstances.
The DFRDB scheme is a fully defined benefit scheme in which entitlements are based on factors such as salary and years of service.
Unlike many other schemes, the DFRDB benefit is not dependent on fund earnings which are typically influenced by fluctuating global and domestic financial markets.
The only exception to this is the entitlements of DFRDB Members who have separate ancillary contributions with MilitarySuper. These Members are affected by fund earnings which may vary depending on the investment option chosen by the Member. Further details can be located on MilitarySuper's website.
Interdepartmental Working Group
Since 2007, ComSuper has participated in the Interdepartmental Working Group (IDWG) which aims to examine opportunities to streamline service delivery to Australian Defence Force (ADF) members in their transition from military to civilian life. Areas of focus for this working group include the revision of processes relating to medical discharge from the ADF. This group was initiated following direction from the former Minister Assisting the Minister for Defence.
The IDWG has formed four subcommittees to address specific issues experienced by Members discharging from the ADF. These subcommittees focus on: Members change of address, proof of identity (POI) requirements, data transfer and consistency in decision making in respect of determining spouse and dependant eligibility under ComSuper, Department of Veterans' Affairs (DVA) and Centrelink legislation. ComSuper is represented on both the POI and change of address working groups.