DEFENCE FORCE RETIREMENT AND DEATH BENEFITS (FAMILY LAW SUPERANNUATION) AMENDMENT ORDER 2012 (NO. 1)
ISSUED BY THE MINISTER FOR DEFENCE SCIENCE AND PERSONNEL
Section 49F(1) of the Defence Force Retirement and Death Benefits Act 1973 (the Act) empowers the Minister to make Orders prescribing matters required or permitted to be prescribed for the purposes of the Family Law splitting arrangements in Part VIA of the Act.
The Act provides for Defence Force Retirement and Death Benefits (DFRDB) pension recipients (referred to in the Act as ‘recipient members’) to re-enter the Australian Defence Force (ADF) for a period of service. If a recipient member re-enters the ADF for a period of further service of 12 months or more and elects under section 61B(1) of the Act (before commencing that service) to again become a contributing DFRDB member, the DFRDB pension is cancelled under section 62 of the Act and is then recalculated when the re-entered service is completed to take account of the person’s total ADF service.
Part 2 of Schedule 6 of the Superannuation Legislation Amendment Act 2007 inserted subsection 49E(1A) into the Act to address an anomaly that occurred when the initial Family Law amendments were applied to the Act. The subsection provides for a payment split within the meaning of Part VIIIB of the Family Law Act 1975 to apply to a second or subsequent (or later) pension that becomes payable; the pension is to be reduced to the amount calculated under Ministerial Orders.
The amendment to the Defence Force Retirement and Death Benefits (Family Law Superannuation) Orders 2004 made by the Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No.1) formalises a method developed by the Australian Government Actuary in 2011 for recalculating a previously reduced DFRDB pension as a result of a payment split following a further period of re-entered service of 12 months or more that is subject to a subsequent payment split.
The methodology in this amending Order is taken to have commenced on 1 January 2008 to be consistent with the date of commencement of Part 2 of Schedule 6 of the Superannuation Legislation Amendment Act 2007.
ComSuper, the administrator of the DFRDB scheme, has advised that it was only in early 2011 that the first of seven recipient members whose previously reduced DFRDB pensions again became the subject of a payment split following a further period of service of 12 months or more. The methodology in the amending order has been applied to the seven cases in these unusual circumstances. There is no one that is adversely impacted by the retrospective application of the methodology from 1 January 2008.
Individual amendments
Clause 1 – Name of order
This clause is formal and names the amending Order that amends the Defence Force Retirement and Death Benefits (Family Law Superannuation) Orders 2004.
Clause 2 – Commencement
This clause provides for the amending Order to commence on 1 January 2008, the date of commencement of Part 2 of Schedule 6 of the Superannuation Legislation Amendment Act 2007.
Clause 3 – Amendment of the Defence Force Retirement and Death Benefits (Family Law Superannuation) Orders 2004
This clause identifies that the principal orders are being amended.
Schedule 1
Item 1
This item formalises the methodology for splitting later standard pensions and associated reversionary pensions.
- Proposed order 2.09 formalises the methodology to calculate the reduction of second or subsequent (or later) standard pensions and associated reversions not payable as a spouse's pension on the death of a contributing member.
- Proposed order 2.10 formalises the methodology to calculate the reduction of second or subsequent (or later) standard pensions payable as a spouse's pension on the death of a contributing member.
Legislative Instrument Act
This amended Determination is a legislative instrument for the purpose of subsection 44(2) of the Legislative Instruments Act 2003 (LIA) and is not subject to disallowance in accordance with item 39 of the table in subsection 44(2) or sunsetting in accordance with item 42 of the table in subsection 54(2) of the LIA because it is an instrument relating to superannuation (that is, it formalises a method for reducing the superannuation benefits of a recipient member following a payment split within the meaning of Part VIIIB of the Family Law Act 1975).
Both the Australian Government Actuary and ComSuper, the administrator of the DFRDB scheme, have been consulted. Further consultation was considered unnecessary pursuant to paragraph 18(2)(a) of the LIA because the instrument does not substantially alter existing arrangements that have been applied since the first case for which the methodology was developed was identified in early 2011.
A regulation impact statement is not required.
Statement of Compatibility with Human Rights
As this legislative instrument is not subject to disallowance, Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 does not apply. Nevertheless, this legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Human rights implications
This legislative instrument does not engage any of the applicable rights or freedoms.
Conclusion
This legislative instrument is compatible with human rights as it does not raise any human rights issues.
Authority:
Authority:
Section 49F of the Defence Force Retirement and Death Benefits Act 1973
Overview
The Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No. 1) was enacted to address an anomaly in the calculation of Defence Force Retirement and Death Benefits (DFRDB) pensions when a recipient member re-enters the Australian Defence Force (ADF) for a period of service of 12 months or more. This anomaly arose when a payment split under the Family Law Act 1975 was applied to a second or subsequent pension. The Minister for Defence Science and Personnel, empowered by section 49F(1) of the Defence Force Retirement and Death Benefits Act 1973, issued this amendment to formalise a methodology developed by the Australian Government Actuary in 2011 for recalculating a previously reduced DFRDB pension following a further period of re-entered service. This legislative instrument was designed to ensure that the pension is accurately recalculated to account for the total ADF service of the re-entered member, thereby providing a fair and consistent approach to pension calculations under the DFRDB scheme.
Scope and Application
The Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No. 1) applies to Defence Force Retirement and Death Benefits (DFRDB) pension recipients who re-enter the Australian Defence Force (ADF) for a period of 12 months or more and elect to again become a contributing DFRDB member. The Act modifies the methodology for calculating the reduction of second or subsequent standard pensions and associated reversionary pensions payable following a payment split within the meaning of Part VIIIB of the Family Law Act 1975. This applies to both pensions payable as a spouse's pension and those not payable as a spouse's pension on the death of a contributing member. The Order formalises a method developed by the Australian Government Actuary in 2011, which has been applied retrospectively from 1 January 2008 to address an anomaly that arose when the initial Family Law amendments were applied to the Act. The methodology has been applied to the seven known cases where the pension again became subject to a payment split following a further period of service of 12 months or more. The Order is a legislative instrument that does not require disallowance or sunsetting under the Legislative Instruments Act 2003, as it does not substantially alter existing arrangements. This legislative instrument is compatible with human rights, as it does not raise any human rights issues and has been developed in consultation with the Australian Government Actuary and ComSuper, the administrator of the DFRDB scheme.
Key Provisions
The Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No. 1) primarily serves to formalise a methodology for recalculating Defence Force Retirement and Death Benefits (DFRDB) pensions following a second or subsequent period of service by a pension recipient who has re-entered the Australian Defence Force (ADF). This is articulated in the clauses of the Order (Clauses 1-3) and detailed further in Schedule 1, Item 1. Specifically, Proposed Order 2.09 outlines the methodology for splitting later standard pensions that are not payable as a spouse's pension, while Proposed Order 2.10 details the methodology for splitting later standard pensions that are payable as a spouse's pension (Items 1 and 2 of Schedule 1). This methodology is applied to pensions reduced as a result of a payment split under Part VIIIB of the Family Law Act 1975, following a period of re-entered ADF service of 12 months or more.
The Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No. 1) imposes obligations on the parties involved, particularly the pension recipients who re-enter the ADF. These recipients must elect to again become contributing DFRDB members before commencing their re-entered service, as stipulated in section 61B(1) of the Defence Force Retirement and Death Benefits Act 1973. Upon re-entry and election, the DFRDB pension is cancelled and subsequently recalculated upon completion of the re-entered service, taking into account the individual’s total ADF service. This recalculation must adhere to the formalised methodology specified in the Order, ensuring consistency and fairness in pension readjustment.
The Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No. 1) does not introduce new offences or penalties but rather refines the existing framework for pension recalculation. Non-compliance with the recalculation methodology or failure to elect to re-enter as a contributing DFRDB member may result in disputes or legal challenges regarding the accuracy of pension amounts. However, the Order itself does not specify additional penalties beyond those that might apply under the Defence Force Retirement and Death Benefits Act 1973 or other relevant legislation. It is important to note that the Order is designed to formalise an existing methodology and does not create new civil or criminal consequences for breach.
In summary, the Defence Force Retirement and Death Benefits (Family Law Superannuation) Amendment Order 2012 (No. 1) formalises the methodology for recalculating DFRDB pensions for pension recipients who re-enter the ADF, ensuring that pension amounts are accurately adjusted following a payment split. This Order imposes specific obligations on pension recipients, such as electing to re-enter as contributing DFRDB members and adhering to the formalised recalculation methodology. While the Order does not introduce new offences or penalties, it provides a clear framework to avoid disputes over pension amounts, maintaining the integrity of the DFRDB scheme.