9.5 Defence Force Retirement and Death Benefits Scheme (DFRDB)

The DFRDB Scheme is a contributory scheme for 'eligible members of the Defence Force’ i.e. all members of the ADF on continuous full-time service for a period of at least one year. The DFRDB scheme is essentially a pension scheme. 

9.5.1 Non-medical discharge benefits

There is no employer benefit if the person has served less than 20 years. In this case, the person will receive a refund of their own contributions and a gratuity (none of which is an employer benefit). The employer benefit only accrues for those members who reach 20 years of service (or 15 years if he or she reaches compulsory retiring age for rank – see section 9.5.3) or who are medically discharged. 

Where the person has served more than 20 years (or 15 years if he or she reaches compulsory retiring age for rank) a pension or part pension/part lump sum is paid upon discharge. The employer benefit is taken to be 80% of the initial superannuation benefit (20% is considered to be the employee benefit and this 20% amount remains constant throughout calculations). 

The pension benefit is calculated by the number of years completed service (20 years = 35%).  A portion of the pension benefit can be commuted to a lump sum by multiplying the annual pension amount by 4.9.  The commutation amount is divided by the member’s life expectancy to calculate the amount by which the pension is reduced to compensate for the commutation lump sum.

9.5.2 Medical discharge benefits

The member will receive an invalidity pension if they are classified Class A or B.  80% of the pension is considered employer benefit and held in calculations. There is no refund of contributions. 

The invalidity benefits are calculated as follows:

Class A: a pension of 76.5% of the member’s final salary for DFRDB purposes.  Final salary includes service allowance and in some instances may include higher duties allowance, however all other disability allowances are excluded from their final salary for superannuation purposes.

Class B: is generally half the Class A pension (38.25%).  If the member has greater than 23 years of service their Class B benefit is based on years of actual service and not half of the Class A benefit.

Class C: is generally 1.5 times the member’s contributions, paid in the form of a lump sum. 1/3 of the lump sum benefit is considered to be the employer benefit. If the member has in excess of 20 years’ service then the benefits are calculated as if they had elected their own discharge.  This applies only to members who are medically discharged and subsequently classified as Class C.  Therefore, they have entitlement to a pension benefit, and can commute a portion of that benefit to a lump sum.

The Productivity Benefit

A productivity benefit has accrued on behalf of DFRDB members since 1 January 1988. The productivity benefit is paid separately to other DFRDB benefits. It may be paid at retirement from the ADF but in most cases is paid on or after preservation age.

The whole of the productivity benefit is Commonwealth-funded.

Further information about the DFRDB scheme can be found at http://www.dfrdb.gov.au/your-future/withdraw-benefits/discharge/

9.5.3 Retirement Age for Rank 

In the DFRDB Scheme, a member can qualify for a pension after 15 years’ service (rather than the usual 20 years) if the member has reached retirement age for his or her rank.

The retirement age for a member's rank is determined by regulations made under the Defence Act, the Naval Forces Regulations and the Air Force Regulations. This may be complicated, in individual cases, by amendments to the Regulations and savings provisions arising from those amendments.

In general, retiring age for rank is now 60 years, with a range of later dates for officers of the rank of Major-General, Rear Admiral and Air Vice-Marshal and above.

9.5.4 Table of Superannuation Benefits Payable under DFRDB

* or 15 years and reached retirement age for rank.

As a result of changes to superannuation legislation in the early 1970's, DFRDB pensions paid from 19 June, 1973 were entirely Commonwealth-funded. However the decision to hold 80% of the benefit as Commonwealth-funded, and 20% as employee funded was determined by the Commissioner for Employees Compensation under the Compensation (Commonwealth Government Employees) Act 1971 (the '1971 Act'). In effect, as the initial pension increases over time, the 20% attributable to the employee contribution decreases in relation to the Commonwealth-funded portion.

Note: A person may also access their superannuation prior to preservation age on the grounds of financial hardship, compassionate, or permanent invalidity. See Chapter 9.1 for clarification on this issue here.

See Chapter 9.8 for clarification on when superannuation benefit has been 'received' here.