Commonwealth Superannuation Scheme Class Action

Are you a retired member in the Federal Public Service with pre 1990 Commonwealth Superannuation Scheme (‘CSS’) entitlements?

If so, you retired with a lifetime of defined benefit pension entitlements which comprised:

  1. a part CPI indexed component which maintained the real purchasing value of your pension over time; and
  2. a part non-indexed component which provided a fixed but decreasing real value pension over time.

 

Upon retirement, many retired members of the Federal Public Service converted their non-indexed pensions into lump sum payments on the advice of their financial advisers. These financial advisers would receive zero commissions if their clients held onto their non-indexed pensions but significant commissions if their clients chose to convert their non-indexed pensions to a one-off lump sum payment. This scenario motivated many financial advisers to provide inappropriate advice to their clients, who may not have canvassed the long-term benefits of retaining the non-indexed pension.

If you converted your non-indexed CSS pension to a lump sum upon retirement, we encourage you to register your details with us so that you can be informed of the result of our investigations. We are presently enquiring into whether advice received from financial advisers was inappropriate and/or not in the best interests of their clients. In other words, we are investigating whether the financial advice you received was wrong, misleading or negligent. If this is proven to be the case, you may be entitled to compensation for your losses.

 

There is no cost or obligation to you in registering.

 

Worked Example

In 2010, Homer retired from the Australian Public Service after 30 years of service at the age of 55.

Homer was entitled to a final pension which comprised of:

  1. An inflation adjusted indexed pension of $45,000 per annum; and
  2. A fixed non-indexed pension of $22,000 per annum together with its related once off “productivity” payment of $35,000.

Both of these pensions are reversionary to Homer’s wife Margaret, if she survives him, at the rate of 67% of Homer’s entitlements for Margaret’s lifetime.

Upon the suggestion of long-term work colleagues and friends, Homer decides to visit his financial planner Barney who provides him with a Statement of Advice.

The Statement of Advice tells Homer he should take his CPI pension indexed for life but convert his non-indexed pension into a fixed lump sum payment of $215,000. This Statement of Advice undertakes no:

  1. analysis of annuity stream breakeven points;
  2. Homer’s life expectancy of 95 according to his doctor; or
  3. Homer’s personal family circumstances which involve Jill who is many years younger than Homer.

Homer was busy as a public servant and does not know anything about pensions so he relies on Barney’s judgment as a professional financial adviser. Homer therefore agrees to convert his non-indexed pension into a one-off payment. Once that lump sum is paid, Barney tells Homer he will help him to invest the proceeds into a medium to low risk managed fund platform that Barney’s financial advisory firm is associated with.

A few years later, Homer is having drinks with his best friend Mo who was good at maths when they were at school. Mo tells him that his non-indexed pension was actually worth $431,000 based on his life expectancy. Homer, who is now only 65, did not actually need any lump sum capital at retirement and could have invested the stream of non-indexed pension payments instead, which could be worth significantly more now and into the future.

Homer concludes that Barney ripped him off by $216,000 and now wants his money back with interest.

How do I find out more about the CSS Class Action?

If you are retired Federal Public Servant who converted your non-indexed pension to a lump sum, you can obtain information and updates regarding the proposed class action by completing the registration form below to register your interest.

Please note that registering your interest does not mean that you are agreeing to be a group member in the proposed class action. Registering your interest is free and your information will be held in confidence in accordance with our privacy policy.

Alternatively, if you have any queries or require any further information, please contact MC Lawyers & Advisers on (02) 8379-1278 or send an email to [email protected]. For international callers please call +61 2 8379-1278.

Are you a retired member in the Federal Public Service with pre 1990 Commonwealth Superannuation Scheme (‘CSS’) entitlements?

If so, you retired with a lifetime of defined benefit pension entitlements which comprised:

  1. a part CPI indexed component which maintained the real purchasing value of your pension over time; and
  2. a part non-indexed component which provided a fixed but decreasing real value pension over time.

Upon retirement, many retired members of the Federal Public Service converted their non-indexed pensions into lump sum payments on the advice of their financial advisers. These financial advisers would receive zero commissions if their clients held onto their non-indexed pensions but significant commissions if their clients chose to convert their non-indexed pensions to a one-off lump sum payment. This scenario motivated many financial advisers to provide inappropriate advice to their clients, who may not have canvassed the long-term benefits of retaining the non-indexed pension.

If you converted your non-indexed CSS pension to a lump sum upon retirement, we encourage you to register your details with us so that you can be informed of the result of our investigations. We are presently enquiring into whether advice received from financial advisers was inappropriate and/or not in the best interests of their clients. In other words, we are investigating whether the financial advice you received was wrong, misleading or negligent. If this is proven to be the case, you may be entitled to compensation for your losses.

There is no cost or obligation to you in registering.

 

Worked Example

In 2010, Homer retired from the Australian Public Service after 30 years of service at the age of 55.

Homer was entitled to a final pension which comprised of:

  1. An inflation adjusted indexed pension of $45,000 per annum; and
  2. A fixed non-indexed pension of $22,000 per annum together with its related once off “productivity” payment of $35,000.

Both of these pensions are reversionary to Homer’s wife Margaret, if she survives him, at the rate of 67% of Homer’s entitlements for Margaret’s lifetime.

Upon the suggestion of long-term work colleagues and friends, Homer decides to visit his financial planner Barney who provides him with a Statement of Advice.

The Statement of Advice tells Homer he should take his CPI pension indexed for life but convert his non-indexed pension into a fixed lump sum payment of $215,000. This Statement of Advice undertakes no:

  1. analysis of annuity stream breakeven points;
  2. Homer’s life expectancy of 95 according to his doctor; or
  3. Homer’s personal family circumstances which involve Jill who is many years younger than Homer.

Homer was busy as a public servant and does not know anything about pensions so he relies on Barney’s judgment as a professional financial adviser. Homer therefore agrees to convert his non-indexed pension in a one-off payment. Once that lump sum is paid, Barney tells Homer he will help him to invest the proceeds into a medium to low risk managed fund platform that Barney’s financial advisory firm is associated with.

A few years later, Homer is having drinks with his best friend Mo who was good at maths when they were at school. Mo tells him that his non-indexed pension was actually worth $431,000 based on his life expectancy. Homer, who is now only 65, did not actually need any lump sum capital at retirement and could have invested the stream of non-indexed pension payments instead, which could be worth significantly more now and into the future.

Homer concludes that Barney ripped him off by $216,000 and now wants his money back with interest.

How do I find out more about the CSS Class Action?

If you are retired Federal Public Servant who converted your non-indexed pension to a lump sum, you can obtain information and updates regarding the proposed class action by completing the registration form below to register your interest.

Please note that registering your interest does not mean that you are agreeing to be a group member in the proposed class action. Registering your interest is free and your information will be held in confidence in accordance with our privacy policy.

Alternatively, if you have any queries or require any further information, please contact MC Lawyers & Advisers on (02) 8379-1278 or send an email to [email protected]. For international callers please call +61 2 8379-1278.

Register your interest

 
 

What is a class action?

A class action is a form of legal proceedings whereby a minimum of seven claimants with common issues of fact or law, band together in one claim and appoint a representative to conduct the proceedings on behalf of themselves and a group, or “class”, of defined persons.

Register your interest

What is a class action?

A class action is a form of legal proceedings whereby a minimum of seven claimants with common issues of fact or law, band together in one claim and appoint a representative to conduct the proceedings on behalf of themselves and a group, or “class”, of defined persons.