Ex-RBNZ executives take fight for top-up on ‘gold-plated’ pension to Appeal Court
A group of former Reserve Bank senior managers, including ex-assistant governor David Archer, renewed their fight for the bank to top up their pension after being knocked back in the Employment Court last year.
In the Court of Appeal in Wellington, Justices Rhys Harrison, Douglas White and Forrest Miller today heard arguments over an application that would force the Reserve Bank to review the percentage of employees' total remuneration in setting superannuation and retirement gratuities.
The dispute arose out of changing employment practices in the late 1980s and early 1990s when firms started placing a dollar value on the various perks offered to workers and taking them into account when setting remuneration.
At the time, the central bank set its pension contributions at 70% of an employee's total remuneration package, which was later reviewed to 73%.
Ex-RBNZ senior staffers Bruce White, Peter Katz, Peter Ledingham and Archer, and current employee Ian Harrison claimed the level should probably have been about 87% or 88%.
The crux of their argument was whether the Reserve Bank failed in an obligation to regularly review what it deemed as an appropriate level of contribution into the pension scheme, and in doing so, acted in bad faith, Ian Millard QC told the court.
"When the employees accepted the 70% \, they were doing so because the bank said it was going to be reviewed," Mr Millard said.
He detailed the negotiations between senior staff and the bank when switching to a total remuneration package, saying the bank took on an obligation to regularly review the pension provision.
Justice Harrison said that process showed a "careful negotiation of the final figure" in what was an evolving world in terms of employment contracts.
"You're asking us to say that they're not bound by that," Justice Harrison said.
The judges tested Mr Millard's argument, questioning him on whether his clients' subsequent contracts with the bank meant they implicitly gave their approval to the status quo and on where the bank failed in its obligation to hold regular reviews of the scheme.
Alan Galbraith QC, counsel for the Reserve Bank, told the court the bank was following the market trend away from perks in the late 1980s, which he said "erred on the generous side."
Mr Galbraith agreed with Justice Miller's proposition that, even if the court ordered an increase in the pension contributions, there would be a "quid pro quo" clawback on the cash portion which made up the balance of the total remuneration package.
All of the men held senior roles at the RBNZ, with White and Harrison special advisers, Katz as Austraclear business manager, Ledingham head of financial system oversight and Archer an assistant governor and head of economics.
They were all members of the bank's staff superannuation and provident fund, which was set up in the 1930s and, until 1994, saw employees pay 6% of their salaries into the scheme with the RBNZ topping it up by an amount equal to 12% of their pay.
After 1994, the bank was only liable to make contributions to the fund as considered necessary by an actuary, and to provide benefits payable to members.
The fund was closed to new members in December 2000, and Mr Galbraith said there were about 10 or 11 people drawing on it.
The pension paid $2.65 million in the 12 months ended March 31, according to its latest financial statements, and had about $40.9 million in liabilities for promised benefits at the end of the balance date. Mr Katz was listed as a trustee of the fund as at March 31.
The judges reserved their decision.