Ex-RBNZ executives' pension top up bid tossed

The Reserve Bank, The terrace, Wellington. 01 July 2013. Photograph / Mark Mitchell
The Reserve Bank, The terrace, Wellington. 01 July 2013. Photograph / Mark Mitchell

The Court of Appeal has tossed out a bid by a group of former Reserve Bank senior managers, including ex-assistant governor David Archer, to top-up their pensions, and upheld an earlier Employment Court ruling.

In a Dec. 17 judgment, Justices Rhys Harrison, Douglas White and Forrest Miller dismissed an appeal by the former RBNZ senior staffers which would have forced 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 per cent of an employee's total remuneration package, which was later reviewed to 73 per cent.

The former central bank senior staffers Archer, Bruce White, Peter Katz, Peter Ledingham, and Ian Harrison claimed the level should probably have been about 87 or 88 per cent.

The crux of their argument was that the Reserve Bank hadn't regularly reviewed the level of its contribution to the pension, relying on an executive remuneration paper (ERP) written by then-deputy governor Richard Lang.

They claimed the Employment Court had erred in its ruling by not considering certain matters in its earlier judgment, such as the Lang paper, which they said implied the regular review.

The Appeal Court turned down the former RBNZ staffers' bid, saying their proposal as to what was implied failed "almost all the traditional tests for implication" and that the contracts they signed provided a "plain answer" to what the bank agreed to.

"The appellants feel a grievance attributable to what they see as the bank's failure to adhere to the ERP or to tell them that it no longer meant to do so," the judgment said.

That amounted to an allegation that the employment contracts didn't reflect the parties' agreement, it said.

"The remedy, if one is available after all this time, must lie in rectification, which was not pleaded and would require the appellants to establish that their employment contracts did not accurately represent the mutual intention of the parties," the judgment said.

All of the men held senior roles at the RBNZ, with White and Harrison as 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 per cent of the salary into the scheme with the RBNZ topping it up by an amount equal to 12 per cent 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.

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. Katz was listed as a trustee of the fund as at March 31.

The Reserve Bank was awarded costs.

- BusinessDesk

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