Ruling clears backdated payout of BNZ super scheme

By BRIAN FALLOW

The Court of Appeal has cleared an obstacle to a payout of the much-fought-over, $100 million-plus surplus of the Bank of New Zealand's staff superannuation scheme.

The court has allowed a rule change made in late 2000 to be backdated to 1995 so that 2500 former bank employees who left the BNZ Officers Provident Association (OPA) between 1995 and 2000 can benefit from any payout, as well as the 3000 present members.

The OPA board considered that excluding the former members would create a windfall for present and future members.

But the bank objected to the backdating. It is still considering the judgment and has made no decision on whether to appeal.

The surplus is the difference between the assets of the fund and its liabilities, as estimated by the actuaries.

The bank and the OPA have agreed that the fund should be brought back into equilibrium (the surplus eliminated) by 2015.

The surplus peaked at $278 million in 1989. The following year the fund was restructured, with most members switching from a pension to a lump-sum arrangement.

This was the period when the bank got into trouble, was recapitalised by the taxpayer and then sold to the National Australia Bank.

There is still a group of around 180 people who were BNZ staff and OPA members in 1990, who believe they have yet to receive their fair share of the surplus and who have been fighting for it for years.

They were not a party to the latest litigation, but their leader, Warwick Alexander, welcomed the fact that the court was prepared to countenance a retrospective rule change.

"Now we have got to agree the date," he said.

The surplus has been whittled down over the years by the fact that the bank has enjoyed a "contribution holiday", drawing on the surplus to fund its subsidy to members' individual savings.

The surplus can also be reduced - the year to last October was an example - when investment returns were negative.

As at October 31 last year the surplus stood at $104 million, down from $129 million a year earlier.

The Court of Appeal noted the law's strong disposition against retrospective changes.

But in this case the rule changes did not take away any vested rights in the surplus, and so were not retrospective, it said.

Before any past or present OPA members get cash in hand, a lot has to happen, however. The OPA board has to decide on the amount and timing of any payout, and the bank, which nominates half the OPA board members, has to sanction it.

An earlier proposal, when the surplus stood at $129 million, would have paid $43 million to people who were members in 1995, of whom those who have since left would have got $16 million.

And there remains the unresolved issue of any claim that pre-1990 members have on the surplus.