The Commonwealth Bank’s treatment of Peter Beck, the former managing director of its insurance arm, CommInsure, has suffered criticism in the NSW Supreme court and the Commonwealth Bank Officers Superannuation Fund (OSF) has been ordered to pay him his retirement pension – an amount that may run to several million dollars.
Details of the NSW Supreme Court decision which followed a 10-year battle between Beck and the bank have been made public by law firm Slater & Gordon.
Beck, who later became a chief executive of superannuation administrator, Pillar Administration, mounted his action against the Commonwealth Bank after his position was terminated two years before he became entitled to a pension from the Bank’s defined benefits scheme.
Beck, who began working with Colonial in South Africa in 1981, became an employee of the Commonwealth Bank when it acquired Colonial – something which resulted in the Colonial pension fund becoming a part of the Commonwealth Bank Officers Superannuation Fund.
In a 125 page judgement, NSW Supreme Court judge, Justice Slattery declared that amendments made to the rules of the Commonwealth Bank OSF by the trustee were void.
His Honour found the changes were not in the best interests of the beneficiaries of the OSF and breached the Superannuation Industry Supervision Act and Regulations.
Slater & Gordon commercial lawyer Vicky Antzoulatos said the judgment reaffirmed that trustees of superannuation funds, like trustees of any trust, are under fiduciary duties to act in the best interests of their beneficiary members.
“The independence of trustees of superannuation funds from their employer sponsors is paramount,” she said.
“In this case the trustee was obliged under the fund rules to seek actuarial advice to ensure members were not detrimentally affected before making the subject amendments, which it did not do.”
“The trustee of the OSF did not properly consider whether Mr Beck would be detrimentally affected by the amendments, which the Court found to be a fundamental breach of trust,” Antzoulatos said claiming the superannuation benefits
Beck received upon termination were therefore substantially less than the amount he would have been entitled to, had he remained in the Bank’s employ until the age of 55.
The judgment determined that Mr Beck is entitled to the pension he ought to have received from age 55.
Slater & Gordon said the precise amount would be determined at a supplementary hearing in August “but is expected to be several millions of dollars, in view of the present day cost of purchasing a pension in the market”.
“The judgment also opens the door to other fund members affected by the amendments to the fund rules to come forward and seek consideration of payment of an early retirement benefit.”
Ten years or so to get justice? Is it any wonder CBA and other major banks appear less than trust worthy to the ordinary investor?