This troubled and ill-governed scheme (of which I have been a trustee since 1988) has consumed vast amounts of time, energy, and money over the last 15 years. Neither Reserve Bank management and board members nor trustees emerge well from that period (in responding - or failing to do so – to a mix of egregious and careless acts by their predecessors in amending the scheme rules on several occasions in the late 1980s and 1990s).
Possible wind-up of the scheme
Trustees have disclosed to members (and thus in public documents) that they have been exploring the possibility of winding up the scheme and transferring the pension liabilities to the Government Superannuation Fund. It is an attractive option, in principle, for a small scheme. Unfortunately, it appears not to be lawful, under the existing provisions of the Government Superannuation Fund Act (although could be made so with a simple amendment to the legislation). On the advice of the Minister of Finance. a Cabinet committee has agreed in principle to the pretty obvious illegal (and also highly risky for members) route. I have written to the Minister of Finance (26 August 2024) detailing my concerns.
A fuller discussion of this issue, and the Cabinet paper, is here. A further on the specifics of whether section 98 of the GSF Act can possibly allow a deal of the sort proposed is here.
Letter to Minister of Finance re section 98 of the GSF Act
Governance more generally
Bank-appointed trustees have consistently acted in ways that were observationally indistinguishable from what might have been expected had they seen their primary duty as trustees being to those who had appointed them (when their legal duties to members are in fact crystal-clear). There has been a consistent reluctance to engage or to explain, and perhaps the most striking example was the refusal of trustees to meet with Don Brash (former Governor, former Board chair, former chair of trustees) when he expressed unease about events that occurred on his watch.
The stance of the Financial Markets Authority (FMA), the relevant regulatory agency since the Financial Markets Conduct Act came into effect, but also successor agency to the former regulatory entity, the Government Actuary, has been one of studied (at times simply neglectful) indifference. That should have been all the more remarkable in view of a) the Government Actuary past role in approving some of the more questionable rule changes, and b) the close working relationship between the Reserve Bank and the FMA, where one might have supposed that the FMA would want to have gone out of its way to ensure there was no risk of being seen to give an easy ride to their colleagues at the Bank.
The brief document below outlines in summary my stance on the substance and handling of these issues. I have included it here for a number of reasons, including to assist in accountability to the members who elected me and whose best interests I, like all trustees, am required by law to serve. The scheme operates by majority rule, and thus my minority dissents on a range of issues over many years have no particular standing other than as an explanation of what happened, as I have seen and experienced it. Like other trustees, I have always been conscious of the legal risks trustees faced – there are large sums of money potentially at stake – and that is particularly so when one might be found legally responsible and liable for egregiously bad decisions taken by majority. Against that background, I have consistently sought to have my views and dissents on record.
And this document, obtained in October 2023 from the Reserve Bank under the OIA, is the material alluded to at the top of page 2 of my note above.
RB super scheme Feb 2016 memo from RB HR on adverse effect
This is a fuller note, written in January 2024 in advance of a (statutorily provided for) meeting of members, on the processes and failures of trustees, the Bank, and the FMA over the decade since invalidity issues were first raised with us.
In the note below I outline my understanding of the remuneration policy and superannuation issues as they stood leading into the rule changes that were executed in June 1988.
The following document is the official record of the meeting of members held, under the provisions of the Financial Markets Conduct Act, on 31 January 2024
RBNZ Staff Superannuation and Provident Fund: Record of meeting of members held 31 Jan 2024
Other older posts
In this post from August 2022 I reproduce the core of the 2022 Annual Report, in which decisions by trustees and serious differences among them were recorded (the Annual Report itself is a public document).
From 2018
From 2016 on the unwillingness or inability of top Bank managers to distinguish between their roles at the Bank and those as superannuation scheme trustees.
croaking cassandra 