Aon was requested to assist an organisation and their legal advisers defend an action claiming unfair employment terms and $6 million compensation in relation to former public sector DB retirement provisions.
The many challenges they had were that:
- this related to a decision 20 years previously to provide (generous) Defined Contribution superannuation benefits to new employees transferring employment from a public sector enterprise that had provided public sector Defined Benefit superannuation
- there was limited documentary evidence of the details of decisions and communications at that time
- the employer was associated with many other companies that had undertaken Defined Benefit to Defined Contribution conversions, so that an unsuccessful defence may set an expensive precedent
- the complainants’ lawyers had obtained actuarial advice that purported to identify and quantify substantial losses for the complainants
- data to produce definitive calculations was largely unavailable due to the passage of time and various superannuation transfers.
Aon partnered with the client and their lawyers to:
- provide a very experienced actuary who had practical experience of market conditions and superannuation trends at that time, particularly Defined Benefit to Defined Contribution conversions
- review the actuarial reports to determine inconsistencies or omissions
- produce reports which provided insight into the usual actuarial approaches for such a conversion and challenged the process and assumptions of the other actuary
- analyse the development of the employer’s superannuation over ensuing years and develop a model to identify that employees were actually better off in most circumstances
- attend Court including detailed cross-examination by opposing counsel.
After Aon’s advice and support, the client achieved:
- a Court decision in their favour involving multi-million dollar savings
- the establishment of a precedent to limit the risk of similar future challenges.