LGS agrees it’s their responsibility, and they will fix it

Last month we reported on our industrial dispute filed with Local Government NSW representing councils over the apparent underpayment of superannuation by a significant number of councils. This affected some of the 4500 employees remaining in the two closed defined benefit schemes managed by LGS - the Retirement Scheme and the Defined Benefits Scheme.

We’d had two unsatisfying meetings with LGS and LGNSW before the dispute came on in the Commission. For both LGS and LGNSW, this was all about someone else’s responsibility. LGS claimed it was the councils or the individual employees and LGNSW claimed it was LGS or the employees.

With a new CEO as a replacement for the irreplaceable and much-loved Peter Lambert, David Smith found himself between a rock and a hard place. The advice he was getting was coming from those sections of the organisation where we could reasonably expect would have been ensuring compliance with the rules over the years. Uh oh …

A direction from Chief Commissioner Kite to depa as the notifier to invite the “proper officer” of LGS to attend and assist the Commission on the next occasion led to a couple of lawyers and the LGS CEO with a couple of others attending the Commission on 3 November. But it wasn’t the bad experience that it could have been.

On 1 November the LGS Board had met and in an email to the parties the CEO advised it had resolved to direct the CEO to do two things:

  • “to undertake an investigation into the allegations of non-compliance” as detailed in the (depa dispute) before the IRC “and providing the investigation substantiates non-compliance, as the LGS CEO to determine whether any LGS members in either the Retirement Fund all the Defined Benefit scheme had been adversely impacted.
  • To seek appropriate external advice to establish a reasonable approach to determine and quantify the extent of any financial impact on LGS members for me to develop an appropriate remediation plan for Board approval to be applied to correct any non-compliance and make recommendations to the LGS Trustee Board including any suggested amendments to the Trust Deed or LGS policies and procedures, with a view to ensuring all employers are calculating superable salary correctly.”

Clearly the Three Wise Monkeys strategy presented to LGNSW and the unions in the previous meetings had been abandoned. And a good thing too.

CEO David Smith had also written to the Chief Commissioner accepting this responsibility and committing to both investigating and resolving any adverse effect on members of the fund. Here is his letter.

On that basis the Chief Commissioner was happy to adjourn our dispute until 30 January for a report back. LGS is putting on an additional resource to properly review and examine compliance with 1.2 and 1.3 and the Fund will also report to depa, the other unions in support and LGNSW about progress prior to Xmas.

Yesterday the LGS wrote to all councils as the next step in this process and you can see that letter here.

We’ve smashed through the wall and the Board has the staff doing what they should have been doing all along. Well done to the Board and the new CEO David Smith.

(And I’d like to thank those 150 or so members who responded and provided an individual authority for depa to act to obtain information that may be said by either the Fund or their Council to be confidential, to the extent necessary to resolve this dispute. We probably won’t need them now, but better to be sure than sorry.)

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