Sunday, December 21, 2008

Chapter 10 - State Employees Retirement Benefits Board

In 1979, I was promoted to a newly created position of Finance & I.T. Manager of the State Superannuation Board of Victoria, with a “A” Classification and returned to finish that which I had started years before. I scrapped all the work that had been done, evaluated a number of software systems that could be adapted for the administration of a superannuation fund and finally recommended a system that was accepted by the Board. I organised the installation of the American Relational Data base Software to control all aspects of the Board’s operations. The software manufacturer later advised me that I had created a relational database only second to the American Army who used the same system. Maybe it was the fact that I had the Board Room on the top floor as my office that carried me away. To me this was the finest work that I had done to date and was proud of my achievement.



In the meantime, the Government had promised that all public servants who were not covered by a superannuation fund would be given superannuation benefits and had established the State Employees Retirement Benefits Fund and had appointed the Government Actuary to establish and administer the organisation. Mr Ken Fry - a good friend of Mr Vic Arnold, the former Government Actuary, who was now the Chairman of the Transport Accident Board - was appointed the Chairman of S.E.R.B.


He was not happy with the progress of the Government Actuary in the establishment of the Board and asked to see me. At our interview he offered me the job of Manager of the S.E.R.B. at the same “A” Classification, with a promise to ask the Public Service Board to re-classify the position, once we had re-done the position’s job description. As an interim measure, I was given the use of a motor vehicle at the Board’s expense – which I later found was contrary to Public Service Board rules. I later also found that Ken Fry was an ex-Australian Army officer who was stationed at Peradeniya, Kandy and Mt Lavinia in Ceylon during the war and was more interested in getting a job done than following rules and regulations.


I told the Chairman, Ken Fry that I would have to get the project that I had started at the State Superannuation Board to a stage that I could hand over to someone to finish, before I could take the SERB position. He agreed that he would speak to the Board of the State Superannuation Fund and come to some arrangement for me to start as soon as possible. The Victorian Public Service Board agreed to my temporary appointment and transfer and in early 1980, I commenced my work as temporary Manager with the SERB Board that was situated on the 4th Floor of the same building.
The Board members were:-
· Mr Ken Fry – Chairman, appointed by the Governor-in-Council on 22/1/1980,
· Mr Noel Allanson, Nominated by the Treasurer, appointed 23/1/1980,
· Mr Bernard Dawes – Contributors Representative, appointed 22/1/80.


Again, putting into place the structure of a new organisation was not difficult as the same functions that were performed by the Superannuation Fund and the Long Service Leave Fund had to be repeated at the SERB Fund. I used job descriptions that I brought with me from the other organisations and re-created jobs in SERB, but with an emphasis on the objectives of the legislation. The main objective was to give full-time, part-time and casual workers in all Government Agencies an accumulated superannuation benefit on their retirement.
Having already had the job of finding retrospective history records of workers in the private sector, repeating the process in the public sector was not very difficult. I put out a tender for appropriate computer software for the administration of the fund and with a Steering Committee, evaluated the various submissions received and we recommended that the Catholic Church Insurance Company (CCI) be appointed to change their software to provide the capacity to record contributions, pay benefits, record investments and run the General Ledger reporting functions. The reason that CCI was chosen was that they were in the exact situation in relation to composition of their membership and did not to re-invent the wheel. This decision proved to be right one, as in no time at all we had an IBM computer system with adequate software for providing the correct retirement benefits for the membership, that was based on a proportion of a full-time benefit, according to their work history.


Again, several people who worked with me at the State Superannuation Board and the Building Industry long Service Leave Board followed me to the SERB Board and I was pleased that they had the confidence in my ability to provide them with a good working environment and job satisfaction.
The Management Team was:-
· General Manager:- Mr Ed Rowlands,
· Assistant Manager:- Mr Tom Hoyne,
· Investment Manager:- Mr Stan Belcher,
· Finance Manager:- Mr Kevin O’Connell,
· Administration Manager:- Mr Reg Pound,
· O.I.C. Benefits:- Mr Tom Addicoat ,
· O.I.C. Member Services:- Mr Peter McFarlane,
· O.I.C. Member Records:- Mr Frank Livingstone.


Once I had bedded down the whole process and got into a normal working pattern, in the mornings I used to pick-up Ken Fry from his home in Doncaster on the way to work. He got a lift back home with Vic Arnold in the evening.


Following a review of the organisation in 1985, by Management Consultants – Cullen Egan Dell a new organisation structure was recommended to the Board and the after the appointment of staff to these positions, the new Management Team was:-
· General Manager:- Mr Ed Rowlands,
· Internal Auditor:- Mr Richard Kahn,
· Finance & Investment Manager:- Mr Tom Hoyne,
· Operations Manager:- Mr Robert Underwood,
· Accountant:- Mr Kevin O’Connell,
· O.I.C. Benefits:- Mr Tom Addicoat ,
· O.I.C. Member Services:- Mr Peter McFarlane,
· O.I.C. Member Records:- Mr Phil Butterfield.
Standing:- Stan Belcher, Reg Pound and Ed Rowlands.
Seated:- Bernie Dawes, Ken Fry and Noel Allanson


When Ken Fry retired in 1986, my next Chairman was Neil Duke, who had just retired from his position of the C.E.O. of the British Phosphate Commission.


Neil Duke, like Ken Fry was a no nonsense man and advised the Board that the premises that we occupied were not suitable for an organisation that had grown in size of membership and funds under management and I was instructed to find more suitable accommodation.
The new Board was:-
· Mr Neil Duke, Chairman, Appointed by the Governor-in-Council, 24/6/86,
· Mr Peter Leonard-Kenevsky, Nominated by the Treasurer, re-appointed 23/1/1985,
· Mr Chris Patten, Contributors Representative, elected 23/1/85.


Together, we looked at several vacant offices in the city, but were not happy with any. Finally, we were shown the top floor of the first new building to be constructed in the South Bank. We saw the potential, even though work had just commenced on the construction of the river walls, etc and the whole site was a mess. The Board signed a long term lease and a firm of Architect were appointed to design the office space, with instructions to make it a “modern” office layout. The Board Room and Executive Offices were to overlook the Yarra River, with a “Smoking Room” ventilated to the outside for smokers. The office was declared a “Smoke Free Environment” - possibly the first in the Victorian Public Service.


As the picture below show this was ground breaking for the public service and when completed was officially opened by the Victorian Treasurer.


I was determined to ensure that the members of the Fund received the maximum benefits that they were entitled to when they left the Fund. To this end I encouraged the Management Team to ensure that the part that their responsibilities played in keeping done administrative costs and increasing the rate of return on funds invested was crucial in the equilibrium balance of the following equation.


Contributions + Investment Return = Benefits – Administrative Costs.


The rates of contributions from Employers and members being determined from time to time, by the Government Actuary.

S.E.R.B Offices 0n top floor of Legal & General Building

As the Chief Executive of my first organisation, I now had the opportunity to put into practice the personal philosophies about “Communication” with Employers and Members (rather than only the Government) that I had espoused on several occasions. In addition to the Annual Report, we printed a report to Members and Employers and several flyers to members detailing various aspects of their benefits that they were entitled to.


The success of the State Employees Retirement Fund in looking after it’s employers and members with good investment returns and innovations such as “Pre-retirement Seminars” and individual interviews with members and their spouses to determine their future plans in retirement and advice from life style experts and others was noticed by others in the public service.
Reception at SERB Office



The Board Secretary Mr Reg Pound and myself also interviewed the member who was retiring on the grounds of ill health together with his or her spouse to determine their financial status, their entitlements to social service benefits and future plans to determine whether we would recommend payment of the lump sum benefit entitlement in full or part so as to maximise the total benefit they could receive from SERB and the Federal Government.


In recognition of my efforts I was appointed to the “Senior Executive Service”.


In the 1985 Annual Report the Board stated that the continued development of the use of computer and other technology to provide an sophisticated and integrated superannuation and administration system had enabled the staff to perform their duties in a responsive manner directing their efforts to the needs of members, employers and the public. For the first time a summary of the annual report was together with a personal statement advising them of their updated benefits, including the growth of their own contributions with interest, was distributed to all members of the Fund.
SERB Board Room

Despite the complex series of activities to meet the technical requirements of the S.E.R.B. Act and Income Tax and social Security legislation, the Board was able to reduce the annual average administrative cost per member from $66.50 ($1.28 per week) to $61.85 ($1.19 per week).During the 1980’s, when the Government decided to re-organise the Transport Department and the Board of Works, the administration of the superannuation funds of these organisations were transferred to the SERB Board. I advised on the writing of the Transport Superannuation Act 1988, negotiated with administrators of the funds the procedures for the change and co-ordinated the transfer of members and funds from the existing funds in the Public Transport Sector and organised the administration of the two Boards.
The Board Members of the Transport Superannuation Board were:-
· Peter Shepherd – President – Appointed by the Governor-In-Council, 1/7/1989,
· Keith Jones – Appointed 28/11/1989,
· Leigh Mackay – Elected 7/3/1989,
· Jack Reymers – Elected 7/3/1989,
· Tony Touhey – Elected 7/3/1989.

My management philosophy was one of inclusiveness, both with the Board of Management and staff and good line of communication between all service providers, members and employers and I think I attained this during my time as the Chief Executive Officer of the S.E.R.B and Transport Superannuation Boards.

When I turned 50 years of age, I decided that the changing environment of the public service was too stifling for my liking and I started looking for a job outside the Government Sector. My whole career to that time was with semi-government organisations that were autonomous and managed by Boards whose focus was the efficient delivery of services and what I saw coming was to me going to stifle the innovations of organisations such as SERB.

The staff of the Board gave me a 50th Birthday present and I invited the management team to my celebrations at Chirnside Park. A great time was had by all, with my Chairman Peter Shepherd giving the toast.



50th Birthday Greetings


All funds under management for the various superannuation funds administered by the Board under the control of Investment Manager Nicholas Marchello continued to give rates of return well above the median. The investment of several million dollars with the Pyramid Building Society were redeemed just before the financial crash of the Building Society.


The SERB and Transport Superannuation Boards continued to administer these funds until the Kennett Government consolidated all Public Sector Superannuation and transferred the administration of both funds to the Essential Services Superannuation Board of Victoria.
I applied for a couple of positions with Insurance Companies and was on the short list of one when I was approached by Tony Touhey, the elected Employee Representative on the Transport Superannaution Board and Federal President of the Municipal Officers Association, to ask me whether I was interested in the position of C.E.O. of the Trustee Company of an Industry Superannuation Fund that had recently been created by the Australian Chamber of Manufacture (ACM) in partnership with the Australian Council of Trade Unions (ACTU).



My workstation


The name of the fund was “The Australian Retirement Fund” (ARF) and the office was in St Kilda Road. This was the first that I knew of the new industry fund, though I had earlier read about “CBUS” that was the building industry fund.


I submitted my Curriculum Vitae (CV) to the C.E.O. of the Chamber of Manufacture and attended an interview with Mr Klingberg at his office. I was very interested in what I heard and said I would resign from the Public Service of Victoria if appointed to the position.
I discussed the offer with Ruth and we agreed that this would be the best for me at the time and an opportunity like this would not come up too often.
























Transport Superannuation Fund

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