National Australia Bank produced plenty of headlines in Australia and
the UK this morning with its belated but ruthless restructure of the
superannuation entitlements of its 9,000 workers in the UK. The Guardian’sreport included the following:

Finance union Amicus is now intending to ballot the 9,000 staff of the two
banks, which are owned by National Australia Bank, over plans to change the
scheme to one based on average earnings. The group plans to inject £100m into
the pension scheme as part of the planned changes. All final salary benefits
accrued up to March 31 2006 will not be affected.

Not surprisingly, Australian papers such as The SMH
were less concerned about the ethics and IR elements of the move,
preferring to focus on the financial aspects. Given the billions of dollars that NAB has made from its UK adventures
over the past 15 years, it is quite outrageous that they have allowed a
$1 billion superannuation deficit to emerge.

When NAB sold its Irish banks
for $2.5 billion in December 2004, it gloated about making a $1.1
billion profit. Naturally, the Irish pensions had to be fully funded
for the sale, so why on earth didn’t they use some of the proceeds to
plug the holes in the pension schemes of the remaining UK banks?

This $234 million injection is contingent on the bank’s staff approving
the cut in future payments. It shouldn’t be contingent on anything
because the scheme should be fully funded. How on earth did NAB’s board
tolerate this blow-out emerging over the years as they regularly
announced profits of $4 billion a year?

Unless you are flat broke, employee entitlements should be fully funded
and fully provided for in the accounts. The Howard Government has been
doing exactly the same dodgy thing as NAB over the last 10 years,
announcing record
budget surpluses whilst allowing unfunded super to blow-out by $15
billion to
$90 billion. However, at least they are belatedly moving to plug this
hole with the Future Fund, which should actually be called the Past
Fund.

If the Howard Government had adopted the same tactic as NAB, they would
have simultaneously insisted on cutting future benefits as a condition
of establishing the Future Fund.