Wylie, Torvaldsen & Torvaldsen v Wa Govt Employees Superannuation Board [1996] HREOCA 41 (20 December 1996)

HUMAN RIGHTS AND EQUAL OPPORTUNITY COMMISSION

SEX DISCRIMINATION ACT 1984 (CTH)

Nos. H96/29 & H96/28

Between:

Alison Wylie, Sylvia Torvaldsen & Olav Torvaldsen

Complainants

And:

WA Government Employees Superannuation Board

Respondent

REASONS FOR DECISION

of

Sir Ronald Wilson

Inquiry Commissioner

Location of Hearing: Perth

Hearing Dates: 28 October 1996

Date of Decision: 20 December 1996

Appearances: The complainants appeared in person.

Alan Sefton of the Crown Solicitor's Office appeared for the respondent.

1. INTRODUCTION

This is an inquiry pursuant to s.59(1) of the Sex Discrimination Act 1984 (Cth) ("the Act") into complaints by Alison Wylie, Sylvia Torvaldsen and Olav Torvaldsen against the Government Employees Superannuation Board.

Mrs Wylie lodged her complaint with the Human Rights and Equal Opportunity Commission ("the Commission") on 13 June 1994 alleging discrimination contrary to s.22 of the Act. Mr and Mrs Torvaldsen lodged their complaint with the Commission on 7 September 1995, also alleging discrimination contrary to s.22 of the Act.

The complainants allege they have been discriminated against on the basis of their sex in the provision of goods and services provided by the respondent. They complain that the reversionary provisions of the superannuation scheme administered by the respondent of which Mrs Wylie and Mrs Torvaldsen are members operates in a discriminatory fashion. Mrs Wylie and Mrs Torvaldsen claim that whilst the spouses of women members of the fund may apply for the benefit on the death of their wife they must show "hardship" to be entitled to any part of the benefit. On the other hand the surviving spouses of male members of the fund receive their husband's benefits without the hardship provisions applying. For example, Mr Torvaldsen claims that whilst he may apply for the benefit on the death of his wife he must show "dependence" to be entitled to any part of the benefit. The respondent asserts that the exemption provided by s.41B of the Act applies in this case with the result that there has been no unlawful discrimination.

On 1 February 1996 the Sex Discrimination Commissioner, being of the opinion that the nature of these matters was such that they should be referred to the Commission, referred the complaints to the Commission for public inquiry.

As I was of opinion that the complaint of Mrs Wylie and the complaint of Mr and Mrs Torvaldsen arose out of the same or substantially the same circumstances or subject matter I determined pursuant to s.61 of the Act to hold a single inquiry in relation to these complaints. The inquiry was conducted by the Commission in Perth on 28 October 1996.

2. THE LAW

The relevant provisions of the Act are:

4. (1) . . .

"services" includes:

(a) services relating to banking, insurance and the provision of grants, loans, credit or finance;

(b) services relating to entertainment, recreation or refreshment;

(c) services relating to transport or travel;

(d) services of the kind provided by the members of any profession or trade;

and

(e) services of the kind provided by a government, a government authority or a local government body;

(2) . . .

5. (1) For the purposes of this Act, a person (in this subsection referred to as the "discriminator") discriminates against another person (in this subsection referred to as the "aggrieved person") on the ground of the sex of the aggrieved person if, by reason of:

(a) the sex of the aggrieved person;

(b) a characteristic that appertains generally to persons of the sex of the aggrieved person; or

(c) a characteristic that is generally imputed to persons of the sex of the aggrieved person;

the discriminator treats the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person of the opposite sex.

(2) . . .

22. (1) It is unlawful for a person who, whether for payment or not, provides goods or services, or makes facilities available, to discriminate against another person on the ground of the other person's sex, marital status,

pregnancy or potential pregnancy:

(a) by refusing to provide the other person with those goods or services or to make those facilities available to the other person;

(b) in the terms or conditions on which the first-mentioned person provides the other person with those goods or services or makes those facilities available to the other person; or

(c) in the manner in which the first-mentioned person provides the other person with those goods or services or makes those facilities available to the other person.

(2) This section binds the Crown in right of a State.

41B. (1) This section applies to a person (in this section called the "member") if:

(a) the person was a member of a superannuation fund immediately before the commencement of this section; and

(b) unless the Commission has, under section 44, granted an exemption from the operation of this paragraph - before the commencement of this section, the person:

(i) had been given an option to obtain non-discriminatory benefits; and

(ii) had not exercised the option in accordance with subsection (5).

(2) This section applies to a person (in this section also called the "member") if:

(a) at any time before the commencement of this section, the person became a member of a superannuation fund; and

(b) at a later time before that commencement, the person ceased to be a member of the fund.

(3) Nothing in Division 1 or 2 makes discrimination against the member unlawful if the discrimination:

(a) is on the ground of the member's sex or marital status; and

(b) is in the superannuation fund conditions.

(4) Nothing in Division 1 or 2 makes discrimination against a person unlawful if:

(a) the person derives, or would, apart from the discrimination, derive, benefits because the member is or was a member of the superannuation fund; and

(b) the discrimination:

(i) is on the ground of the sex or marital status of the member or the person; and

(ii) is in the superannuation fund conditions.

(5) If the administrators of the fund required the member to exercise the option referred to in subsection (1) before the end of a particular period, subsection (1) does not apply unless that period was at least 2 months long and ended before the commencement of this section.

(6) For the purposes of this section, the member is taken to obtain non-discriminatory benefits where, if section 41A applied to the member in respect of the fund, the superannuation fund conditions that relate to the benefits would not give rise to discrimination that is unlawful under Division 1 or 2.

3. THE FACTS

3.1 The pension scheme

Mrs Wylie and Mrs Torvaldsen are members of a pension scheme established under the Superannuation and Family Benefits Act 1937 and administered by the respondent. The pension scheme commenced in 1938. Mrs Wylie has been a member of the pension scheme for about 15 years. Mrs Torvaldsen joined the pension scheme in 1972.

Mr Peter Patroni, Acting Senior Policy Officer for the respondent, gave evidence about how contributions and benefits are formulated. He said:

"Contributions and benefits are based on the number of units a member chooses to purchase. The cost of each unit varies according to age, elected retiring rate and sex of the member.

(i) Age - As each unit of pension has the same pension value, the older one is when a unit is purchased the higher the fortnightly cost.

(ii) Elected Retiring Rate - Members have the choice of two elected retiring rates - 60 and 65. The earlier a member retires the longer the member can expect to receive the pension and the shorter the time the member has to pay for the units taken. Therefore contribution rates to age 60 are higher than those to 65.

(ii) Sex - Rates vary for two reasons:

The different mortality and invalidity experience of male and female members. Women live on average for about 4 years longer than males, and therefore will expect to receive the pension for a longer period. As a consequence their contribution rates are higher.

The rates for male members include an extra cost to fund automatic reversionary cover for spouses. Female rates do not include a component to fund reversionary cover."

Mr Patroni provided the following explanation for the difference in reversionary cover for male and female members:

"The difference in reversionary cover for male and female members was reasonable at the time the pension scheme was introduced (1938) because of the restriction on employment of females in the WA public sector. In Public Service Board departments females were required to resign (and therefore cease membership) when they married.

As the pension was only payable upon retirement, or earlier invalidity or death, very few married women were expected to qualify for a pension. Therefore, it was reasonable (at that time) for female members, most of whom were single at retirement, not to be required to pay for reversionary cover.

Following the relaxation of public service employment conditions for women employees, a reversionary benefit for male spouses, based on genuine dependency was introduced in 1973. Because of its limited application, female contribution rates were not increased and the full cost of the reversionary cover was met by the State Government."

3.2 The new lump sum scheme

Mr Patroni testified that by the 1980's the WA State Government recognised that the pension scheme was no longer a suitable scheme in the changed work environment in the public sector. For example, the scheme did not cater for increased mobility in the workforce, part-time employees or the increasing participation of female employees.

On 15 August 1986 the pension scheme was closed to new members.

On 7 April 1987 agreement was reached between the WA Government and the State public sector employee representatives on the design of the new contributory lump sum scheme ("the lump sum scheme"). Agreement was also reached on the transfer offer to be provided to existing pension scheme members.

The lump sum scheme commenced operation on 1 July 1987.

In May 1987 and again in June and November 1987 information about the new lump sum scheme and the transfer offer was circulated to members of the pension scheme.

The transfer offer that had been made available to pension scheme members in 1987 was made available again to pension scheme members from 1 January 1990 to 31 March 1990.

Neither Mrs Wylie nor Mrs Torvaldsen accepted the offer to transfer to the lump sum scheme.

4. THE EVIDENCE

4.1 The complainants' evidence

Mrs Wylie states that she was offered the option of transferring to the lump sum scheme but she refused because the "two funds are not the same and not equal". Mrs Wylie refers to comments contained in a letter from Shane O'Donohue of the Government Employees Superannuation Board to the Sex Discrimination Commissioner dated 23 November 1995:

"I would point out that despite its discriminatory aspects, the pension scheme was attractive to public sector employees who intended working in the public sector until retirement. Indeed the Board would have recommended to any such pension scheme member over the age of 45 enquiring about the transfer to remain in the pension scheme. The rate of employer contribution in the pension scheme is 22% of salary as opposed to 12 % of salary in the lump sum scheme. However, the individual's preference for either a lump sum retirement benefit or a fortnightly pension was often a major factor in the decision making process."

Mrs Wylie says, "Shane O'Donohue therefore states that males over 45 would have been recommended to stay with the Pension Scheme whereas females, if they wanted a non-discriminatory policy had to move to a scheme which in the super fund's assessment was not as good. This was discrimination against female members again."

Mrs Wylie asserts that the pension fund is still an active fund "changing and refining its role as societal attitudes change". She submits that as recently as December 1995 the pension scheme rules have been amended to redress perceived discrimination against people living in a de facto relationship.

Mrs Torvaldsen said the pension scheme was important to her because as she grew older she wanted a regular sum coming in each fortnight. She felt it would be unethical to transfer to the lump sum scheme, buy a larger house and then go on the pension. Additionally she pointed out that in 1987 the financial climate was not conducive to investing a lump sum. She noted that the Government contributed far more to the pension scheme than to the lump sum scheme and she recalled a newspaper article saying the government would save $100 million with the new superannuation rules. She felt the respondent was very keen for her to transfer.

Mrs Torvaldsen acknowledged that she would have been aware that there was a restriction on the payment to her husband if she stayed in the pension scheme. She says she would have been aware because the leaflets stressed the new scheme was non discriminatory. She said there were no advantages in the lump sum scheme for her. She said, "the lump sum scheme was so dissimilar to the pension scheme that it was not an equal offer".

Mr Torvaldsen said that he advised his wife to join the pension scheme so that "no one will swindle the money away". He testified that the pension scheme was far superior to the new lump sum scheme and pointed to the difference in government contribution as evidence of that. He said that the employer contribution in the pension scheme was 22% whilst in the new scheme the contribution was 12%. He said that as women lived longer than men he believed his wife should remain in the pension scheme and strongly advised her to do so.

Mr Torvaldsen acknowledged that at the time of the first transfer offer in 1987 and again at the time of the offer in 1990 he was aware that if Mrs Torvaldsen stayed in the pension scheme there were restrictions on him obtaining a widower's pension.

4.2 The respondent's evidence

The respondent denies that there has been unlawful discrimination. It asserts that the pension scheme is not covered by the Act or if it is found to be covered by the Act then the exemption provided by s.41B operates to render the scheme not unlawful.

4.2.1 The option to transfer to a non discriminatory scheme

The respondent submitted that the new lump sum scheme was legitimate and a reasonable alternative for members of the pension scheme. Mr Shane O'Donohue who was the Senior Policy Officer in the Policy Division, Department of the Premier and Cabinet (WA) in 1986/87 testified that his main duties were to design and implement new superannuation arrangements for the State public sector. He testified that the lump sum scheme has many advantages over the pension scheme and that that was evidenced by the fact that approximately 80% of pension scheme members transferred to the lump sum scheme. Mr O'Donohue described the two schemes as different in nature, one offering a pension on retirement and the other a lump sum payment. The flexibility of the schemes differed. Pension scheme members have an option to commute their superannuation contributions to a lump sum at the time of retirement. They can take the employer contributions as a pension. Mr O'Donohue asserted that the lump sum scheme was far more flexible as, for example, on resignation there would be no employer contribution for pension scheme members whereas under the lump sum scheme full vesting and contributions would occur. Similarly, in the event of redundancy a much greater benefit would be available under the lump sum scheme.

Mr O'Donohue acknowledged that for some people the pension scheme would be more financially attractive than the lump sum scheme. He said, "Generally speaking people over the age of 45 have a very low experience of changing employment. Consequently, for persons in that category, if they intended to continue in full time employment until retirement and there was low prospect that they would move to part time or be made redundant, the benefits under the pension scheme were likely to have a greater net financial value."

However, Mr O'Donohue asserted that the choice of transferring to the new scheme depended on personal circumstances and preferences and that "many members in all age categories elected to transfer and obtain a lump sum payment". He noted that, "there was amongst most members a strong preference for obtaining lump sums and increased flexibility. In particular most blue collar employees sought lump sum flexibility as this opened up options such as income splitting to reduce tax and qualify for social security benefits."

4.2.2 The provision of superannuation as a "service"

The respondent submitted that superannuation that is the subject of a statutory scheme is not a service as defined in s.22 of the Act. The respondent draws attention to the fact that the comparative Equal Opportunity Acts in South Australia and Western Australia specifically exclude superannuation from the definition of service and that the Commonwealth Disability Discrimination Act 1992 defines service to specifically include superannuation. The respondent submits that superannuation would only come within the definition of insurance (which is specifically covered in the definition of service in the Act) in a limited scope in the context of a life insurance scheme.

The respondent also drew the Commission's attention to a decision of the High Court of New Zealand - Coburn -v- Human Rights Commission [1994] 3 NZLR 323 in which Thorp J at 335 held that superannuation came within the ordinary meaning of the phrase, "goods, facilities or services" in s.44 of the Human Rights Act 1993 (NZ). The respondent submits that the circumstances of Coburn's case are different in that the employment provisions of the Human Rights Act 1993 (NZ) apply to persons acting or purporting to act on behalf of the employer whereas in the Sex Discrimination Act 1984 the employer is liable.

5. FINDINGS

5.1 The provision of superannuation as a "service"

The respondent does not dispute that superannuation may be a service in terms of s.22 although it does submit that where a statutory scheme is involved s.22 would not apply.

In Coburn -v- Human Rights Commission Thorp J found that in terms of the Human Rights Act 1993 (NZ) "superannuation" comes within the ordinary meaning of the phrase, "goods, facilities or services". Although his finding is made with reference to the NZ legislation I believe it could be equally applied to the Act. The fact that s.41B provides that in certain circumstances "nothing in Division 1 or 2 makes discrimination against the member [of the superannuation fund] unlawful" supports the view that superannuation comes within the definition of service. Division 1 concerns discrimination in work. Division 2 concerns discrimination in other areas - education; goods, services and facilities; accommodation; land; administration of Commonwealth laws and programs; and application forms etc. Accordingly, the reference to Division 2 in s.41B would seem most likely to be a reference to service. The fact that the respondent is a statutory body or that the scheme is a statutory one does not alter the fact that the respondent is providing a "service" in the ordinary meaning of that word.

Although, as the respondent submits, other legislation might either specifically include or exclude superannuation in the definition of service that may not be of great significance as that might be explained by reasons particular to that legislation. For example, the Equal Opportunity Act 1984 (SA) provides an exhaustive definition of service which does not include "superannuation", however, that Act provides a discrete ground of superannuation discrimination. The fact that the Disability Discrimination Act 1992 (Cth) specifically includes "superannuation" in its inclusive definition of service can be seen as confirming that superannuation is a "service" in the ordinary meaning of that word.

5.2 The option to transfer to a non discriminatory fund

Having found that superannuation is a service in terms of s.22 of the Act and as the respondent concedes that the pension scheme is discriminatory in its operation I must now consider whether the exemption provided by s.41B of the Act applies.

Mrs Wylie and Mrs Torvaldsen asserted that the option offered by the respondent to move from the pension scheme to a non discriminatory lump sum fund was not a real option. It was not a real option because for them it would be financially more worthwhile to remain in the pension scheme and because for their purposes the pension scheme was in other ways more convenient and attractive - it offered regular payments and was free of the risk that is associated with the investment of a lump sum.

The respondent submitted that all that was required by s.41B was that the member be given the option to join a new fund that was non discriminatory. It submitted the new scheme did not need to be a pension based scheme - the legislation did not require that there be an absolute equivalent offered. It said that it was implicit that a trade off occurs and that a new scheme may give reduced benefits. It submitted, however, that the new scheme did need to be a bona fide legitimate scheme.

The wording of s.41B(1) is straightforward. It provides:

(1) This section applies to a person (in this section called the "member") if:

(a) the person was a member of a superannuation fund immediately before the commencement of this section; and

(b) unless the Commission has, under section 44, granted an exemption from the operation of this paragraph - before the commencement of this section, the person:

(i) had been given an option to obtain non-discriminatory benefits; and

(ii) had not exercised the option in accordance with subsection (5).

There is no dispute that Mrs Wylie and Mrs Torvaldsen were members of a superannuation fund immediately before the commencement of the section and were offered but did not exercise an option to transfer to a new fund which would afford them non-discriminatory benefits. It is clear they were given the option to transfer to a legitimate non-discriminatory scheme. The legitimacy of the scheme is evidenced by the fact that around 80% of pension scheme members accepted the offer to transfer to the new scheme. For a number of reasons it did not suit Mrs Wylie and Mrs Torvaldsen to transfer. Their decision is perfectly understandable. They assert that the pension fund is an "active" fund and therefore should be amended to remove the discriminatory provisions. However, the legislation does not provide that in order for s.41B to be satisfied the member of the discriminatory fund must be allowed to remain in their current fund with the discriminatory provisions removed or that the member be offered benefits in a new fund that are otherwise identical or equally attractive. The legislation simply provides that in order for for the respondent to gain the benefit of s.41B an option be provided to a member of a discriminatory fund to obtain non-discriminatory benefits. I accept the scheme was bona fide.

Accordingly, I find that in terms of s.41B Mrs Wylie and Mrs Torvaldsen were offered an option to obtain non-discriminatory benefits. In view of that finding Mr Torvaldsen's complaint must also fail as the requirement for him to show dependence in order to be entitled to any part of the benefit is attributable to the choice taken by Mrs Torvaldsen to remain with the discriminatory fund although non-discriminatory benefits were available.

5.3 Other issues

The respondent addressed on the issue of whether the discrimination had yet occurred, who the proper complainants were and whether s.13 operated to exclude the complaint from coverage of the Act. Having found that the provision of superannuation is a service under s.22 of the Act and that an option to obtain non discriminatory benefits was offered in accordance with s.41B of the Act I find that there has been no unlawful discrimination. Accordingly, there is no need to address these other issues.

6. CONCLUSION

Under s.81 of the Act I dismiss the complaint.

Dated this 20th day of December 1996

Ronald Wilson

President