Hurt on duty pension examined
Pool 3 – the husband’s s.10 pension
- By far the most difficult task is assessing contributions to the husband’s s.10 pension.
- Once such a pension is awarded it is payable to a member for life and the issue of retirement becomes irrelevant. However the payment is intended to provide to a former police officer who can no longer work as a police officer with both income until retirement age and income in retirement and it is therefore commonly accepted that these pensions have both a compensation component and a retirement component.
- In T & T, a hurt on duty case decided by Watt J in 2006, Mr B of Superannuation Splitting segmented the husband’s s.10 interest into two separate components namely a non-commutable indexed pension to the age of 60 with a partial right to commute at age 55, and a commutable indexed life pension after the age of 60 and provided a capitalised value for each component which Watt J termed the husband’s category 1 and category 2 superannuation interests. 
- In assessing contributions to the category 1 or compensation component Watt J said that:
Between now and his retirement the amount of the husband’s current superannuation interest is not primarily based upon the amount of time that the husband was in the (omitted) pooled fund. It is based on:-
(i) The husband being hurt on duty;
(ii) The circumstances in which the husband was hurt on duty;
(iii) The amount of the husband’s salary at the time that he was hurt on duty.
- Watt J held that the wife could not be taken to having directly contributed to the category 1 interest as it arose out of the husband being injured but had made a contribution to the amount he received because she had supported him in his police career and made one move to assist his career. He assessed the wife as having made a 15% contribution to the Category 1 interest.
- Watt J held that the category 2 interest was different. It represented savings by the parties during their relationship to assist them in retirement. The husband had been in the fund for 10 years before cohabitation commenced and the relationship was 10 years in length and Watt J assessed the wife’s contributions to the Category 2 interest as being 40%.
- Watt J made two separate splitting orders, one to come into effect immediately and one to come into effect upon the husband turning 60 (the husband was 42).
- In the 2008 case of Schmidt & Schmidt the husband’s s.10 PRSA pension was also treated as having two separate components and Watt J again assessed contributions to each component separately and made two separate splitting orders. The parties in that case had a marriage of about seven and a half years and had 2 children. Watt J assessed the wife’s contributions to the compensation component as being 10% and to the superannuation component as being 35%. He again made two separate splitting orders to come into effect at different times.
- After these decisions the Trustee of the PRSA took a stand against the categorisation of s.10 pensions into two components and said that it would not recognise orders which purported to divide the superannuation into two separate categories and would only accept orders providing for a single split and in December 2008 S.14P of the PRSA Fund was amended to provide that if a splitting order was made the value of the entitlement would be calculated and the amount would be immediately paid in full either to the spouse or to a complying superannuation fund.
- Notwithstanding this people grappling with how to assess contributions to S.10 pensions continue to be attracted to the device of valuing the pre-retirement and post-retirement components of the pension and the parties in this case asked Mr P to provide an opinion about the value of these two components.
- At the request of the wife’s counsel using the capitalised value of $1,118,985.31 Mr P valued the pension to age 60 (the compensation component) as having a capitalised value of $458,511.04 and post age 60 (the retirement component) as having a value of $660,474.27
- He said that if a 50/50 division of the retirement component was to be achieved then a percentage splitting order of 29.5% would be required.
- At the request of the husband’s counsel Mr P valued the components on the basis that the appropriate retirement age was 65 and valued the pension to age 65 as $666,333.00 and thereafter at $452,652.19. He said that in this scenario a percentage split of 20.23% would result in a 50/50 division of the retirement component.
- Mr P was cross-examined about the issue of whether 60 or 65 was the appropriate age to use if the pension was to be compartmentalised. He said that to his knowledge the vast majority of police officers retired at 60 but of course this is not something within his areas of expertise and it is also not necessarily the end of the matter when it comes to deciding whether the retirement component should be deemed whether to commence at 65 (the normal retirement age for males born at the time of the husband) or 60.
- The husband did not give any evidence about when he might have retired absent being hurt on duty.
- It is impossible for me to make a definitive finding about the age which should be used if the pension is to be compartmentalised.
- Another difficulty was that the wife’s counsel took issue with the value assigned to the compensation component in either scenario. He submitted that the value of $458,511.04 was too high and relied on the fact that the husband had asked the Trustee to calculate the commutation available to him pursuant to s.10C of the PRSA and that the Trustee calculated the “Workers Compensation” component of the pension which could be commuted at $243,484.43 which was paid to the husband. He submitted that this represented the compensation component of the pension and that the balance of $875,500.88 should be treated as the value of the retirement component.
- I cannot determine that the s.10C payment represents a redemption of an equivalent amount which would have been payable to the husband pursuant to s.10 for some of the period of his pension. It represents the amount he might have received under the Workers Compensation Act for a certain period but the husband may receive more as a result of a pension (which is a 72.5% of his wage) than he would have done pursuant to the Workers Compensation Act 1987. I am not knowledgeable about Workers Compensation law and cannot be expected to come to a conclusion about this matter without evidence.