PM puts Super Fund board on notice over pay rise

Adrian Orr, Chief Executive of the New Zealand Superannuation Fund. New Zealand Herald Photograph by Steven McNicholl

Prime Minister Bill English has put the board of the New Zealand Superannuation Fund on notice following their decision to ignore his advice and award a large pay rise to chief executive Adrian Orr.

English said he was disappointed in the size of the pay rise and the decision would be taken into consideration when it came time for reappointments of board members.

He made the comments after documents showed that he originally declined to approve a proposed increase which could have been as high as 35.6 per cent if Orr had achieved his maximum bonus.

Ultimately Orr received a 15.8 per cent increase to his base remuneration.

On a total remuneration basis (excluding KiwiSaver), he received a 23.4 per cent increase taking his taxable income to $1.03m.

Speaking at his post-Cabinet press conference today English warned that it was not just the Super Fund board he would be looking at.

"There's been other boards that have taken a pretty independent view about remuneration," he said. "The Government has a view and the board's taken a different view. I think any board that takes a different view when it is a 100 per cent subsidiary takes risks about tenure and that will be discussed when the appointments come up."

Asked about the process in context of other roles such as that of Reserve Bank Governor (for which Orr has been tipped), English said he wanted to find "a more stable process" for salary negotiations around significant appointments.

There was only really four public service positions at that level, he said. They were the Reserve Bank, the Super Fund, ACC fund and the Housing New Zealand.

English said he would like to see an overhaul of the remuneration process for those roles and wanted to get away from the annual "haggle" with the board.

He felt there was time to do that before the appointment of a new Reserve Bank Governor next March.

Meanwhile, the New Zealand Superannuation Fund is standing by its decision to give chief executive Adrian Orr a significant pay rise in the 2015/16 year, despite the opposition from then Finance Minister Bill English.

It was revealed last October that Orr was the nation's highest paid public servant and the first to crack the $1 million pay mark.

The New Zealand Super Fund latest annualised rate of return is 9.9 per cent - generating $5.4 billion on $33b in funds.

"The CEO's remuneration is fair, competitive and appropriate given the nature and complexity of the role," Guardians of the Super Fund chairwoman Catherine Savage said in a statement today.

"In determining an appropriate salary for the CEO the Board relied on external market data."

The CEO's remuneration was not high compared to international peers, she said.

English said he accepted that Orr's performance had been strong and among the best in the world, and that "the discussion we've had about the pay is no reflection on the performance of the fund or the professional and managerial competence of the board".

He said understood that boards for these organisations tended to benchmark against international salaries.

But "in our experience there is a long queue of people who want to do those jobs and we just have to find a better balance".

English suggested it might be better to set a level of pay increases at the start of the appointment.