Former Qantas pilot loses his court fight to have his superannuation recalculated for leap years

Should leap years be accounted for in superannuation calculations? A former Qantas pilot thought so but the Federal Court didn’t agree.

The Federal Court has sided with the Qantas Superannuation calculations.

A former Qantas pilot has lost a court bid to have his superannuation recalculated at a higher rate, failing to argue he was duped out of about one day’s worth of payment for every leap year he worked with the airline.

Federal Court judge David Yates handed down his decision in Peter Muffet’s case on Thursday, concluding the Qantas Superannuation calculation of his final average salary – worth $218,400.83 – was in line with the trust deed.

“Whilst I have some sympathy for the applicant’s position, I am not satisfied that AFCA’s determination was legally unreasonable or otherwise affected by error,” Justice Yates said.

Mr Muffet’s defined benefit was calculated based on an annual period comprising 26 fortnights, being 52 weeks or 364 days.

But he argued this was wrong because “his entitlement should have been based on the days in a year – being 365 days or, if a leap year, 366 days”, the judgment says.

Mr Muffet, who was retrenched in December 2020, protested to the Australian Financial Complaints Authority that he had been financially disadvantaged by QSL’s calculation.

After AFCA agreed with QSL’s method, Mr Muffet appealed to the Federal Court to challenge the outcome.

Justice Yates said Mr Muffet considered the calculation of his final average salary to be financially disadvantageous because “26 fortnights represent only 364 days (26 x 14 = 364) in a given calendar year or financial year”.

According Mr Muffet’s written submissions, as noted in Justice Yates’ judgment, he acknowledged the difference to his hip pocket would be minor.

“Whilst the quantum of financial disadvantage is not life-changing, the applicant is concerned to ensure that the trustee properly performs its functions in respect of the fund’s members, including many thousands of employees of Qantas Limited (and its related entities),” Mr Muffet said.

After he complained to QSL with no outcome, Mr Muffet escalated the matter to AFCA where he argued his superannuation salary should have been calculated on the basis of 365.25 days per year.

He then changed his argument slightly, Justice Yates said.

“(Mr Muffet argued) QSL should have calculated his annual superannuation salary by determining a daily amount derived from the superannuation salary as advised by Qantas, and then applying that amount to the number of days in each year, either 365 days or 366 days, depending on the years chosen for the calculation of his final average salary,” he said.

“In the applicant’s case, one of the years was a leap year (year three). In Annexure 1 to his written submissions in reply, the applicant calculated his final average salary to be $219,206.79, using this methodology.”

During a previous hearing, the court heard Mr Muffet was a member of the defined benefit plan, which was closed to new staff in 2003.

Justice Yates ultimately agreed with AFCA’s reasoning that there was no specified way as to how annual remuneration should be calculated in the trust deed.

“AFCA did not need to be satisfied that the calculation that QSL was entrusted to perform yielded an optimal or the most advantageous or most beneficial outcome for the

applicant,” he said.

“The only question for AFCA was whether QSL’s decision to adopt the methodology it did was fair and reasonable in all the circumstances. AFCA was satisfied.”

A spokesman for Qantas Super said it welcomed the court’s decision.

“The Qantas Super Trustee is acutely aware of the privilege and responsibility it has in managing the superannuation and retirement savings of Qantas Super’s members and will always put members’ best financial interests first,” he said.