Guardians of New Zealand Superannuation Take Measured Approach to Investment
POSTED ON: 11 November 2002
The Guardians of the New Zealand Superannuation Fund have begun the task of preparing the strategy, policies and structure needed before they can draw down the Government's capital and begin to invest it.
The funds, which now stand at $1.095bn, are currently held in the Treasury's Debt Management Office at the official cash rate of 5.75% set by the Reserve Bank.
This was revealed at a finance media briefing in Wellington today, during a break in a board meeting of the Guardians, the Crown entity charged with managing the investment of a Fund intended to smooth the future costs of New Zealand superannuation.
The Guardians' board was appointed on August 26 and has met three times to discuss strategy, establish an interim secretariat, and begun building the framework to support its statutory obligations.
Outlining the timetable for activity over the next year, Chairman David May said the search had already begun for a Chief Executive, and legal, tax and investment advisors. He said he expected these appointments to be announced in the first quarter of 2003.
They will also search for investment managers, and custodians to hold the assets on behalf of the Fund. These appointments should be made by the end of September 2003.
"During this time the board will also be considering the key issue of strategic asset allocation and developing investment policies," Mr May said.
By then the statements of intent and of investment policies, standards and procedures required by the NZ Superannuation Act should be well advanced. The investment programme could then begin.
The Guardians expect the funds to be transferred from the Treasury's Debt Management Office to the Superannuation Fund in the September quarter of the year and the investment of the monies to begin at that stage.
Mr May said the Guardians were required to invest the Fund on a prudent, commercial basis consistent with best practice portfolio management, maximising return without undue risk to the Fund as a whole. "The best possible advisors and managers are being sought, and it is probable that the board will also seek further opinions from a range of sources.
"The Board is following proper process and will not rush any of its decisions." Mr May emphasised the long-term nature of the Fund and commented that year-to-year fluctuations were probably inevitable. "Short-term fluctuations need to be kept in perspective. The Guardians' performance needs to be measured over the long term, " he said.
Under the legislation governing the Fund the investment policies must be reviewed at least annually, and published in its annual report to Parliament.