Sound governance is critical to maintaining stakeholder and public confidence in the Guardians and the Fund. As an autonomous Crown entity, the Guardians is legally separate from the Crown. This means that, although we are still accountable to the Government, we have operational independence regarding investment decisions and are, instead, overseen by an independent Board.
Board members are appointed by the Governor General on the recommendation of the Minister of Finance. The Minister’s recommendation follows nominations from an independent nominating committee and consultation with representatives of other political parties in Parliament. Essentially, this means that the Guardians operates at ‘double-arm’s-length’.
At any given time our Board must consist of five to seven members – all chosen for their experience, training, and expertise in the management of financial investments. Each Board member is appointed for a term of up to five years, after which they may be reappointed.
The Guardians’ overarching responsibility is to invest the Fund on a prudent, commercial basis. Accordingly, the Guardians is responsible for establishing investment policies, standards and procedures for the Fund, including determining the proportion of money allocated to various types of investments and appointing external investment managers to manage different parts of the Fund.
The Minister of Finance may give directions to the Guardians regarding the Government’s expectations of Fund performance – as long as directions are consistent with the duty to invest the Fund on a prudent, commercial basis. The Guardians must have regard to any direction from the Minister and all directions must be tabled in Parliament.
Independent Reviews of Performance
The Guardians is subject to ongoing monitoring from Treasury as well as regular reviews from auditors on behalf of the Government. Every five years there is an independent review of how effectively and efficiently the Guardians is performing – with the first review conducted in July 2004. The terms of the review are set by the Minister of Finance who also appoints an independent person to conduct the review. The report is then presented to Parliament.
In 2008 the Office of the Auditor General also conducted a review of the Guardians’ governance and management of the Fund.