International fund managers could be the big winners from the New Zealand government's decision to open up the NZ$3.5bn (US$1.44bn) Government Superannuation Fund to global share markets.
The decision, announced by the New Zealand Minister of Finance Michael Cullen, will see the fund for New Zealand public servants diversify its investments to include an exposure to international bonds and equities for the first time.
The fund, which has been closed to new members since 1990, is currently invested entirely in New Zealand government and corporate bonds.
According to a spokesperson for the Minister of Finance, the fund’s more adventurous asset allocation is expected to earn the fund between $14m and $40m a year more than its current investment portfolio.
The announcement comes as the New Zealand government has committed the first $600m to its proposed New Zealand Superannuation Fund, a move that is also likely to create opportunities for international managers.
The new fund is to be set up as an independently managed pension scheme funded by the government in an attempt to offset future age-related pension costs.
However, while the scheme is scheduled to be operational by July 1, the government is yet to find enough support for the new fund in the parliament, where it needs the backing of minor parties to pass relevant legislation.
The initial $600m contribution, along with a further $1.2bn earmarked for the new fund next year, is likely to remain with the Government’s Debt Management Office until the New Zealand Superannuation Fund can be established.
Occupational pension provision has continued to grow in value, but there remains large variance in incomes across the pensioner age group, according to latest government data.
Defined benefit (DB) schemes could have an aggregate surplus by 2021 under Pension Protection Fund (PPF) projections, its strategic plan for 2018 to 2021 reveals.
Investment consultants are failing to recommend products that outperform net of fees, the Competition and Markets Authority (CMA) has said as its investigation into the market continues.
This week's top stories included coverage of the much-anticipated defined benefit (DB) white paper and the sector's reaction.