It is understood Mercer has won an implemented consulting mandate for the $340 million plus New Zealand Defence Force Superannuation Fund (NZDF).
Under the deal Mercer will replace current investment managers ANZ and AMP Capital in one of New Zealand’s largest remaining stand-alone superannuation schemes. The NZDF will also end its existing investment consultancy agreement with Russell once Mercer takes over.
The agreement is something of a role reversal for Mercer, which lost its investment consulting gig with the $500 million NZ Universities Superannuation Scheme last July when Russell landed an implemented consulting contract there.
Mercer already provides administration and registry services to the NZDF.
According to the March 2014 NZDF accounts, the scheme spent about $2.5 million on investment fees, $1 million on administration costs, and $168,000 on consulting fees.
Neither the NZDF nor Mercer was available for comment prior to press-time.
While NZDF scheme comprises three membership categories, all new members must sign up to the complying super option (which makes up the bulk of members and funds). Complying super funds essentially mirror the KiwiSaver regime with members available to access all its benefits except the $1,000 kick-start payment.
According to the Financial Markets Authority (FMA) 2014 annual superannuation fund report, there are only 26 complying super schemes, of which 17 were stand-alone super schemes.
The employer-sponsored superannuation market, which already saw scheme numbers fall from 175 to 156 over the calendar year to December 2013, is expected to decline further as the impact of KiwiSaver and new licensing Financial Markets Conduct Act (FMC) regulations prompt more closures.
While some larger employer funds, such as the NZDF and the Universities schemes, have decided to continue under FMC others are weighing up their options. Last year, for example, the $230 million ANZ Staff Super scheme wound-up , with the bank hoping to roll members into its house KiwiSaver product.
The FMA report shows only 46 of the 156 employer-sponsored super schemes had assets over $50 million as at December 31, 2013.