This is an announcement from Air NZ: “We have no update at this time.”
But it appears that the year-long effort to find a new route for the $1 billion Air NZ superannuation scheme has been delayed; indefinitely.
As reported here last year, Air NZ put its KoruSaver scheme out for review in September 2018 with a mandate to bring a step-change to the staff super offer currently flying with the AMP NZ Retirement Trust (NZRT).
KoruSaver offers airline staff a mixture of KiwiSaver and traditional super products while also securing an older employer-sponsored scheme in the hold.
The $150 million Air NZ Super fund transferred to the NZRT in 2016 ahead of the-then impending Financial Markets Conduct Act (FMC) transition deadline. According to disclosure documents, the old-school Air NZ super scheme, now housed in the NZRT Koru balanced fund, reported funds under management of $156 million and 779 members as at June 30 this year.
The Koru fund has averaged an after-fees-and-tax return of 7.82 per cent against the index 9.88 per cent, the latest product update shows. Koru incurs annual management charges of 1.19 per cent plus a $23.40 member fee.
But the Koru fund is a small, and proportionately shrinking, component of the wider Air NZ super scheme that in 2016 boasted about $600 million but is likely to have grown by 50 per cent or more since.
And with over $1 billion under management, KoruSaver looms large in the NZRT, representing about a third of the AMP-owned master trust’s $3.4 billion pool of assets.
It is understood lobbying from the Air NZ youth executive wing and senior pilots triggered the KoruSaver review last year, with Michael Chamberlain, head of consultancy firm MCA, landing the job to steward the request for proposal (RFP) process.
The KoruSaver RFP arrived on the desks of a large number of firms – including other master trust providers such as SuperLife and Mercer and left-field options like Simplicity – last year. While a final call was initially due by last Christmas, the Air NZ review faded into radio silence in subsequent months. Whether AMP has formally retained the Air NZ contract – with possible fee concessions – is not clear but the super scheme is not going anywhere fast.
Of course, the airline has been distracted by larger issues than the fate of its super scheme. Air NZ chief, Chris Luxon, resigned in June sparking an HR emergency. The Australian Financial Review reported earlier in September that former Spark chief, Simon Moutter, and Air NZ chief revenue officer, Cam Wallace, were last-men-standing for the top job.
Moutter denied the rumour.
Regardless, Luxon’s successor should be revealed shortly to relieve Air NZ chief financial officer, Jeff McDowall, who has been on helm since August.
The Air NZ super scheme review has been further complicated by the ongoing ownership uncertainty at NZRT parent, AMP NZ. AMP confirmed this August it would offload its NZ financial services business (including NZRT, KiwiSaver and advice business) via trade sale after abandoning a planned IPO in March.
According to sources, a number of potential buyers have kicked the AMP tyres but, as at this time, there are no further updates.