In spite of a looming ownership change AMP has won a small master trust mandate as an almost 20-year old employer superannuation scheme closes shop.
The AMP NZ Retirement Trust (NZRT) picked up the $21 million Douglas Pharmaceuticals scheme last month, which will bring the market-leading master trust close to $3.5 billion in funds under management (FUM).
According to the Douglas Pharmaceuticals fund final annual report, the “member’s balances are to be transferred to AMP Master Trust at the end of November”.
“The Scheme is then to be wound up,” the report says.
Currently, the Douglas fund, launched in 2001, features JMI Wealth as investment manager, with Aon Hewitt as consultant while Link Market Services provides administration services. Former Mercer actuary, Robert Schoonraad, serves as licensed investment trustee for the scheme.
Established in Auckland in 1967, Douglas now employs about 700 people. The company was also an early-adopter of the employer super KiwiSaver bolt-on option that fell into oblivion, along with about 10 other corporate schemes that gave it a crack.
The Douglas scheme is one of three employer super funds that have folded since the sector transitioned to the Financial Markets Conduct Act (FMC) regime in 2016. Publishing house, Reed Elsevier, and the Tasman Kaingaroa, closed their schemes in 2018 and April this year, respectively.
About 80 traditional employer super schemes remain on the register but several are re-evaluating options after three expensive and compliance-heavy years under FMC.
In September, for example, the $120 million NZAS scheme (previously, the Rio Tinto NZ Retirement Fund) launched a review with a master trust transfer the likely outcome. The future of Rio Tinto’s entire Tiwai Point aluminum smelter operation (whose employees the NZAS services) was put in doubt, again, last month after the Australian company tabled a possible exit from the business.
AMP remains by far the biggest master trust of the six that could benefit if more employers abandon their old-school super schemes.
However, the AMP NZ financial services business is in the middle of a trade sale process after its Australian parent put the approximately $13 billion KiwiSaver, master trust and financial advice business on the market this August.
According to the EriksensGlobal September quarter master trust survey released last Friday, AMP’s NZRT reported about $3.46 billion under management, up about $53 million over the three-month period. Most of the NZRT growth, though, was likely due to market performance and existing member flows rather than any commercial wins.
And the rest of the NZ master trust market also grew organically during the September quarter… with the possible exception of SuperLife.
The NZX-owned SuperLife master trust saw FUM grow from just under $2.4 billion at June 30 to almost $2.5 billion at the end of September, the EriksensGlobal data shows. All up, SuperLife added about $120 million to its master trust over the three months, equating to a 5 per cent growth rate compared to an average 2 per cent for the remaining five players. It is understood a couple of NZRT clients defected to SuperLife during the quarter.
While the NZ master trust market might benefit from any corporate scheme wind-ups, the sector is largely on stand-by mode.
“Total Master Trust FUM rose by $250 million over the quarter mainly due to member contributions and aggressive single sector fund returns,” the EriksensGlobal September report says.
The survey shows the overall market topped $8.7 billion as at September 30 with AMP, SuperLife and ASB ($1.5 billion) dwarfing the other three rivals, comprising: Fisher Funds ($556 million); Mercer ($517 million); and, Aon ($179 million).