The standalone employer superannuation world is about to shrink further with one of the largest remaining schemes due to flick the master trust switch.
Members of the long-established BNZ Officers Provident Association (OPA) super fund should find out the scheme’s preferred master trust provider this week with industry sources tipping Mercer as the likely winner.
With a history dating back to 1887, the current OPA operates under its own Act of Parliament, passed in 1971. As at last balance date of October 31 last year, the OPA fund reported over $270 million in funds under management.
Advised by Russell Investments, the current manager roster on the BNZ staff scheme includes Russell, Harbour Asset Management, Mint Asset Management and Fisher Funds.
In a letter to members in May, BNZ chief people officer, Kate Daly, said the bank was changing course on its 2018 decision to build a new workplace savings scheme for OPA members.
“Instead of establishing a new workplace savings scheme, BNZ now intends to set up a plan for BNZOPA members within an existing multi-employer scheme [master trust],” the letter says. “The new plan will mirror your BNZOPA member benefits, but be managed by a third party.”
The letter blames the scheme closure on the 2013 Financial Markets Conduct Act (FMC) that introduced “new regulatory and process requirements for restricted standalone schemes like the BNZOPA”.
“These requirements have increased operating complexity and cost, both of which are challenging for a standalone scheme,” Daly says.
Furthermore, as per the BNZ “be good with money” catchphrase, the master trust option should provide OPA members with more investment choice, better services and “competitive fees”, the letter says.
BNZ closed the OPA to new members last November (with a few exceptions that ended this May) after reviewing its staff remuneration practices – likely triggered by the Financial Markets Authority (FMA) bank enquiry in 2018.
The bank has introduced a new staff ‘reward’ system, dubbed ‘Value Me’.
Daly says in the staff letter that BNZ put the OPA scheme out to tender in March with a final decision due “by the end of June”.
“We plan to award the contract to the successful [master trust] provider by the end of June, and then submit our request to the FMA for its consent to the transfer,” she says. “You will have at least four weeks to make a submission to the FMA on our plans. Subject to obtaining the FMA’s consent, we currently aim to complete the transfer by the end of September.”
Since superannuation schemes entered the FMC regime in 2016 some four standalone employer funds have closed shop with a few others, including the $170 million NZAS, mulling wind-ups. Many other traditional employer super funds shuttered in the run-up to the FMC deadline.
The NZAS scheme, which serves employees of the Tiwai Point aluminum smelter, put a review on hold last November pending the fate of the overarching business. Tiwai Point owner, Rio Tinto is currently negotiating energy supply contracts with government and electricity suppliers. Rio has threatened to close the smelter unless suppliers discount electricity prices further.
Prior to the broader Tiwai business review, NZAS advisers were expected to recommend a master trust transition.