The NZ employer master trust sector shrank about $2 billion over the three months ending March 31 but the decline is only half as bad as it seems.
According to the latest EriksensGlobal quarterly survey, total NZ master trust funds under management (FUM) tumbled to just over $6.8 billion at the end of March compared to almost $8.9 billion recorded in the December 31 numbers.
However, about $1 billion of the paper loss reflects a restatement of the SuperLife master trust figures, which previously also included the group’s KiwiSaver FUM.
After correcting the data in the March survey, SuperLife FUM fell from almost $2.6 billion at the end of 2020 to $1.1 billion on March 31, dropping the NZX-owned master trust down a spot to third-largest in the competitive pool of six providers.
Post the now-adjusted historical reporting quirk, COVID-19 market losses cut $1 billion – or about 13 per cent – off the total master trust sector during the latest quarter as overall FUM slipped from about $7.9 billion at the end of 2019 (using updated December 31 data) to $6.8 billion by March 31.
EriksensGlobal head, Jonathan Eriksen, says in the March report that: “Total Master Trust FUM fell by $1.06 billion over the quarter. Only Conservative funds saw a positive average return over the one-year period.
“The one year weighted average return for all Master Trust Growth funds fell to -5.9%; Balanced funds fell to -3.2%; and Conservative funds saw a return of 0.2%.”
Aside from the SuperLife glitch, the employer super master trust has been steadily growing FUM over the last decade as solid market returns counter declining membership. Nonetheless, the sector still managed workplace savings on behalf of more than 87,000 members last year, according to Financial Markets Authority (FMA) figures.
But rising coronavirus redundancies could trigger a surge in withdrawals from employer super accounts, which are not restricted by the 65-year age limit that applies to KiwiSaver schemes.
Generally, members in traditional employer super funds can access their savings when leaving their jobs – voluntarily or not.
For example, figures from the Koru Balanced Fund, part of the Air NZ workplace savings scheme managed in the AMP NZ Retirement Trust (NZRT), do show a blip in exits over the March quarter as membership fell by more than 40 in the three-month period to close at about 740.
The Koru Balanced Fund represents over 10 per cent of the total estimated $1 billion Air NZ super savings managed in the NZRT. Air NZ has announced plans to lay off almost 3,750 staff (including close to 400 pilots) in the wake of the COVID-19 crisis that has decimated the global travel industry.
Air NZ embarked on a review of its superannuation arrangements in 2018 that appeared to stall late last year, sparked by changing management priorities and uncertainty about the ownership of the AMP NZ wealth business. Last week AMP canceled the sale of the NZ wealth arm, citing market volatility.