After a relatively short engagement, two of New Zealand’s water-based unions have agreed to merge their respective superannuation and KiwiSaver schemes under a single flag of convenience.
Following the merger, due to take force by April 1 this year, the Seafarers Retirement Fund (SRF) and the Waterfront Industry Superannuation Fund (WISF) will unite as the Maritime Retirement Scheme (MRS) with a collective funds under management of about $200 million.
The deal would also see the unions’ two KiwiSaver schemes conjoined as the Maritime Industry KiwiSaver Scheme (MKS).
David Young, WISF chair, said MRS had appointed Melville Jessup Weaver (MJW) as administrator. Currently, both schemes are administered by Aon, which is looking to transfer its superannuation and KiwiSaver clients to Link.
“We did an evaluation [of Link and other suppliers] and decided to go with MJW as administrator,” Young said.
He said the combined scheme was preparing documents – including the new product disclosure statement (PDS) and Statement of Investment Policy and Objectives (SIPO) – in readiness for Financial Markets Conduct Act (FMC) compliance.
Costs associated with impending FMC were the main driver of the merger, according to a letter to members of both schemes published in the December 2015 issue of union magazine, ‘The Maritimes’.
“Small schemes of less than $50-100m are not expected to be viable under the new FMCA environment and SRF is currently less than $70m,” the letter says. “By merging WISF and SRF, there will be significant administration and investment cost savings with the result being that the MRS is expected to be a cost-effective superannuation fund…”
As reported by Investment News NZ (IN NZ) last year, the $85 million New Zealand Harbours super scheme pulled out of tri-partite merger talks citing concerns about the proposed governance structure.
Combined funds would be pooled once the merger was complete but current members of both schemes would still be able to access existing benefits, including pensions, the member letter says.
The two WISF portfolios and the SRF market-linked fund would remain as separate investment options for the time-being,
“The Balanced Fund of the WISF and the Market-Linked Fund of the SRF are very similar and it is envisaged that eventually these will be rationalised so that the same option will be offered to both groups of members,” the letter says. “Similarly, it is envisaged that consideration will be given to offering a Conservative Portfolio to seafarers.”
Young said the underlying investment rationalisation process would begin after the April 1 launch date for MRS.
“We’ll begin a manager review soon after that,” he said.
The SRF and WISF traditional super schemes reported funds under management of $63 million and $132 million respectively as at March 31 last year while their KiwiSaver offshoots managed $1.7 million and $7.8 million (both of which invest in the respective underlying super funds).
SRF managers include AMP Capital, Devon, Pathfinder and Nikko while the WISF uses AMP Capital, ANZ, Legg Mason, Milford and Standard Life.
MRS would have 10 trustees, the merger letter says, comprising: four members each appointed by the unions and employers; and independent chair appointed by the trustees, and; a licensed independent trustee as required under the FMC.