The $85 million NZ Harbours Superannuation Scheme has dropped out of tripartite talks to create a mega-maritime fund.
In a letter to members, NZ Harbours scheme chairman, David Stevens, says merger talks with the Seafarers Retirement Fund (SRF) and the Waterfront Industry Superannuation Fund (WISF) foundered on governance issues.
Stevens told NZ Harbours members if the three schemes merged “cost savings may be possible, mainly by reducing administration costs and investment management fees resulting in an increase in returns to members”.
However, he says trustees from the three schemes – as well representatives from the Rail and Maritime Transport Union (RMTU) and the Maritime Union of NZ (MUNZ) – could not agree on a governance structure despite acknowledging that “a satisfactory legal structure could be developed that would fully protect the existing interests of the members of all schemes”.
“Following discussions with my fellow trustees and the RMTU [NZ Harbours scheme sponsor] it was agreed that a suitable governance structure to fully protect the interests of our Plan, its members and the RMTU was not a possibility,” Stevens says in the letter.
It is understood the SRF and the WISF – which both operate under the MUNZ umbrella – were continuing merger negotiations. David Young, WISF chair, said he was unable to comment.
If a deal goes ahead, the conjoined schemes – which include both traditional super and KiwiSaver options – would manage over $200 million with the WISF making up about 70 per cent of the total.
The SRF and WISF traditional super schemes reported funds under management of $63 million and $132 million respectively as at March 31 this year while their KiwiSaver avatars managed $1.7 million and $7.8 million.
Both schemes share the same administrator – the recently-sold Aon – but a different underlying manager mix. SRF managers include AMP Capital, Devon, Pathfinder and Nikko while the WISF uses AMP Capital, ANZ, Legg Mason, Milford and Standard Life.
Stevens says in the NZ Harbours letter the merger talks were prompted by compliance costs associated with the Financial Markets Conduct Act (FMCA), which will come into full effect next December.
“The Financial Markets Authority [FMA] and various consultants to the superannuation industry also encouraged ‘smaller’ schemes to review options before looking to implement FMCA compliance,” he says.
NZ Harbours closed its $3.8 million KiwiSaver option this May. Stevens told members the board had also considered shifting the traditional employer fund scheme into a master trust.
“Following consultation with the RMTU and the trustees a strong preference was expressed for the Plan to retain its status quo and become FMCA compliant,” the letter says. “This was agreed.”