NZ Post is set to wind down its long-running in-house superannuation scheme to follow the well-trod path of traditional employer-based funds to a master trust solution.
After gaining approval from the Financial Markets Authority (FMA) this month, the $125 million NZ Post super scheme will start transferring member funds across to the Mercer super trust during November.
Mercer is the incumbent administration manager for the NZ Post retirement plan.
Established in 1987 in Post Office days, the fund was earmarked for a master trust destiny due to “increasing costs involved in maintaining the Plan and the natural falling rate of membership of the Plan, by its nature as a closed scheme”, according to official documents.
The NZ Post scheme closed to new members in 2010, ending a generous employer retirement savings contribution of 7.5 per cent (down from a high of 10 per cent).
As at the end of March this year, the scheme boasted 964 members – including 773 contributors – compared to 1,077 at the same date in 2023.
Earlier this year NZ Post revealed “significant job losses” lay ahead as the government-owned business continued to suffer from the decline in paper mail demand and increasing competition for parcel delivery.
David Walsh, NZ Post chief, told media at the beginning of October that the company had “opened expressions of interest for voluntary redundancies, as well as asking for expressions of interest for a four-day working week” following a review. About 100 staff are expected to go in the postal cull.
Mercer will offer postie scheme members a choice of nine investment options compared to just three under the current employer-based funds with significant fee reductions to boot.
Currently, the NZ Post fund invests in direct local assets while outsourcing global asset classes to three exchange-traded funds – including two BlackRock iShares products and the Vanguard Total World Fund. About a third of the scheme assets ($43 million) was held in cash as at March 31.
In June the postal employer fund also dropped external investment consultant, EriksensGlobal, ahead of the planned master trust transition.
As at the end of June, the Mercer master trust reported about $700 million under management, according to the EriksensGlobal quarterly sector survey.
NZ Post also shuttered its complying superannuation fund section – a KiwiSaver-like bolt-on – in July this year, noting the 57-member subset had “become too small and costly to run”.
It is understood, veteran NZ Post scheme manager, Nick Economu, will step down post transition.
Almost 10 employer-based super schemes have closed down since the sector fell under the Financial Markets Conduct Act regime in 2016, leaving about 60, mostly closed funds, remaining.
Last week, the FMA released new guidance on registered investment scheme wind-up procedures.