The $170 million NZAS superannuation scheme has put an outsourcing review on hold pending a final call on the fate of the Rio Tinto-run Tiwai Point aluminum smelter.
Originally known as the Rio Tinto New Zealand Retirement Fund, the NZAS scheme was set up as a workplace savings scheme for Tiwai Point employees.
According to the most-recent NZAS newsletter, last September “Rio Tinto advised the Trustee Directors that it had commenced a review of the Fund’s structure and operations, and that an external consultant had been engaged to assist with this process”.
An NZAS report published in September also notes the review would explore “potential alternative retirement savings platforms”.
The most likely outcome would see NZAS assets shift to a master trust.
However, in October Rio put the entire Tiwai Point smelter business under review ahead of negotiations with electricity suppliers. Tiwai consumes about 12 per cent of all NZ electricity.
The smelter is also the single- biggest employer in Southland with about 1,000 workers currently on the payroll. Tiwai earns the region some $500 million each year in salaries and contractor income.
Rio is expected to make a decision on the Tiwai smelter by March this year with the retirement scheme review on ice until then. The ASX-listed mining behemoth owns 80 per cent of Tiwai with Japanese firm Sumitomo Chemical holding the remainder.
The November 2019 NZAS scheme newsletter says:
“We have now been advised that the review of the Fund has been placed on hold until after a strategic review of [Tiwai Point] has been completed, and that an update on the review of the Fund will be provided in the first quarter of 2020.
“In the meantime, the Trustee Directors will continue to monitor any developments and the Fund will continue operating as usual.”
Tim McGuinness is licensed independent trustee for the NZAS fund.
The scheme has five underlying managers: AMP Capital for fixed income and cash; ANZ (global equities); Mercer (real assets); with Nikko and Harbour sharing Australasian shares duties.
Since the traditional superannuation sector fell under Financial Markets Conduct Act (FMC) rules in 2016 three stand-alone employer schemes have shuttered with more – including NZAS – expected to drift into master trusts over the next few years as compliance costs bite.