Getting a full report
Superannuation Board’s Statement lacks in-depth analysis
The release of the Superannuation Board’s Statement on the performance of the Cook Islands Superannuation Fund makes for disconcerting reading. The statistics and graphs reveal how much we have lost and the global recession cops the blame
The Board should not accept at face value what the investment advisors have done as this could leave the fund open to further unpredictable losses.
Saying they are ‘passive balance’ or ‘active balanced’ or ‘growth funds’ or even ‘NZ shares’ has no meaning to the layman (most of us) and contributors need more analysis of the type of investments, where funds were invested and why they lost value.
These are good questions in light of the fact the concerns expressed by the Guardians of the Superannuation Fund in New Zealand in a briefing to NZ Finance Minister, John English in December 2008 on the state of the NZ market.
The report only became public knowledge a week ago in a NZ Herald report dated Friday 31 July 2009 called “Guardians wary of distorting market” which sourced their story from a current affairs website: pundit.co.nz after it had complained to the Ombudsman of censorship of their website.
The NZ Herald said that information requested under the Official Information Act had revealed that the guardians of the NZ super funds opposed the NZ government plans to invest 40% of their funds into NZ investments.
The guardians say that investing in New Zealand has ‘significant challenges in finding enough suitable investments to meet the target’ and that ‘unless this market grows substantially, it will become increasingly difficult to maintain our current percentage exposure without impacting market liquidity and price’.
Apparently, they fear that even to maintain the current exposure, the market must grow at the same rate as the fund. This has not happened with the report saying that the NZX-5os market capitalization ahs shrunk since the fund started investing in October 2003.
The private equity market (in NZ) is ‘even more problematic’ and ‘institutional quality offerings were few and far between’. Even the local bond market came under fire which is ‘relatively small, illiquid, undiversified and poorly priced compared with comparable credit opportunities globally.’
Apparently, the only area the guardians are interested in are increasing investments in infrastructure assets. However, even then, they have warned that future governments could face public resistance in the sale of such assets which it comes time ‘to realize the asset’.
Since then the government has suspended contributions to the NZ Super Funds for up to 11 years and dropped their requirement to increase NZ investments.
In light of the NZ Herald report on their super problems, the CI Herald will be interested in viewing the 2008 annual report and financial statements which is ‘currently under review by accounting and consulting firm, Ernst and Young’.
