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New Zealand Harbours Superannuation Plan

New Zealand Harbours Superannuation Plan. An update. June 2012. Origins of the Plan. Cash accumulation scheme established in 1985 by the employers and unions in the New Zealand Harbour Industry

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New Zealand Harbours Superannuation Plan

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  1. New Zealand Harbours Superannuation Plan An update June 2012

  2. Origins of the Plan • Cash accumulation scheme established in 1985 by the employers and unions in the New Zealand Harbour Industry • Aim was to provide a better and more flexible means of saving for retirement than membership of the National Provident Fund • Original union was Harbour Workers which amalgamated to form Rail & Maritime Transport Union in 1995

  3. Benefit entitlements • Retirement, withdrawal, death or disability, ill-health and resignation benefits provided for members and their dependants • Retirement – total of member and employer accounts; assistance with annuity purchase decision if required • Death or Total and Permanent Disablement – total of member and employer accounts plus an age-dependent multiple of salary • Ill Health or Retrenchment – total of member and employer accounts • Resignation – total of member and employer accounts

  4. Contribution details • Member generally contributes minimum percentage of earnings (defined as basic salary plus overtime and bonus) directly from pay • Member can be at nil contribution if employer agrees to additional contributions • Member can make additional voluntary lump sum or regular contributions • Employer generally contributes $1 for each $1 contributed by the member to a maximum percentage of earnings • Employer Superannuation Contribution Tax is deducted from employer contributions at the appropriate rate • Net contributions are credited to the member account and to the employer account in the name of the member

  5. Investment overview • The Scheme is invested in a balanced mix of assets comprising NZ and Offshore equities and bonds, properties, and cash. • Trustees: • Set proportion of funds in each asset class • Set investment objectives/policy and monitor performance. • Select and review investment managers. • Investment objectives • Minimum real rate of return after tax of 2.5% p.a. • An average return compared to the balanced funds in the MJW investment survey. • The assets of the KiwiSaver Scheme will be invested with the assets of the Superannuation Scheme.

  6. Fund managers • AMP Capital Investors New Zealand: • Owned by large Australian parent company, $11.7 billion of managed funds. • Actively manages 23% of Plan assets in their NZ shares, NZ bonds and Property funds. • OnePath (NZ) Limited: • Fully owned subsidiary of ANZ National Bank, $7.0 billion of managed funds. • Actively manages 15% of Plan assets in their Global shares fund. • TOWER Asset Management Limited: • Operating division of TOWER limited, $4.0 billion of managed funds. • Actively manages 27% of Plan assets in their Global shares, Global bonds and Property funds. • Tyndall Investment Management Limited: • Owned by Nikko Investment Asset Management, $3.4 billion of managed funds. • Actively manages 5% of Plan assets in their Option Fund and Multi-manager Multi-strategy Hedge fund.

  7. Recent Plan investment results The table below shows the annual returns credited to members after investment fees but before tax rate, with a comparison to inflation.

  8. Governance of the Plan (1) • The Plan has its own Trust Deed • A maximum of nine Trustees, up to four appointed by the Rail and Maritime Transport Union, up to four appointed by a unanimous decision of the remaining Trustees and a Chairman who is appointed unanimously by the Trustees • Current Trustees are: • Chairman: David Stevens (ex-NBNZ) • From Union: Wayne Buxton, Hal Upton, Dion Young • Appointed by Union: Roy Cowley (ex-Deloitte) • Appointed by Trustees: David Sharman (Chief Financial Officer, Port Taranaki), Sara Lunam (Corporate Services Manager, Port of Tauranga)

  9. Governance of the Plan (2) • Independent Plan managed by its own Trustees • Trustees make decisions based on the needs of the industry and their members • The Plan has own relationship with its advisers • Operated on a “not for profit” basis with costs kept to minimum • No shareholder return on capital requirements • Long and established history

  10. Regular information to members • Annual Report as at 31 March year end • Financial Statements as at 31 March year end • Member Benefit Statement as at 31 March year end • Chairman’s newsletter each quarter • Website with Plan and Member information – www.harbourssuper.org.nz • Administrator or Plan Secretary can be contacted at any time, for information such as: • Estimate of current benefits • Copy of current Investment Statement • Copy of current Prospectus, Trust Deed

  11. Includes KiwiSaver • KiwiSaver - a voluntary, work-based savings initiative • With automatic enrolment of new employees • Allowing employees to opt out • Otherwise, requiring employee and Employer contributions • Accumulating money (locked in) until entitlement to New Zealand Superannuation - currently age 65 - after 5 years membership • But allowing earlier withdrawal for first home purchase, hardship, serious illness or emigration, all of which are subject to tightly prescribed rules

  12. KiwiSaver has Government incentives • $1,000 tax-free kick-start contribution • Employee contribution addition (up to $1,040 annually) • Up to $5,000 towards an employees first home • IRD involvement for contributions

  13. But employees can opt out • Every new employee has 8 weeks to opt out of KiwiSaver, but can’t opt out in first 12 days • An opt out is not carried forward to subsequent new employments • Opting out requires filling out either: • an opt out form (in the information pack) and giving it to the Employer or to IRD, or • an online form at the KiwiSaver website • Employer must notify IRD of opt outs received, on a monthly basis • No further KiwiSaver contributions are made once the opt out takes effect

  14. Contributions to Plan • Employees contribute usually at 6% or 7% of salary/wages • Employers contribute at matching 6% or 7% of salary/wages • 2% of employee contributions can go to KiwiSaver Scheme to meet employee KiwiSaver contribution requirement • 2% of Employer contributions can go to KiwiSaver Scheme to meet Employer KiwiSaver contribution • Employee KiwiSaver contributions attract government rebate up to $1,040 each year – added to employee balances

  15. Advisers involved with the Plan • Auditor Deloitte • Solicitor Johnson Lawrence • Administration Manager Melville Jessup Weaver • Plan Secretary Leonie Stieller • Insurer Sovereign • Investment adviser Melville Jessup Weaver

  16. Member Benefits from Plan

  17. Regular information to members • Annual Report as at 31 March year end • Financial Statements as at 31 March year end • Member Benefit Statement as at 31 March year end • Chairman’s newsletter each quarter • Website with Plan and Member information – www.harbourssuper.org.nz • Administrator or Plan Secretary can be contacted at any time, for information such as: • Estimate of current benefits • Copy of current Investment Statement • Copy of current Prospectus, Trust Deed

  18. Preferred KiwiSaver provider • For the Harbours KiwiSaver Scheme • Trustees do recommend using the Plan as the Preferred Provider • Employer may choose another preferred KiwiSaver scheme • If a Preferred Provider is chosen, only that KiwiSaver Scheme information is provided to employees • Regardless, employees may choose another KiwiSaver Scheme

  19. Other information • Harbours Plan (for information about the present Plan) – www.harbourssuper.org.nz • Sorted (for information about your finances and KiwiSaver) – www.sorted.org.nz • Inland Revenue (for information about KiwiSaver) – www.kiwisaver.govt.nz

  20. Dialogue with members • Always keen to receive feedback and ideas about the Plan. • Presentations or meetings can be arranged, including question and answer sessions.

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