The Government Super Fund has rebounded after a couple of tough years, returning an after-tax surplus of $285 million for the year to June 30 2010.
This represents a 10.4% return on average net assets and is a big improvement from last year, when it retu
The Government Super Fund has rebounded after a couple of tough years, returning an after-tax surplus of $285 million for the year to June 30 2010.
This represents a 10.4% return on average net assets and is a big improvement from last year, when it returned an after-tax deficit of $583.3 million, representing a loss of 16.8% on average net assets.
In 2008 it posted an after-tax deficit of 6.7% on average net assets.
“The overall result for the past year is a welcome recovery, following two years of negative returns during the global financial crisis,” Government Superannuation Fund Authority Board chairman Tim McGuinness said.
“It has helped us claw back some of the impact of the crisis.”
With a 10.4% return the fund ended the year ahead of its investment performance measure (IPM) of 2.5% above the return from government stock, which this year was 8.2%.
Since 2001, when former finance minister Michael Cullen made major changes to the way the fund is allowed to invest, it has achieved an annualised after-tax return of 2.3%.
This is 4.7% down against the annualised IPM but is still an improvement from last year when the big loss blew the shortfall out to 5.6%.
In its annual report, the fund’s authority said significant returns above benchmarks were generated by its equities and fixed interest managers and by its commodities manager, while multi-asset class strategies also added value.
Only the return from real estate was below benchmark.
Not to be confused with the New Zealand Superannuation Fund (commonly known as the Cullen Fund), the Government Superannuation Fund is for state sector employees and was largely closed to new members in 1992.
On June 30 the fund schemes had 67,391 members (down from 68,698 in 2009), made up of 14,587 contributors (15,683 in 2009), 46,855 annuitants (46,963 in 2009) and 5949 deferred pensioners (6052 in 2009).
Mr McGuinness said that in response to the volatility in global markets the authority had increased its risk parameter to have no more than a one in 10 chance of an annual loss for the fund greater than 9%.
Previously this was set at an annual loss of 6%, which it breached by losing more than this amount two years in a row.
“At the same time, the performance measure has also been changed by increasing the expected margin of return over government stock to ‘at least’ 2.5%.
“This reflects a corresponding increase in the expected return, making up for the higher level of risk,” Mr McGuinness explained.
