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Review of Govt. Superannuation Fund Authority

21 August 2006

Review of Govt. Superannuation Fund Authority

Finance Minister Michael Cullen today welcomed a largely positive review of the Government Superannuation Fund Authority (GSFA) carried out by Mercer Investment Consulting.

The independent review, required every five years, was tabled in Parliament today. The review is the first since the GSFA was established by the government in 2001 to administer the Government Superannuation Fund – the fund that manages entitlements for 67,500 current and former civil servants.

"I note that the review found that "New Zealand has been extremely well served by GSFA" and the authority had "laid strong foundations and has done so in spite of extremely volatile market conditions."

"However, Mercer criticises the decision of the GSFA to proceed with its transition from investing in government stock to investing in equities two months after the September 11 terrorist attacks, as a further sharemarket decline occurred from mid-2002.

"Expert advice was sought and while the transition was slightly slowed, this was still considered the most prudent strategy. The criticism seems largely based on hindsight and the review does note it was "a fine judgement".

"The review also calls for more guidance from the government over the GSFA's investment objectives and its appropriate risk tolerance. However, in line with the arms length practice applied to Crown Financial Institutions, I firmly believe our current policy remains the most sensible.

"I am pleased with the GSFA's performance and note too that in the period covered by the review, the authority has earned about $350 million more from its new strategy than had it continued to invest only in fixed interest securities. This has saved taxpayers a considerable amount of money," Dr Cullen concluded.

Legislation in 2001 allowed the GSFA to change the previous investment strategy so that it could make a larger contribution from its own earnings to members' entitlements.

The review is available at:

Further information on the Government Superannuation Fund Authority is available at:


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