Eriksens Master Trust Survey

The Eriksens Master Trust Survey reports on the performance of the leading New Zealand wholesale (employer) investment funds.  Master trusts give smaller employers a cost-effective way of providing their employees with access to superannuation. The survey is updated at the end of every calendar quarter.

 

If you wish to receive a copy of this survey regularly or have other comments about it please email us.

 

Complete past surveys in pdf format and partial past surveys (which exclude our commentary) in Excel format may be downloaded from the links below.

 

All funds in our Master Trust Survey are PIE compliant and are shown net of all fees, expenses and taxed at the highest marginal tax rate of 28%.

Superannuation Schemes 101

Now and again it’s worthwhile going back to basics.  A brief run-down of workplace superannuation schemes follows – have a read – you might find you learn something new!!  Our Survey is the only one of its kind in New Zealand; it calculates the after fees and after tax investment returns (at the highest PIR tax of 28%) for all investment funds managed by the six Master Trust providers in New Zealand.  It allows for an easy comparison of your chosen investment fund’s performance, your investment fund provider’s performance, and shows how many others have (obviously very wisely) entrusted their hard earned money alongside yours.

 

Defined Contribution Schemes

Most super schemes in New Zealand are Defined Contribution (DC) schemes, where both the employee and employer contribute to the fund.  All KiwiSaver funds are DC schemes and in fact most super schemes in New Zealand are DC.  It is the employee who carries the investment risk: if your investment falls in value in the few years leading up to retirement then the amount you have available at age 65 will have reduced and you will be worse off than if the markets had rallied in that same period.  Employees also carry the longevity risk: if you live until age 110 but you thought you’d only reach 85, your savings at retirement will likely be lower and spending patterns during retirement slightly more extravagant.  The savings would be made to last for the number of years you expect to live (give or take).  Another 25 years of life after exhausting all your retirement savings: income shrinks substantially but at the same time your health slowly worsens and medical expenses rise.  Or you could be hit by a bus the day after you retire.  Who knows?!

 

Defined Benefit Schemes

The other common type of scheme is Defined Benefit (DB).  It is generally only the employer who contributes to the scheme; upon reaching retirement age the employee begins receiving a pension which is usually a fixed sum each month or week, payable for life.  The investment risk is borne by the employer: the contributions made throughout each employees’ tenure must cover the pension benefit that is payable from retirement age.  The pension amount is a fixed sum which is usually based on employees’ salary and length of service.  The value of the investment can still go up and down with the markets so the scheme needs to have enough in reserve to ensure that all future pension payments can be made, even if markets suffer a sustained downturn.  Longevity risk is also borne by the employer.  If an employee lives ten years longer than expected, the scheme must ensure it is able to cover the payments.

 

 

Q: What is a stand-alone superannuation scheme?

A: It is a super scheme established by an employer for the benefit of its employees.  Each employer operating a stand-alone scheme carries out the administration functions of the scheme in-house and each scheme has its own Trust Deed, Investment Statement etc.  The employer chooses the scheme rules such as what investment options are made available to employees, contribution rates, vesting and the like.  These schemes can be quite costly to run due to the time spent on admin functions, compliance etc.

 

Q: What is a Master Trust?

A: Rather than an employer providing a super scheme that is self-managed, many employers can utilise the expertise and scale of one investment firm who manage and administer many schemes on the one platform.  The scheme rules can stay exactly as they are – each workplace scheme on the platform is independent of other schemes.  A Master Trust basically facilitates the pooling of investment funds from many sources (each employer scheme) to invest in bulk.  This reduces the transaction costs of buying/selling securities and results in lower overall admin fees as the provision of these services is much more cost effective when carried out on a large scale, rather than many firms doing the work themselves.

 

Q: Who are the Master Trust providers in New Zealand?

A: There are currently six providers, namely:

·         Aon ·         Fisher Funds
·         AMP ·         Mercer
·         ASB ·         SuperLife

 

 

Q: What do each of the fund types mean?

A: Multi Sector means the fund is comprised of different asset categories i.e., shares, bonds and cash.  A higher proportion of shares means the fund will fall into the Growth category; a lower proportion the Conservative category.  Balanced usually means the fund has 60% of its assets in shares and property.  Single Sector means the fund only has one type of asset – aggressive will mean shares or property and defensive represents bonds or cash.

 

 

Complete Surveys – Results and Commentaries – pdfs

 

1997 March June Sept Dec
1998 March June Sept Dec
1999 March June Sept Dec
2000 March June Sept Dec
2001 March June Sept Dec
2002 March June Sept Dec
2003 March June Sept Dec
2004 March June Sept Dec
2005 March June Sept Dec
2006 March June Sept Dec
2007 March June Sept Dec
2008 March June Sept Dec
2009 March June Sept Dec
2010 March June Sept Dec
2011 March June Sept Dec
2012 March June Sept Dec
2013 March June Sept Dec
2014 March June Sept Dec
2015 March June Sept Dec
2016 March June Sept Dec
2017 March

 

 

Survey Results Only – Excel Format

2004 March June Sept Dec
2005 March June Sept Dec
2006 March June Sept Dec
2007 March June Sept Dec
2008 March June Sept Dec
2009 March June Sept Dec
2010 March June Sept Dec
2011 March June Sept Dec
2012  March June Sept Dec
2013 March June Sept Dec
2014 March June Sept Dec
2015 March June Sept Dec
2016 March June Sept Dec
2017 March