Super stuff up

Wednesday 13th August 2003

In what appears to be a major blue the New Zealand Superannuation Fund has prematurely released its targeted asset allocation model.

The fund, which has been established by the Government to partially prefund future state pension costs, planned to announce its asset allocation at 11am on Thursday.

However, the information was available on its website on Wednesday.

According to a Reuters reports the Guardians of the fund intend taking a relatively conservative asset allocation strategy, investing 67% of its assets in shares and 20% in fixed interest, 6% in property and 7% in private equity, infrastructure investment, commodities and other opportunities.

The split between international and New Zealand assets is 78:22, which means about $20 million a week would be invested locally.

One of the more contentious elements of this asset allocation is that it appears the fund, which currently has about $2 billion, it will invest in New Zealand Government bonds.

That is the equivalent of the Government raising money through taxes then lending it to itself.

The closes equivalent to the NZ Superannuation Fund is the a similar vehicle set up in Ireland, Irish Pensions Reserve Fund. Pensions Board chief executive Anne Maher, who was in New Zealand recently, said the one thing the Irish fund is banned from doing is investing in local government bonds.

The other significant difference is that the Irish fund has allocated 80% of its money to shares, compared with 67% in New Zealand.

From a theorectical perspective the New Zealand fund (like its Irish counterpart), it has no outgoings until 2020 should be invested in growth assets � it has no need for income.

The chief executive of the New Zealand Superannuation Fund, Paul Costello, would not confirm any numbers in the Reuters report. "I cannot confirm whether they (the numbers) are correct or incorrect," he told Reuters.

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