Establishment of super fund delayed

The establishment of the New Zealand Superannuation Fund looks to have been delayed because of political issues surrounding the appointment of Guardians to run the multi-million fund.

Finance Minister Michael Cullen said in January that he hoped to appoint the Guardians by the end of March. When that didn't happen he said in April that he hoped to appoint the Guardians by the end of that month. With June just around the corner there is no sign appointments are imminent.

An appointment committee, headed by Investment Savings and Insurance Association chief executive Vance Arkinstall, finished its job of making recommendations to the minister some time ago.

Cullen said last week that he hoped to put a paper to Cabinet this week.

The major sticking point appears to be the requirement for the Government to consult with other parties over the appointments.

This job is fraught with difficulties as National, Act and the Greens oppose the fund outright.

Cullen told SuperTalk that he hopes the parties will be reasonable during the consultation process.

Although a number of parties oppose the fund, he is hoping they will work to appoint the best possible people to the job because of the size and importance of the savings vehicle.

These might be forlorn hopes considering that an election could be held within the next two months.

Cullen acknowledges the election "does make life difficult."

He says it would be "irresponsible" for opposition parties to use the appointment process to slow down the fund's establishment.

Cullen indicated if there is trouble he can get tough as he is only required to "consult" the other parties, it's not a matter of getting their "assent".

The Guardians are required to follow best practice portfolio management, maximise returns without undue risk to the fund as a whole, and avoid prejudice to New Zealand’s reputation as a responsible member of the world community.

To protect the fund from political meddling, the legislation stipulates that the government must make the appointments from a short list prepared by a special nominating committee.

The committee advertised for nominations last year and received more than 100 expressions of interest.