Govt needs to protect super fund people

Pressure to retain good quality staff means the government should give the Guardians of the New Zealand Superannuation Fund the extra $1 million they asked for in this year’s Budget – and then another $1.7 million on top of that, says an independent review.

Friday, November 12th 2004, 7:21AM

by Rob Hosking

And the author of the review, Auckland-based business consultant and actuary Jonathan Eriksen, says the Guardians should also get extra money to research alterative asset classes such as infrastructure assets and other private equity investments.

As Supertalk revealed in July, the Guardians had asked for ane extra $1 million in this year's Budget to research alternative asset classes, but Treasury advice – which Finance minister Michael Cullen heeded – was to hold off any increase until after the Eriksen review.

Cullen says he is considering the recommendation for extra resources.

However Eriksen’s comments on staffing issues suggest the subject is of reasonable urgency. Despite being able to lure such highly regarded talents as chief executive Paul Costello and former AMP chief strategist Paul Dyer, the Guardians need more money to retain the necessary skills.

“I am…concerned at the potential risk of a particular staff member being poached …it is particularly important to the Guardians because of the relatively short time it has been in operation and the pace at which policy is being developed and implemented.”

Eriksen suggests setting up a “bonus pool” of between 20% and 50% of the investment professionals’ salaries, to fund performance related pay.

That would require extra funding on top of the additional $1.7 million he is already recommending.

“While the Guardians cannot hope to compete on the basis of international salaries, it would be short-sighted in my view to rely on lifestyle and the job satisfaction inherent in this exciting new venture to retain people for the medium term.”

The Guardians' annual report shows that one staff member - presumably Costello - is paid between $340,000 and $350,000 a year, another staff, presumably Dyer, is paid between $250,000 and $260,000. There is another person on between $220,000 and $230,000 and two people paid in the range of $110,000 and $120,000 a year.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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