NSW State Super has maintained its crown as Australia’s largest superannuation fund and public sector fund in this year’s TOP 300, despite experiencing a decline in assets from $27 billion to $25.6 billion by the end of December, 2001.
Lyn Gearing, CEO of both NSW State Super and First State Superannuation Scheme, blames the fall on several factors, including the poorer returns and the fund’s ageing membership.
“The markets haven’t been kind to us in 2001. We have achieved a zero investment return for the one year ended February 28, 2002, and being a closed fund, there are now a lot of people retiring, placing us in a phase of negative cash flow, as we are paying out retiring members,” she says.
Despite this, Gearing believes that NSW State Super’s high growth focus, where 80 per cent of the fund is invested in growth assets, is the right strategy, particularly since its actuaries have predicted that it has another 40 plus years before all members and pensioners have exited the scheme.
While this may be one motive to have a high growth strategy, the other is that the fund is only 65 per cent funded, with the balance being a liability of the NSW State Government.
“It’s their biggest liability, so they are always keen to see we achieve strong investment returns in order to reduce their liability, ” Gearing says.
This year, an issue that the investment committee will be addressing is whether the fund should exercise its option to outsource the remaining 60 per cent of its funds under management currently being managed by Deutsche Bank.
Among the other significant concerns that the fund faces is finding a replacement for Gearing who has resigned, but who has delayed her departure until December when the fund has completed its reporting to members for 2002.
Gearing says while she will not decide on her future until the end of the year, she hopes to leave the fund in very good order and to be remembered for introducing a “disciplined business approach” during her tenure.
