A year of steady returns and significant legislative change
Two main features dominated the year ended 31 December 2016 for UniSaver’s directors. Like you, we kept a wary eye on markets as investors reacted to unexpected political events with Brexit and a US presidential election result few predicted. Behind the scenes, transitioning to the Financial Markets Conduct Act 2013 (FMCA) was a major undertaking. You’ll see some of the requirements of this new governing legislation reflected on these pages.
New approach to annual reporting
This section of the website brings together a range of material relating to the performance of UniSaver for the year ended 31 December 2016. The annual report and fund updates follow the format prescribed by FMCA regulations. We’ve created these documents as web pages to make them easier to read online. They are also available as pdfs at companiesoffice.govt.nz/disclose. We have also published the full financial statements.
Returns remain above target
Despite volatility in returns during the year, the end result was pleasing with UniSaver’s three main funds once again posting returns well above their long-term investment objectives. The return from Cash was in line with expectations.
The investment objective for each of the three main funds is based on a margin over and above inflation (measured by the Consumer Price Index (CPI)). They change each year depending on the change in the CPI. The objective for Cash is to provide a return broadly in line with the ANZ NZ 90-Bank Bill Index after tax. For more information, see the statement of investment policy and objectives.
These returns are after tax and expenses. It’s worth remembering that when making comparisons with other investment returns. Bank deposit rates and returns from many KiwiSaver funds are quoted before tax.
UniSaver returns continue to track well against comparable KiwiSaver funds. This graph compares returns over one and three years.
Investment markets remain as unpredictable as ever, sensitive as they are to the twists and turns of economic factors and varying political tides. In a world of lower economic growth and low inflation, many commentators predict markets will experience a sustained period of low returns. While we can hope to be surprised positively, it may be sensible to factor this possibility into your retirement income planning. It’s worth reading this article from our investment manager, Russell investments about saving in a low return environment.
You can read about the main influences on market performance during the year and the outlook for 2017 in our 2016 investment review.
Steady growth in membership
Scheme membership continues to grow steadily. We welcomed 762 new members this year with the number of contributing members increasing by 5% to 7,649. The number of former members electing to leave their savings in the scheme has also increased taking the total number of participants in UniSaver to 8,929. You’ll find more detailed information about changes in membership in the 2016 annual report.
As part of the FMCA transition, we moved to a corporate trustee structure where a company, UniSaver Limited, was established to manage the plan. The trustees at the time of the change became directors of that company. I thank my fellow directors Adrienne Cleland, Carolyn Dimond, Wayne Morgan and John Patrick and scheme secretary Robyn Doherty for their work and guidance in what has been another year of significant change for UniSaver.
Since balance date, Ian Russon joined that team as a director of UniSaver Limited. Ian has had a long career in financial services and investment in New Zealand, Germany, Hong Kong and the UK. As a Licensed Independent Trustee, Ian brings specific governance skills relating to financial services. His appointment brings the number of directors to six, two of whom are Licensed Independent Trustees.
As always, we value your feedback. Please feel free to get in touch with the directors at any time via the scheme secretary.
Chair, UniSaver Limited