NZ Super, the sovereign wealth fund for Aotearoa, has a clear mandate to grow  its assets to meet the retirement liabilities of today’s teenagers. With eyes fixed on  this faraway horizon the fund has instituted governance practices and a way of  investing that are world-class and should benefit future generations in the land of  the long white cloud. AMANDA WHITE reports.

New Zealand is a small  country with a reputation for  harbouring great talent. Its  national rugby team, the All Blacks, are  renowned as world leaders on the field.  Mountaineering legend Sir Edmund  Hillary, who made the first ascent of  Everest with Sherpa Tenzing Norgay,  also hails from the shaky isles. The nation  produces world-class artists, such  as opera singer Dame Kiri Te Kawana,  film-maker Peter Jackson, musicians the  Finn family, and indie pop up-and-comer  Kimbra. Similarly its sovereign wealth  fund, the $15.2 billion New Zealand  Superannuation Fund (NZ Super), executes  an investment strategy that is seen  globally is as something worth emulating.  NZ Super earns the highest  possible ranking on the SWF Institute’s  Linaburg-Maduell transparency index,  and ranked first in a 2007 review of  32 sovereign wealth funds in Edwin  Truman’s research paper, “A scoreboard  for sovereign wealth funds”, published by  the Peterson Institute for International  Economics.

It is also a research partner  at the Toronto-based International  Centre for Pension Management,  sitting alongside contemporaries such  as the Ontario Teachers’ Pension  Plan, CalPERS, Denmark’s ATP and  Australia’s Future Fund in setting a  research agenda for advancing pension  excellence.  NZ Super is known in the global  pensions community for its governance  policies. Typically, pension fund  governance is interpreted as relating  to the activities and behaviour of  boards. But NZ Super integrates good  governance throughout the fund so that  people in its three executive committees  – for leadership, investment, and risk and  portfolio monitoring – are accountable for  decisions at all levels of the organisation.  Consistent with its good governance,  NZ Super’s way of allocating assets and  working as a team to make investment  decisions has undergone a series of  refinements since the fund’s September  2003 inception.  The purpose of NZ Super, which  was seeded with $3.2 billion, is to reduce  the tax burden on future taxpayers who  will fund New Zealand Superannuation,  the retirement benefit paid to eligible  citizens by the Federal Government.  The size of the fund is not expected  to peak until today’s 19-year olds are  able to begin claiming the benefit in  2056. This timeframe means the fund  is in the enviable position of being truly  long term – and this is reflected in the  way it invests.

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