News Round Up: July 16

Fund managers want direction; not so super month for Super Fund; more delays in SFO case.

Monday, July 16th 2012, 6:00AM

by Niko Kloeten

New Zealand's fund managers appear united in wanting the Government to provide firm direction on the issue superannuation savings, according to the latest quarterly investment outlook survey carried out by Russell Investments.

Following recent warnings from the Financial Services Council about looming demographic challenges and their impact on superannuation, New Zealand's leading fund managers were asked for their views on the actions needed to face those challenges.

"While many options were put forward there is a strong body of opinion among our leading fund managers that superannuation saving should become compulsory and that the retirement age should be raised," said Daniel Mussett, Russell's head of consulting.

"Fifty percent of fund managers support those two options, while around a quarter of those surveyed suggest means testing of future government superannuation entitlements."

Mussett said there was also a strong emphasis on greater and more open discussion of the current issues around government superannuation and the future of Kiwisaver.

"Fund managers want to see expectations set early so that workers have time to prepare for any changes to existing schemes and entitlements."

Not so super month for Super Fund

The New Zealand Superannuation Fund took a hammering in May, losing almost a billion dollars as its volatile year continued.

The fund was down 4.45% for the month ($940 million), leaving its fund size at $18.33 billion.

It is down 1.12% for the financial year to date with one month left; however, the fund's latest report says it recovered in June and is likely to finish the year at about break-even performance.

This follows a couple of strong years for the fund, which recorded returns of 15% in 2009/10 and 25% in 2010/11 following a 22% loss in 2008/09 when the global financial crisis hit.

Its returns this year have highlighted the volatility of international markets; it has recorded five months of gains and six months of losses.

May wasn't even the worst month of the year for the fund, which lost 5.04% in August; its best month was October when it gained 6.66%.

More delays in SFO case

The former financial adviser facing Serious Fraud Office charges over an alleged $5 million fraud will have to wait until October to enter a plea.

Evan Paul Cherry faces seven charges under the Crimes Act, which carry a maximum penalty of 10 years in jail.

The charges relate to the alleged theft of investor funds and false statements in investor reports.

Cherry appeared last week at the North Shore District Court, where his lawyer Matthew Dixon said negotiations between his client and the SFO were continuing.

He said the hold-up was over a specific matter that was likely to be resolved shortly.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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