Further to the update provided on 26 June 2014 in the Latest News item regarding University Superannuation Liabilities, and in anticipation of the finalisation of funding arrangements between the Commonwealth and NSW State Governments, State Super has conducted a review of the investment approach for the employer reserves relating to university assets.
Notice of two new investment strategies for university superannuation assets
Given the anticipated run-down of universities' reserves over the next three years, the State Super Growth Strategy, which university employer reserves are currently invested in, is not considered to be an appropriate investment strategy for university funds into the future. As such, two new investment strategies with specifically tailored strategic asset allocations have been formulated to ensure both the liquidity and return time frame requirements of universities' reserves are addressed. These two new strategies are:
- University Diversified Strategy – with a return objective of CPI+2%p.a. over rolling three to five year periods, and
- University Cash Strategy – with a return objective of CPI+0.25%p.a. over a rolling three year period
University reserves to be transferred effective 30 September 2014
The Universities' reserves will be switched out of the current Growth Strategy into the University Strategies based on values as at 30 September 2014. Universities where the employer reserves are greater than 12 months cash flow will be transferred into the University Diversified Strategy and universities with reserves that are likely to fall below 12 months cash flow during 2014–15 will be transferred into the University Cash Strategy.
Universities' reserves initially invested in the University Diversified Strategy will be transferred into the University Cash Strategy once an individual university's employer reserve is depleted and falls below the 12 month cash flow buffer. Future government contributions to sustain these reserves will be made on a 'Pay-as-you-go' basis and will be invested directly into the University Cash Strategy, as will any employer contributions.
Member accounts will not be affected by these changes. SASS member contributions subject to investment choice will remain in the current investment strategy selected by the member or in the default strategy (Growth Strategy) where no investment choice has been made. SSS member reserves will also remain unaffected and will continue to be invested in the State Super Growth Strategy. It should be noted that the two University Strategies listed above are not available to members as an investment choice option.