Overview

The Superannuation Provision Account (SPA) was established to recognise the investment assets and defined benefit employer superannuation liabilities of the Territory.  The Directorate, through the financial operations of the SPA, assists the Government to effectively manage the defined benefit employer superannuation liabilities of the Territory.  This includes the responsibility for the management of the investment funds set aside to meet those liabilities.  The SPA also recognises the unfunded superannuation liabilities for the defined benefit superannuation entitlements for the eligible Members of the Legislative Assembly.

Highlights

During 2013-14, the Directorate:

• managed the SPA investment portfolio in accordance with the established investment plan and policies;
• completed the annual actuarial review of the defined benefit employer superannuation liabilities of the Territory;
• continued implementation of the operational requirements of the Responsible Investment Policy with:
• improvedreporting and disclosure of responsible investment practices on the Directorate's website including disclosure of all proxy voting activity for the financial year, the proxy voting policy guidelines, the Government's direct share holdings, and Responsible Investment Policy; and
• implementationof customised share benchmarks for the Australian and international direct share holdings incorporating the exclusion of certain prohibited business activities and the integration of an assessment of environmental, social and governance risks and international norms-based risk criteria;
• procured an actuarial services provider, a fund manager in relation to indexed equities investment and a new master custody services provider for the financial investment assets of the SPA;
• achieved a net investment portfolio return for the financial year that was greater than the portfolio's performance benchmark return; and
• administered benefit entitlements for Members of the Legislative Assembly defined benefit superannuation arrangement.

SPA met or exceeded all of its accountability measures with the exception of the target of 95 per cent of voting rights being exercised where the result was 93.1 per cent.  There were 5,418 share voting proposals for the 2013-14 financial year with 5,042 voting instructions exercised, resulting in 93.1 per cent of voting rights being exercised.  The variance reflects no-vote instructions in relation to company meetings which require shareholders, wishing to vote, depositing their shares before the date of the meeting with a designated depository, resulting in the shares being unable to be traded over the voting period.  The current proxy voting policy framework incorporates a no-vote for shares impacted by these types of voting practices.

The accountability indicator relating to the difference between the net investment earnings rate and benchmark was exceeded.  The portfolio delivered an investment return for the 2013-14 financial year of 15.8 per cent (net of fees) against the portfolio's performance benchmark return of 14.4 per cent.  This was mainly due to outperformance of the Australian listed equity investment managers against their individual performance benchmark hurdles.

Government's Responsible Investment Policy

Reporting and disclosure of responsible investment related activity is available from the Directorate's website.  This includes the disclosure of:

• the Government's Responsible Investment Policy;
• the Investment Plan;
• directly-owned share holdings (updated quarterly);
• a summary of the Sustainability Proxy Voting guidelines; and
• share voting activity for the financial year (updated quarterly).

Future Directions

In 2014-15, the Directorate will:

• continue to manage the SPA investment portfolio in accordance with the established investment plan and the investment and operational policies;
• transition to the new master custody service provider;
• procure professional investment management and investment advisory service providers as required; and
• complete the major triennial actuarial review of the defined benefit employer superannuation liabilities of the Territory.

Further Information can be obtained from:

Patrick McAuliffe
Director
Asset Liability Management
+61 2 6207 0187