Fairfax to wind up staff pension schemes

Friday 30 September 2016 11:50 AM

Fairfax to wind up staff pension schemes as membership dwindles

By Paul McBeth

Sept. 29 (BusinessDesk) - Fairfax New Zealand, the newspaper publisher seeking to merge with rival NZME, will wind up its two staff pension schemes today as dwindling membership coincided with multiple rounds of job cuts in recent years, while new staff signed up to state-sponsored KiwiSaver.

The Wellington-based subsidiary of Australia's Fairfax Media Group will close the Fairfax New Zealand Retirement Fund and Fairfax NZ Senior Executive Superannuation Scheme from Sept. 30, accounts for the two pension funds show. BusinessDesk understands members are expected to be paid 90 percent of what's owing by the end of October.

"Membership of the superannuation fund has reduced significantly in recent years as most new employees join KiwiSaver," Fairfax NZ communications manager Emma Carter said in an emailed statement. "This, and the changes required to the fund by the new Financial Markets Act, led Fairfax and the trustees to consider its future. The decision was made to close the fund to new members in April 2016, and to wind it up before December."

Fairfax and NZME have continued to keep a lid on costs as they await regulatory approval to merge their operations, which they say will give them a fighting chance in the digital advertising market against global giants such as Google and Facebook. That's involved shrinking the size of their newsrooms and prioritising online over print, which continues to generate the bulk of their revenue.

The Fairfax NZ Retirement Fund, a defined benefit scheme, made its biggest redundancy payout in the year ended March 31 of $19.4 million, draining almost a third of the scheme's assets which were valued at $40.6 million as at March 31. That was up from redundancy payments of $6.8 million in the 2015 year and $12 million in 2014.

The publisher transferred $72.4 million of assets into the fund in 2007 from the now-closed Fairfax New Zealand Superannuation Fund. Since then, Fairfax New Zealand's staff has more than halved, with 1,197 full-time equivalents and 88 casual and part-timers employed as at June 30, down from 2,353 FTEs and 488 part-timers at the end of the 2008 year.

The media company's contributions were based on each member's complete years of membership and could draw on the fund's surplus, while staff would put in 5 percent of their pre-tax income, and could voluntarily put in more. That compares to a KiwiSaver account where an employer is required to contribute 3 percent to the scheme, and the government provides tax credits of up to $528 a year, or about 1 percent of an average private sector worker's salary, based on Statistics New Zealand's ordinary time average weekly earnings in the June quarter.

Members contributed about $2 million to the fund in 2016 compared to $1.2 million from the company, down from $2.3 million from members and $1.3 million from the company in 2015. Some $1.3 million was withdrawn for retirement, $3.1 million from resignations, $933,000 transferred to other schemes, and $1 million paid as in service partial withdrawals. The scheme generated investment revenue of $1.8 million and attracted management fees of $205,000.

The smaller executive pension, a defined contribution scheme, had assets of $3.8 million at the March 31 balance date, down from $6.7 million a year earlier, with $1.4 million paid in withdrawals and $2.1 million in redundancies. Member contributions were $200,000 in the year, down from $242,000 a year earlier, while employer contributions fell to $360,000 from $416,000.

The senior executive scheme sees members contribute at least 5 percent of their salary, and the company puts in 15 percent.

Carter said members were consulted throughout the process about the winding down of the funds, and offered help with making decisions because of the closures.

(BusinessDesk)

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