Business Hub: Catherine Savage on life after the Super Fund

It’s been a few weeks since Catherine Savage left the board of the New Zealand Superannuation Fund, but she still talks as though she is very much a part of it.

Savage stepped down as chair of the $57 billion fund in March after 12 years on its board and five years as chair, but her involvement goes back much further than that.

“It has been an enormous part of my life since the fund started. Even though I wasn’t on the board then, I remember sitting down with Michael Cullen talking about it.”

As Labour Finance Minister, Cullen set up the fund in 2001 with the aim of using Government surpluses to pre-fund some of the cost of New Zealand Superannuation for the country’s ageing population.

It began investing in 2003 and the first external manager it appointed to look after investments was AMP Capital Investors – a company whose New Zealand operation was headed by Savage.

“We visited the fund for first time when [first CEO] Paul Costello was the only employee.

“He answered the door and I said: ‘where I are all your staff?’ and he said, ‘I am hiring yours at the moment’ and he was.”

Savage was managing director at AMP for seven years, starting the job at just 33 years old. At the time she was the global fund manager’s youngest country manager and the only woman in charge of one of its businesses.

She managed $11b while having a young family and says she always knew she wanted to be in charge.

Savage left AMP in 2007 to set up private investment company Savage Group with her father Roy, a well-known Wellington businessman who had owned a number of safety clothing and related businesses.

Two years later she joined the board of the Super Fund in 2009, a move that coincided with the National-led Government’s decision to put a hold on contributions to the fund.

“… that was when the Christchurch earthquake happened, as a board that was a tough time for us.”

But she says what could have been perceived as a lowlight of that period has in fact been one ofthe best things for the fund in hindsight, because it meant it had to work hard and assess whether it could meet its goals.

“We really had to dig down and say: ‘We are not having this amount of contributions come in every week. Markets are extremely volatile. We did make good decisions around being a contrarian investor and buying in after the GFC but what does it mean for adding value going forward, not really knowing if we were ever going to have contributions again?’

“I think that was really tough for the organisation; we genuinely felt if we didn’t have the contributions then at some point in the future it was going to be really tough to deliver on the purpose and what the fund was set up for.”

Fortunately for the fund, the Labour-led Government resumed contributions in 2017.

While that was a challenging moment, Savage does not hesitate in saying her toughest time at the fund was the year she stepped into the chair’s role and was challenged over then-CEO Adrian Orr’s pay.

Orr, now the Reserve Bank governor, found himself the centre of controversy after his pay hit $1.03 million in 2016 – getting a 23 per cent pay rise in one year after earning a bumper bonus.

Savage stepped up to defend her chief executive but her board was rebuked by Prime Minister Bill English for its decision to ignore his advice and award the pay rise.

“That was pretty tough and having to try and deal with the media and also stakeholders and the wider government and questions on that. It was a bit of a perfect storm.

“Having to break that down from the headline into what it actually meant was a real education for me. But I think one that has stood us in good stead.”

Savage says another low point was the Government’s decision not to pursue the fund’sbid to build light rail in Auckland alongside Canada’s CDPQ Infra Group.

“Obviously the decision around the light rail was a low point for me personally because I think we had as a team worked really hard to get a good solution for Auckland and also the country, and obviously our solution at the end of the day wasn’t chosen.”

But despite the hard moments, Savage says her highlight was ensuring the fund continued to manage money and add value while maintaining good relationships with its stakeholders.

“I have had four ministers of finance so keeping that continuity of keeping your stakeholder on your side, informed, as well as being able to perform and be true to the mandate independence… I think has been the highlight.”

Last year the fund faced one of its trickiest investment periods when sharemarkets around the world tumbled in March in the face of the Covid-19 pandemic.

Savage says calling on her years of experience helped her hold her nerve during the dramatic plunge, which wiped $9b off the fund’s investments.

“I’ve had this before in markets, both in my executive career when I was managing money, but also at the Super fund with the GFC, and in my executive career around the Asian Crisis.”

She says her main focus at the time was supporting current chief executive Matt Whineray.

“We knew we would have volatile returns; we weren’t quite fully prepared, because you can never be fully prepared for an event like Covid, but I knew how the fund would behave given all the discussions we had had and how we had set the fund up.

“My main focus was making sure the board, and both collectively and individually as chair, that we were supportive of Matt Whineray and the team … to know that we were in this together. And that we would help him manage his staff.”

Savage says she has constantly felt humbled by the responsibility of managing such a large amount of taxpayer money and doing it in a way that protects New Zealand’s reputation.

“I’m very conscious of it but that is sort of what you sign up to when you become a guardian [board member].

“I wouldn’t say I didn’t sleep at night as a result of that. I’ve learnt very much that you have to get the governance and set it up right so that you can deliver on the purpose. That’s what is important for me and making sure that the team around me, and the board is really one team – it’s not the top team – it’s just a team in the organisation.

“I don’t think a board’s job is to control, a board is actually to provide insight and oversight for the present but the biggest thing the board has to do is provide foresight for the future … knowing of course that most of the decisions you make around foresight, you are not going to be around to see that come to fruition.”

If she has some advice for her replacement Catherine Drayton, it’s to keep her eye on the prize.

“I think the challenge for the Super Fund is to remain focused on delivering on the purpose and keeping our stakeholders – being all of New Zealand – particularly our Minister of Finance, on side with us and informed about the decision. So it doesn’t become Super Fund off into the sunset.”

While Savage is saying goodbye to her time at the Super Fund, the 53-year-old still has plenty on her plate to keep her busy, running Savage Group and serving on the boards of Infratil and a number of other organisations.

“I feel really proud of what the fund has done. But it was the right time.

“I have promised my husband I will do a ski season in New Zealand with him. He still doesn’t believe it is going to happen. We are child-free now the girls are at Otago [University]. We are just going to spend some time enjoying New Zealand.”

But she also promised staff at the Super Fund that they would not be seeing the last of her.

“I just feel I want to give back. There is an onus on me to do that. I am sure there will be something in future to help New Zealand.”

Catherine Savage:

Job: Professional director and managing director of Savage Group
Age: 53
Education: Bachelor of Commerce and Administration majoring in accounting, finance and marketing at Victoria University
Career: Worked for an accounting firm straight out of university and then became treasury manager at National Gas Corporation. She joined AMP Capital Investors and in 2000 became New Zealand managing director. In 2006 set up Savage Group with her father, where she is still a managing director. Joined the board of the New Zealand Superannuation Fund in 2009, becoming deputy chair in 2012 and then chair in 2016. She left the board in March. Director of Infratil and board member of the Pacific Pension & Investment Institute and an advisory board member of Paua Wealth Management.
Family: Married to Glen with children, Matthew, Emily and Lizzie
What was the last book you read? Madness of Crowds by Douglas Murray
Last movie you watched? Who do you think I am?
Last holiday? We went to Waiheke with the children for four days at end of January for our wedding anniversary.

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