Our investment governance statement
At GESB, we are what is known as a crown agency – and we operate within the Western Australian State Government's policy framework. The Treasurer administers the legislation, which underpins our operations.
Within this framework, we invest our members' superannuation contributions to produce investment returns that meet or exceed benchmarks.
Our operations are defined in the State Superannuation Act 2000 (WA) (SSA) and the State Superannuation Regulations 2001 (WA) (SSR). In relation to our Board:
- Section 5 of the SSA establishes our Board
- Section 6 of the SSA sets out the functions of our Board, including its responsibility for administering the schemes and managing the Government Employees Superannuation Fund (the Fund)
Our Board is here to act in the best interests of our members
In carrying out its functions under the SSA, our Board is, as far as practicable, to act in the best interests of our members. Our Board needs to ensure that our members and employers are fully informed of their rights and obligations under the SSA. Our Board also needs to ensure equity between the members of each scheme and the members of each other scheme.
As part of the regulatory process, the Treasurer, advised by the Department of Treasury, issues Prudential Guidelines and approves recommendations by our Board on the appointment of external investment managers. Section 18 of the SSA allows our Board to invest the assets of the Fund in any form of investment that is, or is of a kind that is, approved by the Treasurer.
Our Board appoints an investment committee
As permitted under clause 8 of schedule 2 of the SSA, our Board has appointed an investment committee to help in the performance of our investment functions. The current committee comprises:
- Five Board directors
- Two external members who have been chosen for their expertise and high level technical skills in investment matters
Our Board appoints the members of the committee, selects the Chair and is responsible for determining our investment governance framework. The investment committee, in performing its duties, needs to operate within the parameters determined by our Board.
Our Board formulates our investment strategy
As required by section 19 of the SSA, our Board formulates an investment strategy for our Fund, which is to be consistent with any relevant Treasurer's guidelines. In formulating our investment strategy, our Board takes into account all of the circumstances of the Fund including:
- The need to exercise care and prudence to maintain the integrity of the Fund
- The nature of, costs and risks associated with, and potential for capital appreciation from different investments
- The desirability of diversifying the investments
- The liquidity of the Fund
- The expected cash flow requirements of the Fund
- The level of existing and prospective liabilities
With respect to the different investments and different kinds of investments, our investment strategy will take into account their nature, potential for capital appreciation and income return, associated costs and associated risks.
The Treasurer's Prudential Guidelines for Investments reinforce the legislation. These guidelines give our Board the responsibility to:
- Recommend investment objectives for each scheme
- Formulate an investment strategy to achieve these objectives, which is in accordance with the guidelines
- Recommend external investment managers to manage the assets of the GESB Fund to the Treasurer
- Terminate external investment managers as required
When determining the investment objectives and asset allocation of the schemes our Board needs to consider a range of factors, including:
- Risk of capital or income loss
- Effect of tax on returns
- Expected net investment returns
- Reputation risk to the State and GESB when determining the investment objectives and asset allocation for the schemes
Our asset consultant provides independent advice on asset allocation and investment manager selection
Our Board is also required to take independent advice on asset allocation on a regular basis. In following the Treasurer's guidelines, our Board has appointed an asset consultant to assist in developing our investment strategy and selecting appropriate investment managers.
Our asset consultant's approach to manager evaluation and selection is consistent across all asset classes. This consultant is continually researching investment managers to understand their philosophies, styles, strengths and weaknesses. Using this knowledge, our asset consultant is able to recommend investment managers who are the best fit with the investment strategy of our Board.
Our investment approach considers environmental, social and governance (ESG) risks
We believe that ESG factors can impact the ability of some assets or securities to meet investment objectives and provide optimal outcomes for our members and the state over the long term.
We maintain an ESG policy, which outlines our beliefs and approach in relation to including ESG and climate change risks in our investment process.
Learn more about our approach to responsible investing.
Our investment governance process involves regular review of our investment strategy
Our investment governance process is designed to fulfil the legislated role of acting in the best interests of members, as far as practicable, and to review regularly our investment strategy and the management and performance of its investments.
Through the activities of our appointed asset consultant and on-going reporting and review function, our Board endeavours to ensure that it achieves investment returns that meet or exceed stated objectives.
To learn more about our investment process, visit our investment and performance section.
Thank you for printing this page. Remember to come back to gesb.wa.gov.au for the latest information as our content is updated regularly. This information is correct as at 22 January 2021.