The New Zealand Superannuation Fund has ended investment relationships with ING (NZ) and NZX subsidiary Smartshares as it takes more investment management in-house.

The Guardians of New Zealand Superannuation said the aim of the in-house move was to enhance the flexibility of their decisions and reduce costs.

It was part of a general focus on having direct participation in the New Zealand market, and was consistent with capabilities developed within the organisation.

The immediate consequence of the move was the internalising of three passive investment mandates in New Zealand equities, New Zealand cash and New Zealand credit, the guardians said yesterday.

Smartshares was appointed in September 2005 to manage a passive NZ equities mandate, while ING (NZ) was appointed in October that year to manage passive mandates for NZ cash and NZ credit

The guardians said they had had a 'professional and productive' relationship with ING (NZ) and Smartshares.

The New Zealand Superannuation Fund, which started investing at the end of September 2003, is designed to partially pay for the future cost of New Zealand superannuation.

Because the population is ageing, the cost of providing super is predicted to double over the next 50 years. It was designed to make its first payout in 2031.

Also known as "the Cullen Fund" after its founder, former Labour finance minister Michael Cullen, the fund was valued at $13.1 billion at the end of May.

The National Government, in its first Budget, stopped the annual $2 billion contributions into the fund, saying it could not be afforded in the current climate.

The Treasury has estimated that by 2050, with an 11-year contribution 'holiday', the fund would pay for 8 per cent of New Zealand's superannuation bill that year, compared with 11 per cent if there had not been an 11-year holiday.