Australia to delay tapping US$130b Future Fund
SYDNEY: Australia will delay tapping its US$130 billion (RM572 billion) Future Fund, the world’s seventh-largest sovereign fund, for at least six years to ensure it has sufficient assets to cover mounting public service pension liabilities, said a newspaper on Saturday.
Federal Treasurer Scott Morrison would extend the maturity date for drawing down on the fund from July 1 2020, to at least 2026, said The Australian.
By doing so, the fund would generate sufficient assets to cover unfunded superannuation liabilities for federal public servants, who enjoy generous defined benefit pension schemes that guarantee as much as 80 per cent of their final salary for life.
According to The Australian, public service pension liabilities under the schemes, which have been closed to new members, will peak in 2049-50 at US$20 billion. Liabilities are not expected to expire until 2100.
Morrison said it made no sense to draw down on the Future Fund while it was earning seven per cent a year when governments could borrow to pay the pensions at 2.8 per cent.
“Ten or 15 years down the track, the unfunded super-liability problem would still be there,” he was quoted as saying.
“We want the Future Fund to be able to do the job for which it was set up.”
The Future Fund is Australia’s biggest investor. Reuters