Aus­tralia to de­lay tap­ping US$130b Fu­ture Fund

New Straits Times - - Business -

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

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