Labour resumes super payments
After almost a decade of suspensions, the Government will resume repayments to the New Zealand Superannuation Fund today, albeit more slowly than its founder expected.
The fund was set up by the previous Labour Government in a bid to help smooth the looming rise in state pension costs.
National ceased payments into the fund when it came into office, at the depths of the global financial crisis.
Robertson confirmed in the Government’s half-year economic and fiscal update yesterday that payments to the fund would begin today. A total of $500 million will be paid into the fund in the current fiscal year.
The fund currently manages about $35 billion in assets.
‘‘This isn’t a policy about tomorrow, or next year, or even the next decade; it’s about investing responsibly to enhance the long-term wellbeing of New Zealanders,’’ Robertson said.
‘‘To do that, we plan to put money in regularly, as Sir Michael Cullen intended when he set up the fund in 2001 … This Government cares about how future costs are funded across generations.
‘‘We are acting responsibly to address future issues now.’’
Over five years, contributions will total $7.7b.
While Labour has said the added cash will see the fund grow to $63b by 2023, the contributions are considerably below what Cullen envisaged.
The Labour-led Government has said it will increase contributions progressively, to $1b in 2019 through to $2.5b by 2022.
But under the formula laid out in the fund’s founding legislation, the Government would be required to inject $2.7b each year.
Robertson told reporters that the Government saw the move as important and contributions would eventually approach the level required under law.
‘‘We’re doing what we can do,’’ he said, adding that the Government had a number of other priorities for spending.
The initial payment was largely ‘‘symbolic’’ but the payments approached the required contribution by 2023. ‘‘What we want to do is make a start.’’
According to calculations, the NZ Super Fund has missed out on about $14.5b since payments were suspended. Had the fund had the extra capital, it would have generated more than $6b in additional returns.