Govt resumes payments to NZ super fund today
THE Government plans to contribute $7.7 billion to the New Zealand Superannuation Fund between now and 2022 and the first $500 million payment is being made today.
The Guardians of the Super Fund board welcomed the resumption of the contributions to the $37 billion fund which has been overseen by Adrian Orr, who will become Reserve Bank governor next year.
The super fund is also known as the ‘‘Cullen fund’’ after its founder and former Labour finance minister Sir Michael Cullen.
The former National government stopped contributions to the fund in July 2009, saying it would restart contributions when the Crown accounts returned to surplus.
The accounts returned to surplus but National failed to restart the contributions.
Now, Finance Minister Grant Robertson has approved ongoing contributions.
Super fund board chairwoman Catherine Savage said the cost of providing universal superannuation in New Zealand was rising due to an increasing proportion of older people in the population.
The fund, which invested globally, was a way for the Government to save now in order to help pay superannuation costs in the future.
At the projected peak of withdrawals from the super fund in 2078, the fund would be covering 12.8% of the country’s net superannuation bill. The projected tax paid by the fund would equate to a further 8.5% of the superannuation cost.
Ms Savage said the fund’s performance had been exceptional.
It had returned 10.5% since inception in 2003 and 21.3% over the last 12 months.
‘‘While we remain confident the fund will deliver value for taxpayers over the longterm, more normal returns of 7% to 8% are expected in the future.’’
The contributions would initially be invested in passive, lowcost equity and bond investments. New active investments would be added as opportunities arose, she said.
The fund retained its strong emphasis on growth investments and, as a result, it continued to be heavily weighted towards shares.