Guardians Board welcomes resumption of contributions to the NZ Super Fund
POSTED ON: 14 December 2017
The Board of the Guardians of New Zealand Superannuation, the manager of the NZ Super Fund, has welcomed the resumption of Government contributions to the $37 billion Fund.
The Government plans to put $7.7 billion into the NZ Super Fund between now and June 2022, with the first payment to be made on Friday, 15 December.
The cost of providing universal superannuation in New Zealand is rising due to an increasing proportion of older people in the population. The NZ Super Fund, which invests globally, is a way for the Government to save now in order to help pay superannuation costs in the future. It will smooth the cost of superannuation between today’s taxpayers and future generations.
At the projected peak of withdrawals from the NZ Super Fund in 2078, the Fund will be covering 12.8% of the country’s net superannuation bill. The projected tax paid by the Fund will equate to a further 8.5% of the superannuation cost.
Chair Catherine Savage said: “We welcome the resumption of contributions to the NZ Super Fund and note the apparent progression towards funding in accordance with the formula in the NZ Superannuation and Retirement Income Act.”
“The Fund’s performance has been exceptional. It has returned 10.5% p.a. since inception in 2003 and 21.3% over the last 12 months*. While we remain confident that the Fund will deliver value for taxpayers over the long term, more normal returns (7%-8% p.a.) are expected in future.”
“It is important to understand that, for long-term investors such as the NZ Super Fund, market downturns are often when the best investment opportunities can be secured. We are well positioned to take advantage of any market stress.”
Ms Savage said the contributions would initially be invested in passive, low cost equity and bond investments, with new active investments to be added as opportunities arise over time.
“We retain our strong emphasis on growth investments and as a result the Fund continues to be heavily weighted towards shares.”
Contributions to the Fund were suspended in July 2009.
*As at 30 November 2017, after costs, before NZ tax.
Minister of Finance's Media Release: Super Fund contributions secure generational legacy