Our Purpose Tā mātou kaupapa
Investing for the long term
What is the challenge the Fund is helping to solve?
All New Zealanders aged 65 and over are eligible to receive New Zealand Superannuation payments (also known as the pension, National Super, Government Superannuation or Super). The government pays for these through taxes paid by today’s taxpayers.
With New Zealand’s population ageing, there will eventually be fewer taxpayers as a proportion of the working age population to support those receiving superannuation.
These demographic changes mean that in order to keep funding universal superannuation, future generations face a much higher tax burden than their predecessors.
How do we fit in?
To help pre-fund future retirement benefits, the New Zealand Superannuation and Retirement Income Act 2001 (the Act) established:
- the New Zealand Superannuation Fund (the Fund), a pool of assets on the Crown’s balance sheet; and
- the Guardians of New Zealand Superannuation (the Guardians), a Crown entity charged with managing the Fund.
Between 2003 and 2009, the government contributed NZD14.88b to the Fund. Contributions are scheduled to restart once core Crown net debt is 20% of GDP, currently forecast to occur in 2020/21. From around 2029/30, the government is expected to begin to withdraw money from the Fund to help pay for New Zealand Superannuation. Withdrawals will continue for an eleven year period, before switching back to contributions for a further 17 years. A larger, more permanent withdrawal period will commence in 2057/58. The Fund is expected to peak in size as a percentage of GDP in the 2070s (see www.treasury.govt.nz/government/assets/nzsf/ the contribution rate model for projections by New Zealand Treasury).
We compare the performance of the Fund to a passive, low-cost Reference Portfolio in order to benchmark the value we have added through active investment.
We also compare the performance of the Fund with that of 90-day Treasury bills – a measure of the ‘opportunity cost’ to the government of contributing capital to the Fund instead of using the money to retire debt.
For more information on the Fund, visit our website.