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NZ Super Fund sees strong recent returns

The New Zealand’s Superannuation Fund has experienced a strong start to its financial year with a 6.3% rise in July, followed by a 2.8% return in August.

While managed funds are a long-term investment, last year was not a strong one for the fudn, dropping from $14.3 billion in July 2008 to $13.3 billion the following year.

But that drop has now been wiped out by gains in the first few months of the 2010 financial year, with $845 million coming into the fund in July, followed by another $421 million in August.

September is keeping up that trend, with an unaudited return of 3.07% in the first 17 days of the month, bringing the fund to $15.3 billion.

This represents an unaudited return of 33.34% or $3.6 billion since the market trough in early March, when the fund sat at just $11.5 billion.

The fund aims to exceed, before tax, the interest rate on New Zealand treasury bills by at least 2.5% per annum over rolling 20-year periods.

The fund was started in September 2003 with $2.4 billion in cash, with the Government contributing $14.88 billion since then, while $1.36 billion has been returned in tax.

By the end of August, the fund had total assets of $14.9 billion, including more than $5 billion in international equities, $2.3 billion in international fixed income and just over $1 billion in New Zealand equity.

As part of this year’s budget announcements, Finance Minister Bill English axed contributions to the New Zealand Superannuation Fund until the books head back into surplus, ten years away in 2020.

He also issued a directive to invest 40% of its worth in New Zealand, although this was framed as an expectation rather than an attempt to enforce such a limit. 

More by Robert Smith

Comments and questions

The previous government eventually alienated a large part of the electorate with its idiotic social poliices. However, it did try to address the coming superannuation crisis - something which this National-led government is ignoring. To quote Thatcher they "stagger from expediency to expediency". How about some sensible, bi-partisan long-term planning on the superannuation issue? Don't the voters deserve this?