Government to Boost NZ Superannuation Fund Contributions to $3.1 Billion by 2030

Government contributions to the New Zealand Superannuation Fund are forecast to total $3.1 billion over the next four years, $2.2 billion more than expected at the Half Year Update in December, Finance Minister Nicola Willis says.

The Government’s Super Fund contributions are set by a legislated formula and rise from $562 million next financial year to just over $1 billion in 2029/30, Nicola Willis says.

Updated population projections, new inflation forecasts and other changes to formula inputs mean we are continuing to make contributions over the next few years, rather than drawing down from the Fund as expected in last year’s Budget.

One significant change is the Guardians of New Zealand Superannuation lowering their assumption of long-term expected returns from 7.8 to 7.2 per cent.

This reflects their view that, with global equity markets at historically high levels, future returns will likely be weaker compared to recent years.

These higher contributions are included in the Treasury’s fiscal forecasts. Super Fund contributions are capital investments that add to government debt but do not count against the Budget capital allowance.

Withdrawals from the Super Fund are now expected from 2054 onwards, to help meet the future costs of New Zealand Superannuation.

In the meantime, Budget forecasts show the cost of New Zealand Superannuation growing rapidly as the population ages, from $24.7 billion in the current financial year to $31.2 billion in 2029/30, Nicola Willis says.