24 May 2001

1st payment made to partial prefunding of NZ Super

The Government has used the 2001 Budget to begin making contributions into the planned New Zealand Superannuation Fund.

"The initial contribution is for $600 million, the amount signalled in this year's Budget Policy Statement," Finance Minister Michael Cullen said.

The assumed transfers for the subsequent three years were $1.2 billion, $1.8 billion and $2.5 billion respectively.

This money would sit in the Debt Management Office, earmarked for the New Zealand Superannuation Fund. But the Fund itself, and the governance arrangements for it, would not be formally established until the New Zealand Superannuation Bill, now before the Finance and Expenditure Select Committee, was passed.

"Securing New Zealand Superannuation is vital as currently almost half of all superannuitants rely entirely on NZS as their sole source of income," Dr Cullen said.

"However it is important that New Zealanders also save privately if they want a higher standard of living than the NZS can provide.

"The Government will appoint a small task force of officials and savings industry representatives to report back before the end of this year on options to lift private savings."

This timetable would allow the task force to take into account the work of the Taxation Review Committee.

"We will attempt to get cross-party consensus on both the partial prefunding scheme and on the tax treatment of private superannuation schemes.

"But if we cannot get agreement to pass the necessary legislation in this Parliament, we will campaign actively for our own policies at the next elections and let the voters judge," Dr Cullen said.

ENDS

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