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Abolished 1974 Super fund would now be worth $278 billion

Abolished 1974 Super fund would now be worth $278 billion, delivering $256,000 nest eggs


A report prepared by Infometrics estimates the 1974 New Zealand Superannuation Fund would be worth $278 billion by 1 April 2015 had the scheme continued. The Infometrics report, funded by the Financial Services Council, and released today also estimates that someone on the average wage, saving over 40 years would have had a retirement nest egg of $256,000 at age 65 by 1 April 2015.

The fund was built on 8% contributions (4% from employees and 4% from employers) invested half in New Zealand bonds and half in New Zealand shares.

That nest egg invested in a bank term deposit earning 5.5% would fund a comfortable retirement, adding $234 dollars a week after tax on top of the NZ Super pension which is currently $282 a week after tax for each person eligible in a married, civil or de facto relationship.

Financial Services Council Chief Executive Peter Neilson says: “This helps explain why three out of four adult New Zealanders think it was a mistake to scrap the 1974 Superannuation Scheme”.

The Financial Services Council commissioned Infometrics to estimate the value of the 1974 NZ Super Scheme had it not been abolished after the change of Government in November 1975. Had the NZ Super Scheme continued there would now have been $139 billion invested in the New Zealand share market and another $139 billion invested in debt instruments.

The value of the total listings on the NZ Stock Exchange is currently $87 billion of which around $2 billion is from KiwiSaver funds.

“1974 Super fund investors would own a substantial proportion of our own listed
companies. We would also have a lower dollar, more New Zealanders on higher wages and fewer fast growing companies would have to sell equity to foreigners to be able to grow,” Mr Neilson says.

“Public opinion has changed since 1974, and most supporters of parties currently represented in Parliament now support making KiwiSaver universal (compulsory).

“We think the Infometrics report will help inform the Budget and General Election debates this year on how we can ensure New Zealanders achieve a comfortable retirement and how best to address our persistent current account deficit and growing external borrowing despite record terms of trade.”

Ends

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