Short-term variation won’t affect pensions - Mallard

Acting Finance Minister Trevor Mallard said today the value of public servants’ pensions, paid out of the Government Superannuation Fund, would not be affected by fluctuations in the value of investments in overseas shares.

“The annual results for the GSF (Government Superannuation Fund) have not been published but I understand that during the last financial year, a small pre-tax profit will be made across the whole portfolio – which includes overseas and New Zealand shares, and fixed interest investments.”

“The point of a diversified fund is that it balances risk and return. There will be good years and there will be bad years. In some years shares will do well, in other years bonds do well,’’ Trevor Mallard said.

Trevor Mallard said it was important to look at the portfolio over time and not at the performance of elements of it over short time spans.

The portfolio had been assessed by experts as giving the best chance of positive returns, with acceptable levels of risk, over the next 30 to 50 years.

“Short, and even long term, variations in returns will have absolutely no effect on the pensions of contributors. Those pensions are defined benefit pensions and are government guaranteed. Variations in returns merely alter how much the government contributes to the final pension,” Trevor Mallard said.

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