Hon Dr Michael Cullen
Minister of Finance

1 September 2006 Media Statement

New Zealand Super Fund caps off super week

Finance Minister Michael Cullen today congratulated the managers of the New Zealand Superannuation Fund for another outstanding investment performance.

"For the June financial year the fund earned a return of 19.2 per cent with funds under management climbing to $10.1 billion – it's a result that will be the envy of many fund managers across the industry," said Dr Cullen.

"The fund's expectation is to exceed the risk free rate of return (the return on Treasury bills) by at least 2.5 per cent over the long term. The risk free rate of return is currently 6.77 per cent so today's result is excellent.

"It is the nature of equities markets that results will not always be as good as this. However, the fund has performed extremely well since inception in 2003 with annual returns averaging 14.9 per cent. This is pleasing, as good returns will ease pressure on future governments to fund New Zealand Superannuation.

"Today's result caps off a great week for the government's superannuation strategy and the retirement dreams of thousands of New Zealanders.

"On Wednesday night the KiwiSaver Bill passed its third reading. This was another important milestone in securing the long term financial security of New Zealanders. KiwiSaver will provide an easy savings choice for thousands of workers from 1 July next year.

"The Labour-led government has shown continuing leadership in building a savings culture. National has no vision, no strategy. It was the only party to vote against KiwiSaver.

"The New Zealand Superannuation Fund, the State Sector Retirement Savings Scheme (SSRSS) and now KiwiSaver are all significant planks in our strategy of preparing for the future.

"I am also heartened that 33,333 civil servants are now members of the SSRSS, an increase of 17 per cent for the June year. The message is getting through that all of us - government, workers and employers - must do more to secure our futures.

"Indeed, our policies have been admired around the world. New York credit rating agency Standard & Poor's said in June New Zealand was one of the best placed nations in the world to meet the challenges of an ageing population."

Note
The New Zealand Superannuation Fund was established in 2003 with an initial allocation of $2.4 billion. It aims to partially provide for the future cost of New Zealand Superannuation, thereby reducing the fiscal pressure on future governments as the proportion of the population aged over 65 climbs. At present, one person in eight is over 65. This is forecast to rise to one in four by 2030. By then the fund is expected to total over $120 billion.

Further information on the fund is available at:
http://www.nzsuperfund.co.nz/

ENDS

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