The New Zealand Superannuation Fund has beaten the cost of debt by $346 million over nine years, according to a new analysis.
That "modest achievement" was not enough to justify the risks run by the Government's Super Fund, according to an analysis by the Retirement Policy and Research Centre co-director Michael Littlewood.
The research centre is based at Auckland University.
In the past, Littlewood has said the now-$20 billion Super Fund should be carefully dismantled and superannuation payments returned to the original pay-as-you-go model.
"The 2012 numbers add nothing to the case in favour of the Super Fund's continued existence," Littlewood said.
In a total accounting context, the Super Fund seemed "little more than fiscal and political window dressing".
The Super Fund or "Cullen Fund" has been running for more than nine years, set up to partly pre-fund future superannuation costs.
The Government temporarily stopped contributions to the Super Fund in 2009 but planned to resume them in 2019.
The research centre has long questioned whether the fund has added to the Government's net worth since it started.
The only proper way to measure that was by comparing the fund's return with the cost of long-term government debt.
"That's because the Government, if it wished, [could] sell the NZSF investments and repay that debt," Littlewood said.
The Government had the choice with each contribution to either cut debt or ask the fund's guardians to invest the money.
Like a household, it was not sensible to raise a mortgage on the family home and invest the proceeds in shares and other investments, unless the before-tax returns were better than the cost of debt.
Against that measure the Super Fund's returns were "less than comforting", Littlewood said.
In the year to June 2012, the Super Fund lost $645m based on what it could have saved by paying off debt instead.
That loss was based on the 5.04 per cent yield on 10-year government stock, against the fund's guardians' published return for the year of 1.1 per cent, giving a loss of $645m.
For the full nine years to the end of June 2012, the fund beat the cost of debt by $346m.
"Taxpayers have not been compensated for effectively borrowing all the money required to allow the NZSF to maintain its investments in financial markets," Littlewood said.
The fund has said in the past that it was set up for a long- term purpose and was weighted towards "growth assets" like shares.
That meant it was more subject to short-term ups and downs in the market.
The Super Fund expected to achieve average returns of at least 2.5 per cent better than Treasury bill interest rates and had beaten that in most years but under-performed in 2008 and 2009 during the global financial crisis.
Meanwhile, the returns for the first four months of the current financial year have recovered the loss of the previous year.
In the first months to the end of October, unaudited results show the Super Fund's assets rose $1.47b to $20.2b.
But based on the risk-adjusted hurdle rate, the fund's guardians are still about $1.3b behind, over the past nine years.