Superannuation is an important source of income and a backstop for many senior citizens around Central Southland, writes Bill English (National) in From the Beehive.
The National Government is committed to maintaining New Zealand Superannuation because it's important to provide support for our current superannuitants and certainty for future retirees.
Of course, paying for superannuation is expensive.
The Superannuation Fund was established to address the challenge of how to fund future superannuation entitlements by "smoothing" the tax burden between generations.
It works by investing Government contributions received during the early period of the fund and, through returns generated over decades of investing, by growing the size of the fund.
Government projections show that between 2005 and 2050 the number of New Zealanders eligible to retire (aged over 65) is expected to double. The associated cost of providing retirement income for these Kiwis is also expected to double.
The fund celebrated its 10th anniversary this month and I think it's appropriate to acknowledge what's been achieved for our people in that time.
Started in 2003 with $2.5 billion in cash, the fund has since returned an average of 8.84 per cent a year and now stands at $23 billion. We should congratulate the guardians of the fund, both past and present, on their achievements.
The fund is recognised as one of the best-structured sovereign wealth funds in the world, and was named the most innovative sovereign wealth fund by aiCIO magazine last December.
The guardians can be very pleased with the asset which they have built and with what it means to both current and future New Zealand taxpayers.
To date, the Government has contributed $14.8 billion to the fund. We suspended contributions in 2009 because with fiscal deficits and Government debt already increasing, it was imprudent to borrow more to invest in global financial markets. It remains our intention that contributions to the fund will resume once net debt has reduced to 20 per cent of GDP which is forecast for 2020. In the meantime those approaching retirement age, and our current senior citizens, can rest assured that their future is in good hands.
» Bill English is MP for Clutha-Southland.
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