2 Fiscal Outlook (continued)
NZS Fund
- Figure 2.11 - NZS Fund net worth
- Source: The Treasury
The NZS Fund is forecasting an operating surplus of $1 billion in 2008/09 growing to $1.9 billion in 2012/13.
A combination of holding gains and new investments funded by the Government's annual contribution of around $2 billion per annum is expected to increase the NZS Fund's net worth from $14.2 billion in 2007/08 to $32.2 billion in 2012/13.
|
Year ended 30 June $million |
2008 Actual |
2009 Forecast |
2010 Forecast |
2011 Forecast |
2012 Forecast |
2013 Forecast |
|---|---|---|---|---|---|---|
| Opening net worth | 12,973 | 14,212 | 17,440 | 20,638 | 24,175 | 28,024 |
| Revenue | 385 | 431 | 487 | 562 | 642 | 725 |
| Other expenses | (34) | (156) | (168) | (196) | (221) | (245) |
| Tax expenses | (237) | (326) | (419) | (494) | (574) | (655) |
| Gains/(losses) | (995) | 1,037 | 1,321 | 1,569 | 1,836 | 2,114 |
| Gross contributions from the Crown | 2,104 | 2,242 | 1,977 | 2,096 | 2,167 | 2,194 |
| Other movements in reserves | 16 | - | - | - | (1) | 1 |
| Closing net worth | 14,212 | 17,440 | 20,638 | 24,175 | 28,024 | 32,158 |
Source: The Treasury
The Government's contributions to the NZS Fund are calculated over a 40-year rolling horizon to ensure that superannuation entitlements over the next 40 years can be met if the contribution rate were to be held to be constant at that level. The Government is forecast to make the required minimum annual contribution for 2008/09 as calculated by the formula set out in the New Zealand Superannuation and Retirement Income Act 2001.
The underlying assumptions in calculating the contributions for 2008/09 are the nominal GDP series to 2048, the New Zealand Superannuation expense series to 2048 and the expected long-term, net after-tax annual return of the NZS Fund (6.6%) (also 6.6% in the Budget Update). The forecast rate of return is based on the Treasury's assumptions for the rate of return on financial portfolios of Crown financial institutions. The Treasury website contains further information on the NZS Fund, as well as a copy of the NZS Fund model (http://www.treasury.govt.nz/government/assets/nzsf/contributionratemodel).
