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New Zealand Superannuation Fund Contribution Rate Model - BEFU 2020

Issue date: 
Thursday, 14 May 2020
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Thursday, 14 May 2020
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Formats and related files

29.32 KB

Provides tracks of the capital contributions and the size of the NZSF, for both the central forecast/projection and a scenario where the contributions determined by the legislated formula are applied, over a 40-year horizon.

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A note that explains how and why the modelling technique for projecting the annual return rate on the assets of the NZSF has been changed, and the consequences for projections of important NZSF variables like capital contributions and the size of the NZSF.

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Explains the line-by-line modelling used, and some of the mathematics behind the calculations in the model. There is also information on where other, related material on the NZSF can be sourced from the Treasury website.

This is the Treasury’s model that is used to calculate the government's capital contribution to the New Zealand Superannuation Fund (NZSF) .

This model, which is in MS Excel workbook format, calculates the contribution rate for pre-funding New Zealand Superannuation (NZS). The model was updated at the time of the release of the Budget Economic and Fiscal Update 2020 (BEFU 2020).

Since the last release with the Half Year Economic and Fiscal Update 2019 (HYEFU 2019) the model’s data inputs have been updated. Specifically, the model uses the latest five-year forecasts of the NZSF’s earnings and tax payments and longer-term projections of nominal GDP and aggregate net (after-tax) NZS expenditure.

In particular the means of constructing the post-forecast projections of the rate of return on the NZSF assets has changed from the manner in which it was done in the HYEFU 2019 version of the NZSF model. For more detail on this change, please see the note Changes to the NZSF Model at the 2020 Budget published on this website.

Tables in the Budget Economic and Fiscal Update and the 2020 Fiscal Strategy publications show the Government’s planned capital contributions, alongside what the capital contributions would have been if they had resumed in 2020/21 under the legislated formula in Section 43 of the New Zealand Superannuation and Retirement Income Act 2001.

The two sets of numbers are not strictly comparable over the forecast period as the capital contributions required in any year under the legislated formula depend, in part, on the contributions in previous years. Reduced capital contributions in earlier years will increase the contributions required under the legislated formula in later years.

In the tables in the BEFU documents, planned contributions from 2019/20 to 2021/22 have been factored into the contribution profile intended by the Government but not the contributions as prescribed by the legislated formula (except for 2019/20, because it is nearly completed). 

Between 2019/20 and 2022/23, small percentages of the capital contributions are transferred to a new fund, administered by the Guardians of New Zealand Superannuation, which will invest in New Zealand’s early stage capital markets via New Zealand Venture Investment Fund Limited. While the legislated formula is used to calculate the capital contribution in 2022/23, this amount is reduced by $40 million that will be redirected to investment in early stage capital markets.

From 2023/24 onwards, annual capital contributions (and withdrawals in later years) are equal to those prescribed by the legislated formula.

For information purposes, the model contains two additional worksheets:

  • NZS Expense – History & Future This gives historical data, and the latest forecasts and projections, for aggregate NZS expenditure, both inclusive (gross) and exclusive (net) of tax, and average NZS recipient numbers over fiscal years. Expenditure data is given in nominal dollar terms and as a percentage of nominal GDP.   
  • History of NZSF  This gives historical data on the NZSF since its inception in 2001/02 up to and including the latest historical fiscal year (year ended 30 June).

The projected gross NZS tracks in the NZS Expense – History & Future worksheet display a potential path, beyond the latest forecast horizon, of the aggregate NZS expenditure numbers. These are in gross of tax terms, which is how all expenses in the Financial Statements of the Government of New Zealand are recorded.

The MS Excel workbook New Zealand Superannuation Fund (NZSF) Contribution Rate Model is a special purpose document and cannot be supplied in HTML format.


Last updated: 
Thursday, 14 May 2020