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New Zealand Superannuation Fund Contribution Rate Model - BEFU 2022

Issue date: 
Thursday, 19 May 2022
Status: 
Current

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Document Date: 
Thursday, 19 May 2022
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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), under the legislated formula in Section 43 of the New Zealand Superannuation and Retirement Income Act 2001. The model was updated at the time of the release of the Budget Economic and Fiscal Update 2022 (BEFU 2022).

Since the last release with the Half Year Economic and Fiscal Update 2021 (HYEFU 2021) 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 the Forecast Financial Statements in the BEFU document, the Government's planned contributions for 2021/22 have been applied.

Between 2019/20 and 2022/23, small percentages of the capital contributions have or will be transferred to a new fund, the Elevate NZ Venture Fund, administered by the Guardians of New Zealand Superannuation, which will invest in New Zealand’s early stage capital markets via NZ Growth Capital Partners. 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 data - 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.
  • NZSF history - 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 data 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.

Much more information about the logic of the NZSF model, the history and purpose of the NZSF itself, the public pension New Zealand Superannuation, and the demographic changes that were a major reason for establishing the NZSF can be found in the Treasury Working Paper Golden Years – Understanding the New Zealand Superannuation Fund

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, 19 May 2022