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Financing New Zealand Superannuation

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The New Zealand Superannuation Fund is being established as a means of smoothing out the impact on the rest of the Crown’s finances of the transition that will take place over the next fifty years to a permanently higher proportion of the population being eligible for New Zealand Superannuation, the universal pension paid to New Zealanders over the age of 65. This paper discusses the financial issues surrounding the determination of the contributions that the Government would be required to make to the Fund over time in order to meet this objective. The calculation of the required contribution rate is derived as a function of future expected entitlement payments, future expected nominal GDP, future expected investment returns, and the Fund balance. Estimation issues are discussed and the implications of volatility in investment returns are examined. Some issues in assessing long-term expected returns are addressed in an appendix.

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  • Brian McCulloch & Jane Frances, 2001. "Financing New Zealand Superannuation," Treasury Working Paper Series 01/20, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:01/20
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    File URL: https://treasury.govt.nz/sites/default/files/2007-10/twp01-20.pdf
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    Cited by:

    1. Palacios, Robert, 2002. "Managing public pension reserves Part II : lessons from five recent OECD initiatives," Social Protection Discussion Papers and Notes 33407, The World Bank.
    2. Buckle, Robert A., 2018. "A quarter of a century of fiscal responsibility: The origins and evolution of fiscal policy governance and institutional arrangements in New Zealand, 1994 to 2018," Working Paper Series 20848, Victoria University of Wellington, Chair in Public Finance.
    3. Dhritidyuti Bose & Renee Philip & Richard Sullivan, 2016. "Returning to Surplus: New Zealand's Post-GFC Fiscal Consolidation Experience," Treasury Working Paper Series 16/05, New Zealand Treasury.
    4. Buckle, Robert A., 2018. "A quarter of a century of fiscal responsibility: The origins and evolution of fiscal policy governance and institutional arrangements in New Zealand, 1994 to 2018," Working Paper Series 7693, Victoria University of Wellington, Chair in Public Finance.
    5. Omoniyi B. Alimi & David C. Maré & Jacques Poot, 2018. "More Pensioners, Less Income Inequality? The Impact of Changing Age Composition on Inequality in Big Cities and Elsewhere," Advances in Spatial Science, in: Roger R. Stough & Karima Kourtit & Peter Nijkamp & Uwe Blien (ed.), Modelling Aging and Migration Effects on Spatial Labor Markets, chapter 0, pages 133-159, Springer.
    6. Emma Gorman & Grant M Scobie & Yongjoon Paek, 2013. "Measuring Saving Rates in New Zealand: An Update," Treasury Working Paper Series 13/04, New Zealand Treasury.
    7. James Obben & Monique Waayer, 2011. "New Zealand's old‐age pension scheme and household saving," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 38(9), pages 767-788, August.
    8. John Stephenson & Grant Scobie, 2002. "The Economics of Population Ageing," Treasury Working Paper Series 02/04, New Zealand Treasury.
    9. Omoniyi B Alimi & David C Maré & Jacques Poot, 2017. "More pensioners, less income inequality?," Working Papers 17_02, Motu Economic and Public Policy Research.

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    More about this item

    Keywords

    pension fund; capital markets; investment returns; social security; retirement income;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G1 - Financial Economics - - General Financial Markets
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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