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Source: New Zealand Treasury:


The New Zealand Superannuation Fund (NZSF) is one of New Zealand’s largest publicly-owned financial assets. Its primary purpose is to act as an inter-generational tax smoothing vehicle, in order to assist future taxpayers cover the cost of providing the public pension, New Zealand Superannuation (NZS).

New Zealand’s ageing population structure will, in the absence of any changes to pension settings, lead to a significant lift in NZS expenditure as a percentage of gross domestic product (GDP) over the next few decades. The paper includes an explanation of the reasons behind why this demographic change is occurring and will continue to unfold over the foreseeable future.

The paper contributes a comprehensive analysis of the NZSF’s role in New Zealand’s public finances.

This includes descriptions and modelling of NZS and the NZSF, explanations of the mathematical relationships behind the NZSF’s legislated contribution rate formula, and a brief history of the NZSF.

Future outcomes for the NZSF’s size and role in helping to fund NZS, depending on scenarios that vary the evolution of NZS relative to GDP, are illustrated and explained.

How and why projections related to the NZSF have changed over time is also analysed and explained, including what factors have had the most influence on these changes.

The paper does not comment on the merits of policy decisions that have been made in regard to either NZS or the NZSF. That is not the paper’s purpose, outside of covering any aspects of these in regard to how the NZSF has evolved or may evolve in future, or how its logic operates.


The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.


The author would like to acknowledge the contribution of Dr Brian McCulloch for his work in developing the logic behind the New Zealand Superannuation Fund, and for acting as an advisor to him, in both the author’s own work on modelling the Fund and in writing this paper.

The author is grateful for the valuable contributions and advice of Christopher Ball, Michael Eyre, John Janssen and Oscar Parkyn who, along with Dr McCulloch, acted as referees for this paper. If any errors remain, then they are entirely the responsibility of the author.

This paper is dedicated to the memory of David Bowie, in gratitude for a lifetime of inspiration.