Opinion: NZ Superannuation Fund

The fund is a simple concept. The government has legislated to invest money today to gain a return over the long-term. That return is to be used in the future to smooth the tax burden of the rising cost of superannuation income.

One measure of financial success is whether the returns to the fund over decades are above the cost of government borrowing. This may or may not be the case over any randomly selected day, week, month, or year. In keeping with that we have deliberately and repeatedly highlighted the wide range of year-to-year outcomes we expect over the life-time of the fund, including negative ones. We have used our annual reports to illustrate this.

A government is in a great position to benefit from investing over decades, more so than any individual. It can focus on the long-term and hence make investment decisions not available to many. It has the ability to ride out the tough patches and avoid 'fire sales'. And, it can fund this activity at the cheapest rate and receive the tax on its local investment. The chance of investment success is as good as it can get.