tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, April 2nd, 6:44PM

Investments

rss
Latest Headlines

Returns on NZ Super fund cut

Treasury has cut the expected return rate of the Big Cullen Fund.

Thursday, December 19th 2002, 8:58PM

by Rob Hosking

The projected returns on the New Zealand Superannuation (aka Big Cullen Fund) have been scaled back.

The December Economic and Fiscal Update (DEFU) released today by the Treasury shows that officials have reduced their assumptions about the likely returns the multi-billion dollar fund will make.

It is now expected to make an after tax return of 7%, rather than the 7.5% projected earlier in the year.

The downward shift is due to a change in the assumptions about the expected market equity risk premium, the DEFU says.

The changes are not enough – yet – to cause the government to revise its annual contribution to the fund. The documents show the set of assumptions that the Treasury is working on are still highly speculative.

The Treasury is not working out the likely return on the fund as such: that is a job for the Guardians, once they have finalised their strategy.

Rather, Treasury’s job is to work out how much money the taxpayer will have to divert into the fund each year, and Treasury officials have to make a set of fairly heroic assumptions based on other assumptions in order to come up with such a figure. Those assumptions start on a 70/30 equities/bonds, and then make various assumptions around the likely return on equities, bond rate, management fees and tax rates.

All of these have to be assumed until the Guardians come up with an investment strategy -and that is not expected until the second quarter of next year. That may not be in time for more detail to be revealed in Minister of Finance Michael Cullen’s fourth Budget, which will probably be released in May or June.

What does look set to be included in next year’s Budget is a clearer indication on where the government is heading with its tax treatment of superannuation.

The Budget Policy Statement, released with the DEFU, outlined priorities for the 2003 Budget, and amid the expected bromides about innovation, skills development, and investing in infrastructure, the tax treatment of private savings is given a far greater prominence than it has been in the past.

"We will make tax treatment of superannuation more equitable," the policy promises. "This will potentially remove an important disincentive to save for those on lower incomes."

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

« Guardians advance their thinking on investing the fundAMP & Good Returns launch superannuation website »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Advisers 'will drop out'
    “@Fred Dodds - with respect, focusing on your Level 5 qualification, or for that matter your transitional FAP licence, is...”
    4 hours ago by Andrew Scott GM Newpark
  • Advisers 'will drop out'
    “Pragmatic... larger practices were already pulling back on hiring advisers prior to this as a result of the flight to safety...”
    5 hours ago by Backstage
  • Advisers 'will drop out'
    “I doubt that David Greenslade has got this right. After the 1987 crash, there was an influx of high quality new advisers...”
    7 hours ago by MediCare
  • Covid withdrawals possible 'but not always desirable'
    “Totally agree with you Murray. Total silence to date from Govt and FMA on this important topic. Accessing savings is better...”
    7 hours ago by Davidvs
  • Covid withdrawals possible 'but not always desirable'
    “Surely I am not the only adviser who thinks that in the current Covid-19 circumstances,it should be easier not harder to...”
    8 hours ago by Murray Weatherston
Subscribe Now

News and information about KiwiSaver

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.55 3.85 4.49
ANZ Special - 3.05 3.35 3.99
ASB Bank 4.45 3.55 3.89 3.99
ASB Bank Special - 3.05 3.39 3.69
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 3.09 3.35 3.69
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.75 4.10 4.55
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.15 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 ▼2.95 ▼3.09 ▼3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.94 4.08 4.39
Kiwibank 4.40 3.84 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 3.09 3.39 3.65
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 ▼4.09 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - ▼3.09 ▼3.39 ▼3.69
The Co-operative Bank - Owner Occ 4.40 3.25 3.45 3.69
The Co-operative Bank - Standard 4.40 3.75 3.85 4.19
Lender Flt 1yr 2yr 3yr
TSB Bank 5.34 ▼3.89 ▼4.15 ▼4.49
TSB Special 4.54 ▼3.09 ▼3.35 ▼3.69
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 3.09 3.39 3.69
Median 4.60 3.65 3.89 3.99

Last updated: 31 March 2020 8:55am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com