How the Fund Works

The establishment of the Fund recognises New Zealand's ageing population as a significant and multigenerational, social and financial challenge.

The Fund attempts to address this situation by 'smoothing' the tax burden between generations of New Zealanders, of the future cost of NZS. It does this by investing Government contributions received during the early period of the Fund and, through returns generated over decades of investing, by growing the size of the Fund. At a certain point - currently from 2031 - the Government then begins making withdrawals from the Fund to help to meet the cost at that time of NZS.

'Pre-funding' the future cost of NZS in this way means that future Governments do not have to seek as much from future New Zealand taxpayers (or from other sources, such as through raising debt) to meet the cost of NZS when it is increasing most sharply.

Below are links to a series of graphs from the New Zealand Treasury which show the impact of the Fund.

Graph 1 - projected cost of New Zealand Superannuation with and without the Fund  (PDF 4.5KB)

Graph 2 - Government contributions to the Fund over time (PDF 6.7KB)

Graph 3 - projected Fund size over time (PDF 5.5KB)