The New Zealand Superannuation Fund (NZS) has been knocked off its perch as the country’s largest investment fund, figures released along with last week’s Budget revealed.
According to the Budget financial statements, the Accident Compensation Commission (ACC) investment portfolio hit almost NZ$17 billion as at the end of June last year compared to NZ$15.5 billion in the NZS at the same time.
By June this year the government forecasted the ACC and NZS portfolios to reach NZ$20.8 billion and NZ$18.6 billion respectively.
Over the next four years the gap between the two Crown funds is projected to widen by over NZ$10 billion, with the ACC portfolio tipped to hit NZ$34.7 billion by June 2015, compared to NZ$23.9 billion for the NZS.
Bill English, New Zealand’s Finance Minister, indicated the government would be able to resume contributions to the NZS – which it halted in 2009 – in the 2016/17 fiscal year.
The May 19 Budget statements also reported the Crown’s third largest investment portfolio, the Earthquake Commission Natural Disaster Fund (NDF), would likely halve to total NZ$3 billion after paying out all claims generated by the major quakes that hit Christchurch in September 2010 and February this year.
“The Treasury has estimated that it would take the NDF approximately 15 years to grow back to its previous size of NZ$6 billion, under current policy settings,” Budget papers state. “This estimate is based on a number of important assumptions, including that there are no further major natural disasters during that period. The appropriate size and mix of investments of the NDF will need to be reassessed as a result of the Canterbury earthquakes.”
It is understood the NDF has largely sold down its $1.7 billion international equities investments to cover Christchurch quake claims.
The May Budget also included measures to substantially re-engineer the country’s KiwiSaver system, removing most government subsidies while requiring both employers and employees to contribute more.
Other investment initiatives flagged in the Budget included: the partial sale of several state-owned assets; the issuance of a new long-term inflation-linked government bond; and government assistance in the “creation of broadly diversified, listed passive debt and equity vehicles”.