Contributions model
The Government makes contributions to the NZ Super Fund, and ultimately will withdraw money from the Fund to pay for New Zealand Superannuation, according to a formula set out in the New Zealand Superannuation and Retirement Income Act.
The Treasury calculates these required contributions and withdrawals using a publicly available model: Treasury's Contribution Rate Model for the NZ Super Fund↗
The model is updated six-monthly:
- in the Budget Economic and Fiscal Update (BEFU) in May; and
- in the Half Year Economic and Fiscal Update (HYEFU) in December.
Like any long-term model, the contribution rate model is sensitive to assumptions and underlying forecasts. These include projections of:
- the cost of New Zealand Superannuation payments (after tax) – which is influenced by population forecasts (longevity, birthrate, immigration), the Consumer Price Index (CPI) and net (of tax and ACC earner levy) average ordinary time weekly earnings;
- nominal gross domestic product (GDP), a measure of New Zealand’s economic output; and
- NZ Super Fund size, returns and tax paid.
Another key variable is the choice of a 40 year rolling funding horizon on which to run the model – this determines the amount of tax smoothing between generations that the Fund does.
All of these components are important, but the most significant is how much we expect New Zealand Superannuation will cost the Government, relative to nominal GDP. The lower the difference between current and future costs of New Zealand Superannuation, relative to GDP, the less current taxpayers are required to pay in order to assist future generations to meet those higher expenses.
The model therefore adjusts over time and can show some volatility between updates.
Regardless of the six-monthly revisions to the Fund’s required contributions and withdrawals, factoring in estimated domestic tax paid by the Fund, the Fund is projected to make a positive contribution to the Crown’s overall fiscal position over each of the next three decades.
Contributions suspension
Contributions to the NZ Super Fund were suspended by the minority National government in July 2009, during the Global Financial Crisis. With the election of the Labour-NZ First Government in 2017, contributions resumed in December of that year; contributions have continued under the 2023 Coalition government.
The effect of the 2009-2017 suspension of contributions on the model has been to increase the required contributions to the Fund since contributions resumed, and to defer withdrawals.
At the point at which contributions resumed in December 2017, the Fund was worth $37.5 billion. The Guardians estimates that missed contributions per the model between 2009-2017 equated to around $12.5 billion, forgone returns on those contributions around $12 billion across the period and forgone domestic tax payments on returns around $3 billion.
Diversion of contributions to Elevate
In 2019 the Labour-NZ First Government diverted $240 million of NZ Super Fund contributions into the Elevate Venture Capital Fund in order to develop New Zealand’s venture capital ecosystem and support innovation in the economy. A further $61 million was diverted by the Coalition Government in 2025. Once Elevate’s mandate is fulfilled the legislation provides for eventual repatriation of funds to the Crown, and the policy intent at the time Elevate was formed was that these funds would be used for the purpose of funding superannuation. The diversion has not had a material impact on the size of the NZ Super Fund.
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