Super fund claws its way back from recession abyss

The New Zealand Superannuation Fund continues to bounce back from its losses but is still behind on its long-term target.

The fund, which was set up in 2003 by the Labour-led Government to help provide for the future costs of retiring New Zealanders, was up 2.4 per cent or $358 million last month. That brings its size to a record level of $15.96 billion.

Since the start of its financial year, in July 2009, the fund has grown 17.44 per cent or $2.36 billion - a marked turnaround on the 22.14 per cent drop in the 2008/2009 financial year when it was pummelled by the global crisis.

The growth has boosted its average annual return to 6.23 per cent.

The fund is 0.06 per cent short of its target of exceeding the risk-free rate of return on Treasury bills by 2.5 per cent over rolling 20-year periods.

The Government has contributed $14.88 billion to the fund since it was launched but also taxes the fund's investment returns each year.

Including the tax take, the fund has grown by $2.43 billion since it began investing in September 2003. The $15.96 billion value takes into account the total tax paid.

Last year the Government put contributions on hold until the country's accounts improve.