Super Fund in black again

The New Zealand Super Fund has broken its losing streak, producing a positive return for the second month in a row.

But it may come too late to stop the Government from putting a hold on future contributions. The $12.5 billion fund, which was set up in 2003 by the Labour Government to help pay for future retirement costs of New Zealand's ageing population, rose 6.74 per cent in April.

That was on the back of a 1.12 per cent gain in March although the fund is still down more than 25 per cent for the year to April.

The Super Fund has fallen from a peak of $14.5 billion in August last year in the wake of the economic crisis. Its worst fall was in October when it plummeted 13.51 per cent in one month, wiping more than $2 billion off the fund.

It now has an average annual return of 3.26 per cent, significantly less than the risk-free rate of 6.73 per cent which it is measured against.

The Government pays around $2 billion a year to the fund, which is expected to be worth around $109 billion by 2025, when payments are expected to stop, and withdrawals start.

But that funding is widely tipped to be suspended at next week's May 28 Budget announcement as the Government battles shrinking revenue and growing budget deficits.

But Super Fund chief executive Adrian Orr yesterday told Reuters he was not worried about a funding halt: "It wouldn't necessarily make a particularly significant difference to our investment strategy."