Assets and Liabilities

The assets and liabilities of the Fund as at 30 June 2007 were:

• Net assets of $4,002 million.
• Total liabilities (accrued benefits) of $14,311 million. The Government Actuary valued the accrued benefits of the Fund as at 30 June 2007, to calculate the unfunded past service liability for inclusion in the Crown’s Financial Statements for the year ended 30 June 2007.

The unfunded liability was $10,309 million (being the difference between the two amounts above).

The unfunded liability decreased in value by $1,119 million between 30 June 2006 and 30 June 2007. The decrease was largely due to an increase in the discount rates used by the Government Actuary in valuing the liabilities.

“… investment returns from the Fund have no impact on entitlements.”

Importantly, investment returns from the Fund have no impact on entitlements. The returns do however impact on the amount of ‘top-up’ the Government needs to contribute to the Fund each year to help meet the entitlements. The Fund currently meets about 26% of the cost of entitlement payments. Contributions by members and non-Government employers, such as Telecom and Toll Holdings, provide about 7% and the Government meets the balance.

It should also be noted that the Crown underwrites the total liabilities of the Fund, not just the unfunded liability.