Australia’s Future Fund released its provisional outcome for the 2013-14 year yesterday which showed that the fund’s assets topped $100 billion for the first time at the end of June.
“During the financial year 2013-14 investment returns added $12 billion to the value of the fund. Original contributions to the fund from government valued at $60.5 billion have generated investment returns of over $40 billion. The value of the fund now stands at $101 billion,” it said.
Over the past 12 months the fund was returning 13.9% and 10.3% per annum over the past 3 years. This is solid when compared to the target returns of 7.5% and 6.7% per year over these periods.
But the good news was tempered by growth in the federal government’s pension liabilities according to The Australian this morning. It reports that by the time the fund is due to start paying out in 2020 liabilities will have ballooned to $200 billion.
Fund chair and former Federal Treasurer Peter Costello told The Australian there isn’t much he or his board can do about the liability side of the ledger.
“To be frank we don’t have much control over the liabilities, that is out of our hands. What we have control over is our own performance. We are mandated to try to get CPI plus 4.5 per cent and we are very close to achieving that,” Costello said.
On the topic of using the Fund’s assets to fix the economy’s ills Costello said the fund can’t do that. Rather he said what the fund needs to do is “be very focused, and what it has been asked to do is to invest for future generations”.
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