Dear Mr Mills

 

We refer to your email below.  You have asked why the Government
Superannuation Fund (GSF) was closed to new members effective 30 June
1992. 

 

The Government Superannuation Fund Authority was established in 2001 under
the Government Superannuation Fund Act 1956 (GSF Act) and is responsible
for managing the GSF schemes in accordance with the GSF Act. The decision
to close the GSF schemes to new members in 1992 was a government decision
implemented by way of legislative change.

 

We understand two reviews of GSF were undertaken by the Government in
around late 1988/early 1989. 

 

The first review looked at how to deal with the impact of the 1990 tax
changes on GSF entitlements.   Prior to 1 April 1990 annuities were
calculated gross of tax and then taxed at the member specific tax rate.
 Under this regime, contributions to superannuation schemes and investment
income were both exempt from tax and annuity payments were taxable.  This
regime is commonly known as the “Exempt, Exempt, Tax” regime (EET).   The
legislation changed with effect from 1 April 1990.  Since 1 April 1990
contributions to superannuation schemes and investment income have both
been taxable at a scheme level.  The annuities paid to members are exempt
from tax.  This is commonly known as the “Tax, Tax, Exempt” regime (TTE).

 

The second review looked at the question of state sector superannuation. 
The review recommended the closure of the GSF schemes to new members on
the basis that the GSF's unfunded liability had grown to $11.8 billion -
several billion higher than the May 1988 estimate of $8 billion (that was
based on 1984 membership data). 

 

Given how much time has passed, only a limited amount of information is to
hand regarding this matter.  We have identified commentary in the
following reports:

 

o Report of the Government Superannuation Fund Department for the year
ended 31 March 1990 (cover plus pages 3 and 4)
o Report of the Government Superannuation Fund Department for the half
year ended 31 December 1990 (cover plus pages 3 and 4)
o Repot of the Government Superannuation Fund Department for the year
ended 30 June 1991 (cover plus pages 3 and 4)
o Report of the Government Superannuation Fund Department for the half
year ended 31 December 1991 (cover plus pages 3 and 5)
o Report of the Government Superannuation Fund Department for the year
ended 30 June 1992 (cover plus pages 3, 5 and 6)

 

Extracts of the relevant sections from these reports are attached for your
information.

 

The website – parliament.govt.nz – includes Hansard records for
Parliament.  We have identified some debate and information associated
with the amending legislation  (State Sector Amendment Act 1990 (no. 78)
and Government Superannuation Fund Amendment Act (No 2) 1991 (1991 No 59))
in Hansard volumes 509 and 516 that may be of interest to you.  We attach
some relevant sections for your further information.

 

We trust this answers your query.

 

Regards

 

Philippa Drury | General Manager, Schemes | Annuitas Management Limited 

Address: Level 12, The Todd Building, 95 Customhouse Quay, Wellington
6011, New Zealand 

Phone:   +64 21 1854276

Email: [1][email address]

 

 

Government Superannuation Fund Authority,

Board of Trustees of the National Provident Fund

 

The information contained in this email or attachment(s) is CONFIDENTIAL,
intended only for the addressee. If you are not the addressee, you are
hereby notified that any use or dissemination of the information and any
copying of the email or attachment is strictly prohibited.

 

 

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