Frequently Asked Questions

Future Fund

What is the Future Fund?

The Future Fund is a financial asset investment fund owned by the Australian Government.  The Fund was established under the Future Fund Act 2006.

What is the purpose of the Future Fund?

The purpose of the Future Fund is to enhance the ability of the Australian Government to discharge unfunded superannuation liabilities expected after 2020, when an ageing population is likely to place significant pressures on Government's finances.

What are the roles of the responsible Ministers and the nominated Minister?

The Minister for Finance and the Treasurer are the “responsible Ministers”.

The Minister and the Treasurer have the joint power to:

  • credit cash amounts to the Future Fund through a Special Account and transfer financial assets to the Fund;
  • appoint and remove members from the Future Fund Board of Guardians; and
  • issue the Future Fund Investment Mandate.

The Minister for Finance is the nominated Minister under the Future Fund Act 2006.  In order to streamline and simplify processes, the nominated Minister is given sole authority to make certain decisions relating to the Future Fund and Nation-building Funds.

What is the Future Fund Investment Mandate?

The Future Fund Investment Mandate is a legislative document through which the Australian Government provides the Future Fund Board of Guardians with strategic investment guidance for the Future Fund.

What are the Statement of Expectations and the Statement of Intent?

The Statement of Expectations articulates the Government’s expectations with respect to the Board’s operations and standards of corporate governance.

In response, the Board and Future Fund Management Agency provide a framework for meeting the Government’s expectations through the Statement of Intent.

When will the Government start accessing funds from the Future Fund?

Withdrawals from the Future Fund to pay superannuation benefits may only occur if the balance of the Future Fund at the start of a financial year is greater than or equal to the Target Asset Level, or from 1 July 2020, whichever is earlier. 

Where can I find information on the balance of the Future Fund?

Information on the Future Fund balance can be found at Future Fund Financials and Investment Performance.

Where can I find information on investment returns for the Future Fund?

Information on the Future Fund investment returns can be found at Future Fund Financials and Investment Performance.

What is the Future Fund’s benchmark average return?

The benchmark average return for the Future Fund is “at least the Consumer Price Index (CPI) + 4.5 to + 5.5 per cent per annum over the long term”.  In striving for this benchmark return, the Board may pursue an acceptable, but not excessive, level of risk.

What does the Future Fund Target Asset Level represent?

The Future Fund Target Asset Level represents the best estimate of the Future Fund balance that would be required to offset the present value of projected unfunded superannuation liabilities. 

The Future Fund Act 2006 provides that a comparison of the Fund's balance with the Target Asset Level is required when making decisions on withdrawals from the Fund to meet Australian Government benefit payments prior to 2020 or additional contributions into the Fund..

A Designated Actuary is responsible for determining the Future Fund’s Target Asset Level.

How is the Future Fund treated in the Australian Government Budget?

Fund earnings are recorded on the Government’s balance sheet.  However, they are excluded from the Underlying Cash Balance as their inclusion would effectively overstate the amount of money currently available to the Government.  This is because the earnings have already been pre-committed to meeting future unfunded superannuation payments.

 

Nation-building Funds

What is the purpose of the Nation-building Funds?

The Nation-building Funds are financial asset funds – consisting of cash and investments – with the collective purpose of providing financing to meet the Australian Government’s commitment to critical areas of infrastructure investment.  Specifically:

  • the Building Australia Fund (BAF) facilitates the creation or development of infrastructure in the areas of transport, communications, eligible national broadband network matters, energy and water;
  • the Education Investment Fund (EIF) facilitates the creation or development of infrastructure in the areas of higher education, research, vocational education and training, and other eligible education; and
  • the Health and Hospitals Fund (HHF) facilitates the creation or development of infrastructure in the area of health.

What are the balances of the Nation-building Funds?

Information on the Nation-building Funds balances can be found at Nation-building Funds Financials.

Where can I find information on investment returns for the Nation-building Funds?

Information on the Nation-building Funds investment returns can be found at Nation-building Funds Investment Performance.

What are the Nation-building Funds’ Investment Mandates?

The Nation-building Funds Investment Mandates are legislative documents through which the Government provides the Future Fund Board of Guardians with strategic investment guidance for the Nation-building Funds.

What is the Nation-building Funds’ benchmark return?

The benchmark return for the Nation-building Funds is “the Australian three-month bank bill swap rate +0.3 per cent per annum, calculated on a rolling 12-month basis (net of fees)”.

Governance

What is the Future Fund Board of Guardians?

The Future Fund Board of Guardians is a body corporate with a separate legal identity from the Australian Government.  The Board is responsible for the investments of the Future Fund and Nation-building Funds and is accountable to the Government for the safekeeping and performance of the Funds’ assets.

Who are the current members of the Future Fund Board of Guardians?

A list of all current and past members can be found here.

What is the role of the Future Fund Management Agency?

The Future Fund Management Agency supports the Future Fund Board of Guardians by undertaking operational activities associated with the investment of the Future Fund and Nation-building Funds.  The Agency also has various ancillary responsibilities such as the provision of administrative services to the Board.

The Future Fund Management Agency is part of the Finance portfolio.

What is the role of the Department of Finance?

An Administrative Arrangements Order (AAO) assigns the Department of Finance with responsibility for the administration of the Future Fund Act 2006 and Nation-building Funds Act 2008.  In this regard, the Department provides the Minister for Finance with advice on policy, legislative and governance matters relating to the Future Fund and Nation-building Funds.

The Department also facilitates the authorisation and processing of payments from the Nation-building Funds.

International Engagement

What is the definition of a sovereign wealth fund?

The International Forum of Sovereign Wealth Funds defines a sovereign wealth fund as being:

  • ... special purpose investment fund or arrangement, owned by the general government.
  • [c]reated by the general government for macroeconomic purposes [to] hold, manage, or administer assets to achieve financial objectives, and employ a set of investment strategies which include investing in foreign financial assets.

What is the International Forum of Sovereign Wealth Funds?

The International Forum of Sovereign Wealth Funds [External Site] is a voluntary group of sovereign wealth funds formed in 2009 with the intent of regularly meeting and exchanging views on issues of common interest to its members.

Australia is a member country of the forum.

What are the Santiago Principles?

The Santiago Principles [External Site] are a voluntary set of principles and practices developed by the International Forum of Sovereign Wealth Funds.

The Santiago Principles identify:

  • appropriate governance and accountability arrangements; and
  • prudent and sound investment practices

for sovereign wealth funds.

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Contact information on this page: Funds and Actuarial Branch

Last updated: 08 February 2016