Glossary

Acronym/Term Meaning

(Future Fund) Board of Guardians

A body corporate which 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.

BAF

Building Australia Fund

Building Australia Fund

The Nation-building Fund which makes funding payments for the creation or development of infrastructure in the areas of transport, communications, eligible broadband matters, energy and water.

EIF

Education Investment Fund

Education Investment Fund

The Nation-building Fund which makes funding payments for the creation or development of infrastructure in the areas of higher education, vocational education and training.

Financial Asset The definition of "financial asset" is to be widely read, consistent with the definition of financial asset used for budget reporting purposes. This latter definition is derived from the Australian Bureau of Statistics manual of concepts and classification principles used for publishing government finance statistics.
Finance The Department of Finance

Future Fund

An Australian Government long-term investment fund which is designed to enhance the ability of the Commonwealth to discharge unfunded superannuation liabilities expected after 2020.

Future Fund Act

Future Fund Act 2006

Future Fund Act 2006

The Act which established and governs the Future Fund.

Future Fund Average Benchmark Return

The stipulation in the Future Fund Investment Mandate that the Board of Guardians is to adopt a benchmark average return for the Future Fund of “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.

Future Fund Investment Mandate

A Government document which provides the Future Fund Board of Guardians with strategic investment guidance for the Future Fund.

Future Fund Management Agency

An Australian Government agency which supports the Future Fund Board of Guardians by handling the administrative and operational functions relating to the investments of the Future Fund and Nation-building Funds.

HHF

Health and Hospitals Fund

Health and Hospitals Fund

The Nation-building Fund which makes funding payments for the creation or development of health infrastructure.

International Forum of Sovereign Wealth Funds

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.

NBF

Nation-building Funds

Nation-building Funds

Investment funds which are designed to provide financing resources for critical areas of infrastructure.

Nation-building Funds Act

Nation-building Funds Act 2008

Nation-building Funds Act 2008

The Act which established and governs the three Nation-building Funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund.

Nation-building Funds Benchmark Return

The stipulation in each of the Nation-building Funds Investment Mandates that the Board of Guardians is to adopt a benchmark return of the “Australian three-month bank bill swap rate +0.3 per cent per annum, calculated on a rolling 12-month basis (net of fees)”.  In targeting this benchmark return, the Board must minimise the probability of capital losses over a 12-month horizon

Nation-building Funds Investment Mandates

Government documents which provide the Future Fund Board of Guardians with strategic investment guidance for each of the Nation-building Funds.

Nominated Minister

The Minister for Finance.

The purpose of assigning a nominated Minister is to streamline and simplify processes relating to some of the responsible Ministers’ duties.

Responsible Ministers

The Minister for Finance and the Treasurer.

The responsible Ministers share certain responsibilities with regard to the administration of the Future Fund Act 2006 and Nation-building Funds Act 2008.

Santiago Principles

A voluntary set of principles and practices developed by the International Forum of Sovereign Wealth Funds which identifies appropriate governance, accountability and investment arrangements for sovereign wealth funds.

Sovereign Wealth Funds

As defined by the International Forum of Sovereign Wealth Funds, sovereign wealth funds are “special purpose investment funds or arrangements, owned by the general government. Created by the general government for macroeconomic purposes, Sovereign Wealth Funds hold, manage, or administer assets to achieve financial objectives, and employ a set of investment strategies which include investing in foreign financial assets”.

Target Asset Level

The Designated Actuary’s best estimate of the Future Fund balance that would be required to offset the currently projected unfunded superannuation liabilities.

Statement of Expectations

Correspondence from the nominated Minister to the Future Fund Board of Guardians and Future Fund Management Agency which articulates the Government’s expectations with respect to the Board’s operations and standards of corporate governance.

Statement of Intent

The Future Fund Board of Guardians’ response to the Statement of Expectations.  The Statement of Intent provides a framework for how the Board will meet the Statement of Expectations.

 

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Contact information on this page: Funds and Actuarial Branch

Last updated: 08 February 2016