Australia puts $18 billion towards protecting pensions

Australia’s Treasurer Peter Costello said Friday thegovernment has transferred A$18 billion to the Future Fund, the vehicleset up to cover future government pension liabilities.

“The government will seek to make further contributions to the fundfrom future budget surpluses and asset sales once final budget outcomesare known,” Costello and Finance Minister Nick Minchin said in a jointstatement.

The Future Fund was designed to helpthe government meet its future pension liabilities, which are expectedto grow to around A$140 billion by 2020.

“The transfer of A$18 billion fromsurpluses accumulated at the Reserve Bank to the fund makes asignificant initial contribution to the (fund) board’s ability tooffset these unfunded superannuation liabilities and thereby relievesome of the expected pressure on future budgets arising from the agingof the population,” Costello and Minchin said in the statement.

The ministers also Friday released theFuture Fund’s investment mandate, setting it a long-term benchmark ofan average return of at least 4.5% to 5.5% a year and an “acceptablebut not excessive” level of risk.

Read more at Market Watch Today.

Meanwhile, in the US, the federal government is borrowing from pension trust funds (like the Social Security Trust fund and the Federal Employees’ Retirement Fund) and raising the debt limit to finance the war in Iraq. 

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