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New Zealand will pass an economic milestone in 2028, when the Government makes its first ever withdrawal from the NZ Super Fund.

Finance Minister Nicola Willis announced the milestone in a pre-Budget speech to Sharesies on Tuesday morning.

The date of the withdrawal is not at the Government’s discretion and is written into the Fund’s Governing legislation.

At the Budget in 2024, Treasury forecast making the first withdrawal in 2033. Economic changes mean this has been brought forward to 2028. It will be the first withdrawal since the Fund was set up in 2001.

Willis said the first withdrawal will be just $32m in 2028. It will be followed by some “bouncing around between withdrawals and contributions”.

However, from 2031 onwards, “withdrawals from the Super Fund are expected in every year”.

This does not mean that the fund will shrink in the short term. The fund will continue growing for some time as withdrawals will be smaller than the overall growth in the fund.

“Withdrawals help cover the costs of superannuation, so taxpayers don’t face the full cost each year,” Willis said.

“The Fund currently has $80 billion of investments. On reasonable assumptions, Super Fund returns will outstrip withdrawals, and the Fund will continue to get bigger every year,” she said.

Willis announced the Government would invest $100m into Elevate, a Government venture capital fund which is designed to grow New Zealand’s start up culture.

“This will be funded through a combination of the 2025 contribution to the NZ Super Fund of $61m, topped up with an additional $39m from the Budget 2025 capital allowance,” Willis said.

Willis said the Fund, which was established by Labour in 2020, had been a success.

“The fund was created to fill a funding gap at the so-called Series A/B stage of startup funding – the point at which startups typically need $2–$20m to scale beyond early seed funding.

“The Elevate fund operates as a fund-of-funds. That is, it invests not directly in startups, but in private venture capital funds which must also attract private co-investment,” Willis said.

“In doing so, it supports the commercialisation of science and technology and helps export-focused startups to attract global investment. It also helps to attract global investment to New Zealand by showing there is a pipeline of companies reaching the Series C stage,” she said.

Willis said the fund had “committed $221m across nine funds and attracted $536m of private capital - a ratio of 2.4 dollars of private equity for every $1 committed by the fund”.

Willis cited Dawn Aerospace and Halter as two successes Elevate had helped to fund.

Thomas Coughlan is the NZ Herald political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.