The Future Fund was established in May 2006 to strengthen the Commonwealth’s long‑term financial position by making provision for unfunded superannuation liabilities of Commonwealth employees that will become payable during a period when an ageing population is likely to place significant pressure on the Commonwealth’s finances.
The Future Fund Act 2006 allows the Future Fund to be drawn down by the Government to cover unfunded superannuation cash payments from whichever is the earlier of:
the time when the balance of the Fund is greater than or equal to the target asset level (that is the amount that is expected to offset the present value of projected unfunded superannuation liabilities), or
1 July 2020.
As at February 2017, the Government has not announced when or to what extent it proposes to draw down on the Future Fund. The 2016–17 Mid-Year Economic and Fiscal Outlook (MYEFO) is based on the technical assumption that the Fund will be drawn down to the maximum extent permissible from 1 July 2020.
If the Government decides to draw down the Future Fund from 1 July 2020 to meet its unfunded superannuation liabilities, assuming the Future Fund continues to meet its target investment return, the PBO projects that the assets of the Future Fund would be exhausted by 2052–53 while, based on official projections, the Government’s unfunded superannuation liability would stand at $249.0 billion. If the Future Fund’s investment returns were to be lower than assumed in the PBO’s analysis, under the 1 July 2020 drawdown scenario the assets of the Fund would be exhausted sooner than 2052–53.