The federal government has been told its superannuation liabilities would be covered more sustainably if it delayed drawing down from the Future Fund for just four years.
The Parliamentary Budget Office, in a new analysis, says the fund - created to cover unfunded public servant superannuation liabilities - would be exhausted by 2052-53 if drawdowns start as envisaged in 2020.
But by delaying drawdowns until 2024-25, the Future Fund would maintain an ongoing positive balance until the unfunded superannuation liability arising from the now-closed civilian and military schemes are largely extinguished - about 2100, it says.
However, the later drawdown would result in the need for higher net debt - about 1.75 per cent of GDP - because of the need for additional borrowings from 2020-21 to 2023-24 to finance pending annual unfunded superannuation payments during that time.
The Future Fund was set up by former treasurer Peter Costello in May 1996.
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It stood at $127.66 billion as of December 2016, adding returns of over $67 billion to the $60.5 billion of original government contributions made by Mr Costello, who is now chairman of the fund.
The PBO analysis is based on the Future Fund continuing to achieve a target return of CPI plus five per cent, the government making no more contributions to the fund, and superannuation liabilities peaking at $283.5 billion in 2040-41.
