Future Fund Act 2006

The Future Fund Act 2006 aims to strengthen the Commonwealth's long-term financial position by establishing the Future Fund. The main object of this Act is to make provision for unfunded superannuation liabilities that will become payable during a period when an ageing population is likely to place significant pressure on the Commonwealth's finances.

The Act sets up the Future Fund, which is responsible for making investment decisions. The Board of Guardians is bound by a Future Fund Investment Mandate given to it by the responsible Ministers. The Agency assists and advises the Board.

Key provisions include:

• Establishment of the Future Fund
• Operation of the Future Fund
• Investment policies
• Borrowing
• Investments in derivatives and securities lending arrangements
• Refund of franking credits
• Realisation of non-financial assets

The Act also establishes the Future Fund Management Agency, which is responsible for assisting and advising the Board. The Agency has a range of functions, including managing investments, acquiring derivatives, and entering into securities lending arrangements.

Key stakeholders include:

• The Ministerial directions about transferred financial assets
• Continuing effect of instruments relating to transferred financial assets
• Finance Minister requiring person to assist
• Insurance for certain liabilities of Board members

The Act has significant implications for the Commonwealth's long-term financial position, particularly in relation to unfunded superannuation liabilities.