Prime Minister Jacinda Ardern and Deputy Prime Minister Winston Peters are giving mixed messages around potentially significant changes to KiwiSaver and New Zealand Superannuation.
Peters, at a Grey Power meeting on Monday morning, said the Government was looking at making it harder for migrants to receive Super by requiring people to have lived in New Zealand for longer to qualify.
Currently New Zealand residents over 65, who have lived here for at least 10 years since age 20 (including five years since age 50) are eligible.
Peters said the Government was doing a “serious piece of work” to extend this timeframe and would make an announcement before the 2020 election.
He also said Cabinet was considering requiring employers to make contributions to their employees’ KiwiSaver accounts if they’re over 65 and contributing themselves.
The Government in March passed the Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill, which enabled over-65s to join KiwiSaver. But it didn’t go so far as to requiring their employers to make contributions. Employers can do so voluntarily.
Asked in a post-Cabinet press conference on Monday afternoon whether Cabinet was in fact considering these KiwiSaver and Super changes, Ardern was blunt.
“I’ll make statements around potential changes to policy when they’ve been made and decided upon in Cabinet. I won’t speculate beforehand,” she said.
Ardern dismissed Peters’ Super eligibility comments, treating them as if he made them while wearing his New Zealand First Leader hat, rather than his Deputy Prime Minister hat.
She pointed out: “New Zealand First has long-held a policy in this area and it’s absolutely within any party leader’s rights to reiterate that.”
Asked what Labour’s position was, Ardern repeated the line she used when asked about her party’s position on tax reform while the Government was considering the Tax Working Group’s final report – that her focus was on building “consensus”.
Peters earlier in the day told media there was growing consensus in government to extend the Super residence requirement beyond 10 years.
He noted New Zealand First campaigned before the last election to extend the threshold to 25 years, but had been happy to settle at 20 years to reach a compromise with National.
He said it was unfortunate that National was in opposition, when it came to progressing this issue, but he was pleased Labour was prepared to look at it.
The Commission for Financial Capability said it hadn’t been asked by the Government to contribute to a discussion around Super residence requirements beyond what it’s looking at as a part of its three-yearly review of retirement income policies, to be tabled in Parliament in December.
In its last review, concluded in 2016, it recommended an increase in the length of residence required for Super from 10 to 25 years.
It didn’t recommend employers of over-65s be made to make KiwiSaver contributions, as it didn’t consider this a priority.
The only superannuitant-related clauses in Labour and New Zealand First’s Coalition Agreement are to keep the age of entitlement for Super at 65 and to introduce a “new generation” SuperGold card.
Minister for Seniors Tracey Martin on Monday announced $7.7 million would be allocated in the next budget (to be announced on May 30) towards building a new SuperGold digital platform, including a mobile app, that cardholders can use to stay updated on where they can receive discounts.
There are more than 750,000 cardholders and 14,000 outlets around New Zealand where cardholders can access savings.
51 Comments
The tightening up of qualification for super by migrants is justified and it will be popular too. These areas around pensioners, gold card etc are traditional happy hunting grounds for WP & NZF. Timing though is unusual, premature perhaps? Still 18mths or so until the next election.
This issue is always expressed as a 'migrant' issue so the pro high immigration supporters are against it and the 'it is time we reduced the rate of immigration' rationalists (along with the xenophobes) are for it. But it is not applicable just to migrants. There are skilled Kiwis working all over the world paying income taxes to their place of domicile having been born and educated in NZ and then leaving after university and returning in their fifties for retirement just in time to qualify for superannuation.
And if they miss out by a week they get nothing.
I agree both with you and WP. The most even handed approach would be to pay a proportion of the full entitlement according to length of time the person has been an active worker and tax payer in NZ. If we chose 35 years as the time base this would allow a NZ'er 12 years for education and overseas travel. If a person has worked for a significant period in an overseas country, then that country should make up the balance. If it doesn't do this, then the person should carefully consider the wisdom of working there. NZ should also be looking for some way of charging our expats for our underwriting their families while they are overseas. Tertiary NZ education for their children and social welfare should things go bad for them requiring them to return to NZ.
Oh that poor person, sponging off the government for free education and healthcare in their youth, then spending all their prime taxpaying years paying tax elsewhere, that they might miss out the NZ taxpayer giving them yet more freebies for life, if in trying to spend the least amount of time possible paying tax in NZ they make a mistake in their residency calculations, it's outrageous. Lets reduce the residency requirement then, make it ten years plus or minus five.
Don't worry, when that person comes back with wages that they haven't paid any tax locally on and tries to buy a house in our supply-constrained market, they'll *checks notes* push the price up for Kiwis actually living here, paying tax and earning artificially low wages enabled by WFFTC and other government programmes?
Wait, that doesn't sound good at all! How many NZers live overseas and have a right-to-return again? All of them, you say? Oh.
If they've been living anywhere in the developed world they will have been actively contributing to a retirement plan they can use when they move back. Let's put the responsibility for retirement planning back where it belongs - personal responsibility. Sure we can have National Super as a safety net for all, but if you haven't been working or saving while overseas then you should pay attention to NZ's rules on eligibility for Super when planning to move home.
Heck, in the age of Identity Management, an IRD number, and Big Data, it would be possible to do something like:
Case when sum(tax paid to date) > (X * expected National Super payouts) then 'Maybe let zhe in' else 'Nope' end
Both X and 'expected NS payouts) could be actuarial factors, changeable by regulation, as circumstances (financial, economic, political, state of digestion after the last Bellamy's long lunch) dictate......
Peters is being his normal parochial self , and I am angry I was conned into voting for him . I should never have trusted the bugger.
If you remove the rights of skilled working migrants who have become citizens from receiving a pension at 65 , then the TAX LAWS would need to change to allow these migrants a tax deduction or a tax break to allow them to prepare for their own -funded retirement ( as is the case in Australia, or South Africa and elsewhere where there is no state pension )
Maybe my recall is fuzzy and i am sure more diligent comentators can check it, but the claw back on earned income from the super pay out, is 70 cents in the dollar after the first $100?
And one supposes that as the income is obviously taxed, the total tax and claw back may well be 100% beyond that first $100 which again also is taxed. If that is the case then for average wage earners over65 years there is practically nil net super being received. Maybe a comentator here who is in this situation can clarify it further please.
Ok.checked that..it is likely that there is an effective marginal tax rate of 86% for moderately paid $65 year old full time worker on their nz super income...so of a dortu hour week they may be actually losing an additional 15 hours of equivalence of work value from the super side. As far more will be in this situation soon with mortgage or rent to pay? It could be examined a bit more closely.
Jimmy; please, in their interest, don’t offer tax advice to anyone.
Bottom line is that the marginal tax rate will depend on their income. Their main come (i.e. the larger) will be taxed at the normal M rate; the secondary income - the lesser income(s) - will be taxed at a secondary amount depending on the secondary code supplied to MSD or their employer. Total income from all sources up to $48k the marginal rate is 17.5%; $48 to $70k 30%; and over $70k is 33%. The maximum effective marginal tax rate one will be taxed will be 33%.
Very different to your 86%. I am at a loss how you arrived at this figure.
Printer 8...fyi
If your spouse or partner is included in your payments, you can earn up to $100 (before tax) a week between you, before your New Zealand Superannuation is affected. If you earn more than $100 (before tax) a week your payments are reduced by 70 cents for every dollar of income over $100 (before tax).
Getting other income - Work and ...
https://www.workandincome.govt.nz › ot
Hi Jimmy
Clearly you are talking about a specific person who has included their partner (probably in the order of about or less than 10% of superannuniants) and they are a special case within that group where they currently earn more than $100 per week but less than the abated amount threshold - you do the maths - which is probably less than 10% of those within that category. Also as the partner is most likely to be close to being eligible by reaching 65 this circumstance for most is usually for only a very short temporary period.
So on this very rare instance, your initial generalised comment which implies it holds to be widespread is not really valid.
Cheers
I believe this Bill as an amendment to the Prinicipal Act has already been filed in Parliament by Mark Patterson (NZF) in 2018. Shows at First Reading on the Government site - whatever that means. From social media comments today, this will be hugely popular with those who have been working most of their lives in NZ. Not so confident Labour and the Greens will agree given their Migrant population intentions. I will be voting for it.
How about make it universal from the employer side? For low wage earners who can't afford the cash out of their pay, they are then doubly impacted where the employer doesn't need to contribute. (and triply so when they miss out on the 'free' cash every year) Whereas those on higher wages can afford to pay in themselves and then get matched by the employer.
Unintended consequence, low wage earners will live with suppressed wage increases for longer. But at least their kiwisaver is growing slowly.
It seemed to start out as a coerced savings scheme.
Maybe the politicians thought we'd all be earning so much more that they could cut the starter bonus, membership fee and halve the member tax credit along the way?
Or was it always just a house deposit saving scheme and a nice little cash out for those who were nearing retirement when it first started and had a bit of cash to put into it to get all the freebies?
Damned if they do, damned if they don't. A sly way for Winnie to tackle immigration from behind. I think most of his constituents are not smart enough to realise that without immigrants it will cause capital loss by crashing the housing market. This act will help. Or perhaps you could say what is given in one hand is taken away from the other, good luck if you are retiring to the regions and you want good medial care. My information is that Whangarei hospital is creaking under the strain, and you have to book a month in advance in the far North if you are lucky enough to be on the GP's client list already.
https://www.msn.com/en-nz/news/national/regional-population-surge-puts-…
Tightening up is self-evident. I arrived in NZ aged 55 did not earn as much as I had hoped (self-employed) and now I've received Super for 5 years. I'd be a fool to return it to the govt but it didn't make sense then and it doesn't now - a rational immigation policy would have had me pay a lump sum towards the future benefit.
A change cannot impact people already resident by depriving them of a right they currently have so it will be a long time before it has any effect on actual payments.
True. Means testing would also reduce super payments to those still active in our workforce at 65 and above. This change might force hundreds of them to rethink their productive choices. Such a move will be detrimental to our economy in many ways, especially when we already struggling to attract skilled migrants to NZ; real skills, not the art of burger flipping and bringing your order to your table.
According to an OECD report, we have the third-largest proportion (42.6%) of our population between ages 65 and 69 still in the workforce among the group of nations. There's a reason employers aren't letting go of them. And yes, I am a millennial.
Yea, I've got some bad news about which generation profited from the dismantling of the state so they could have lower taxes bud, and it's not the generation who are currently paying higher housing and living costs and will be working until they die just to make ends meet. But sure, keep sending us the bill and at the same time making wages grow slower than living costs, let's see who sticks around to see that play out.
I suspect you don't realise how difficult that is. NZ has one of the highest (if not highest) number of trust per head of population - many a legacy from means tested super. Not to mention the 1 million recent arrivals, many of which have assets parked overseas - how do we get to these??
The answer lies with a radical review of the tax system and the welfare system (inc National Super). This is what the COl shroud have done instead of the silly Cullen working group. It requires cross part support as it would require a long term approach. But so far this govt has just can kicked with a little tinkering. Much bolder stuff is required.
Winston Peters is behaving like a parochial right wing Nationalist , with this anti-migrant nonsense.
It would be patently unfair to arbitrarily extend the Super qualifying 10 year period to 20 years without phasing it in or making it proportional .
Take a migrant arriving on the skills Visa at age 45 , he/ she would be at the peak of their field or career, likely be in a high -paying job ( such as an Engineer, doctor or medical specialist , professor / academic , CA , CEO of Fonterra , or architect for example ) .
He / she would contribute a significant sum in taxes over 10 or 20 years , but would not received even a proportion of the Super, even though they may not need it .
Quite simply , most people over 70 are not able to work and so would likely be receiving welfare benefits if they did not get the Super .
Peters is being disingenuous, and well as parochial , by attacking a disparate group of migrants who are not able to mount any reasonable group-based counter -argument .
And he is appealing to his core support base ................ Trumpesque if you like .
Not opposed to them changing it... but why not count the time you have worked in NZ before you left and then returned.
I worked in NZ for 20 years and have now moved overseas.... is it fair I would have to live in NZ for say 20 years to receive NZ super when I return home?
Why not make it simple.....if you have worked (or perhaps just lived) in NZ for more than 25 years you are entitled to super.
Cool, so you can live here, work four years post-uni, sod off for 40 years, pay no tax here and not contribute to the maintenance of the state in your absence and then cruise on back whenver you like? Yea, people can't make ends meet here already, I'm not sure taxing them even more to prop up a retirement village for tax exiles is the way forward for our country.
Mate... take a moment and reread my post. I worked in NZ for 20 years paying other peoples retirement before heading overseas. All I am asking is that is taken into consideration.
All I am asking for is that the rule is written in a way that recognises the number of years a person has paid tax in NZ and not make some mandatory stand down period upon return.
I actually agree with you.... no one should be able to leave at 20.. come back at 65 and put their hand out.
I'm more concerned about aspirations to means-test superannuation in the future. I'm paying tax towards the superannuation of current retirees as well paying into the super fund through tax. I'll be seriously annoyed if/when I get shafted out of this contribution at 65 (or whatever the retirement age is by then).
"Shouldn't have been spending" is a damned sight different to "paid taxes towards everyone else's super and then was expected to entirely fund your own". Call me cynical, but enriching yourself at the expense of the next generation is as Kiwi as leaky homes, pav or disputes about the lineage of equine athletes.
Super being paid to wealthy, tax avoiding, family trust using for tax avoidance, property flipping, pulling the ladder up baby boomers is morally corrupt. Super should be means tested so those who need it get it, those who have assets should support themselves. Us Gen X'ers have no support through uni, got student loans, huge property debt and low incomes. How is that fair?
Only fair way to introduce means testing would be to make Kiwisaver compulsory and do away with the taxes that we pay towards current retirees's pensions and the Super Fund. Would need to be staged of course. If people can't save enough through compulsory Kiwisaver to fund their retirement, it could be topped up with a benefit when they retire. I don't support this, but better than what you've suggested.
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