Careful analysis is throwing up several uncomfortable but hard-to-avoid facts about the state pension, New Zealand Super (NZS).
For one, Government budgets will groan and even risk collapse under the weight of paying for it and related costs in the long term.
Second, means-testing the pension so it is aimed solely at those who need it is no panacea.
Third, blaming the previous National Government for stopping contributions to the NZ Super Fund (NZSF) during a fiscal crisis only partially explains its financial insufficiency now.
Lastly, a contributory scheme dreamt up 50 years ago offered hopes of a financial Shangri La, but its politically motivated execution pushed Shangri La permanently out of sight. There's also debate over whether the retirement age should be raised from 65.
On the first question – affordability - the current government plans to carry on with business as usual, insisting there is no problem.
“We believe with the right economic management we can fund superannuation for the longer term," the Prime Minister Chris Hipkins told journalists recently.
However, Treasury analysis contradicts this position, and predicts a future of costs, deficits and rising total debt.
Its latest forecasts indicate the NZSF will meet on average 16% of the cost of superannuation between 2040 and 2090, without including tax, and 20% including tax.
That leaves 80% to be found from other sources.
A detailed study by Treasury in 2021, He Tirohanga Mokopuna, put it another way.
It wove together healthcare as well as pension costs for the elderly and produced some devastating scenarios.
One of them assumed total Crown revenue would remain constant til 2061 at 29% of GDP, but total Crown expenses would rise to 45% of GDP.
The impact of this would push net debt up sixfold to 196% of GDP, not far below the debt level of Greece during the Euro sovereign debt crisis.
Treasury is careful to say that factors such as immigration levels and productivity gains could affect these forecasts, but even a significant downward revision of these numbers would still leave New Zealand state finances in a very tight spot.
When this matter erupted in controversy at the start of this month, Government ministers attacked the previous National Government for making the problem much worse.
It blamed the decision to suspend state contributions to the NZSF in 2009, saying that was a big setback to proper funding of NZS.
The suspension happened at a time when New Zealand was reeling from the Global Financial Crisis, and the government deficit was large.
Speaking about the problem at the time, the then Finance Minister Bill English said he refused to borrow money to buy shares, and contributions would resume when the Government was back in surplus.
The current National leadership say their predecessors were right to do that.
Some commentators accepted this view. They argued borrowing still more money to invest in the NZSF would make the deficit worse, and was based on the unreliable assumption that world stock markets would rise.
But other people contested the National Government’s view, saying a modest savings programme could be maintained even while debt was still on the books. After all, many ordinary citizens pay into their workplace super scheme even when they still owe money on their mortgage. On the other hand, citizens tend to pay down their mortgage, while the Government's debt was growing at the time.
However these arguments pan out, there are signs that continued government input would have had a limited impact on this problem. This is clear from figures released by the Government, which match the NZSF’s own publications.
'Absolutely disgraceful'
As of 30 June 2022, the NZSF stood at $55.7 billion. The foregone contributions by the government, together with an average return on that missed investment, would have pushed it to $84.3 billion.
That means continued Government contributions, plus investment returns over that time, would have added $28.6 billion to the fund.
Put another way, the fund would have been half as big again as it was, in 2022 figures. That would have been a useful addition to paying for NZS, but it could not have come close to meeting its 80% shortfall.
Jonathan Eriksen, a veteran actuary and investment expert, estimates that continued payments by National would have about doubled the share of the cost burden met by the NZSF.
"It is absolutely disgraceful that the National Government stopped the contributions to NZS," says Eriksen.
"(Continuing the payments) would have doubled the percentage from 20% to 40%, which means we would not have been under the same pressure that we are now."
Treasury was requested for more information on this, but said it had not analysed this section of the debate. Others have argued the NZ Super Fund shouldn't be taxed.
What about means testing?
There is another side to the coin here. Instead of building up a bigger pot of money to fund NZS, the money that is available could be paid to fewer people.
At present, billionaires get the same payment as people who struggle to pay the electricity bill. Why not means test the pension, so it goes only to those who really need it?
Not paying the wealthy would clearly reduce the outflow of funds. It could have more social equity, since the taxes from the poor and middle classes would not go into the pockets of the rich, like Robin Hood in reverse.
But means testing is easier said than done. The state-funded pension, which provides a floor beneath Australia's contributory scheme, is means tested and asset tested, and has been widely criticised as costly, intrusive and inequitable.
Here in New Zealand, means testing is almost routinely condemned for the same reason. The argument goes like this: it is administratively far easier to pay everyone the same sum of money than to painstakingly go through their finances one by one and make adjustments in each case.
According to this view, the money spent on bureaucracy to enforce means testing would cancel out any financial gain.
But there is evidence to suggest that this argument has flaws, and arranging people's benefits to suit their finances might not be impossible after all.
And it would be a lot easier if done by the Inland Revenue Department (IRD) instead of the Ministry of Social Development (MSD), since the IRD adjusts people's payments all the time – it is their job.
New Zealand used the IRD in the 1980s to effectively means test the pension. It did this by imposing a surtax on money earned in addition to the pension while leaving the pension itself unscathed.
A cabinet minister from those days, David Butcher, says the system was spoiled by having too many tax loopholes and high tax rates that incentivised people to take advantage of them. But those facts do not invalidate the basic idea.
“People felt they were being swindled,” he says.
“But, in principle, the objection that means testing is too complicated, that you spend hours doing it, and have thousands of people wading through documents, does not apply if you have a proper, straight forward tax system.”
The New Zealand Superannuation Grant
This method of means testing the pension was killed off politically in the 1990s. But the principle of means testing via the IRD lingers on. There is an echo of it in a system proposed by an Auckland academic, Susan St John. Her idea manages to preserve pension universality and introduce means testing at the same time.
St John's scheme would give superannuation to all people. It would be renamed the New Zealand Superannuation Grant (NZSG), and it would be guaranteed, universal and untaxed.
However, any extra income that an NZSG recipient earned would be taxed at a higher rate than would apply to usual earnings.
“When you qualify for your non-taxable grant at age 65, you could choose to opt into that, and then you would automatically have your other income taxed on another schedule," St John says.
“You are essentially replicating the old tax surcharge but you are doing in a way that is much more straight forward and easy to understand.”
St John says people with a lot of money who want to stay on their existing tax arrangements could decide not to opt into the scheme in the NZSG in the first place.
She adds her scheme would definitely save money.
“The old tax surcharge (from the 1980s) used to save 10% of the net cost of superannuation. You would be able to replicate that without any difficulty and 80% of the population would not notice any difference.
"You would probably be able to save more than 10%.”
Despite this, means testing still gets little support. There is a lot of faith in universality among left leaning parties these days. And Eriksen gives another reason.
He says if people knew they were going to be means tested on their other income and potentially lose access to the pension as a result, then they would be disincentivised to save money or invest in the first place.
Eriksen says means testing would gravely weaken KiwiSaver.
The role of life expectancy
Meanwhile, there is yet another complication to this story. The real cost of NZS to the Government will depend on how long people live for. At present, average life expectancy is approximately 82. But that number might be pulled down by Covid-19.
The Otago University epidemiologist Michael Baker says this has happened elsewhere. He points to a study in the BMJ (formerly the British Medical Journal) that says life expectancy in 2020 fell by more than two years for men in both Russia and the United States because of Covid.
Other countries experienced lesser falls in life expectancy, though New Zealand, Taiwan and Norway, actually experienced an increase in life expectancy in 2020.
Baker says New Zealand went on to achieve a similar benefit compared with other countries in 2021, but this happy outcome did not last.
"For the first time in 2022, we saw an increase in mortality of about 10%, which was kept at this relatively low level because of widespread vaccination.
"The impact of Covid will be much less in 2023. We are on track to have about 1000 deaths from Covid in 2023, which would add about 3% to mortality.
"So yes, Covid-19 is increasing mortality rates, particularly in older age groups, and will lower life expectancy."
But that is as far as Baker goes. Just how much lower life expectancy falls remains to be determined, and there is another health impact on life expectancy which is also unsure - deaths from lung cancer and other smoking related diseases.
In the mid 90s, a quarter of the population smoked tobacco. Now, just 8% do. A dramatic decline like this is bound to increase life expectancy, and possibly more than cancel out the impact of Covid-19.
But according to the lobby group, Action on Smoking and Health, no one can quantify in detail how big this impact will be.
The link between smoking and the economy was referenced in a famously cold-blooded comment from Treasury a decade or so ago, that "smokers more than fiscally pay their way." They did this partly by paying excise duty, but also because they die early and save the Government pension money.
However, current smoking trends indicate this fiscal irony will not last.
The Muldoon effect
Finally, the whole pension story in New Zealand could have been very different, according to the late fund manager and business commentator, Brian Gaynor.
For much of his life, he raged against the repeal of a ground breaking superannuation scheme introduced by the Third Labour Government in 1975.
This programme had compulsory contributions from employee and employer, and would have given people individual entitlements, but it was killed off when the National Party under Robert Muldoon won the election that year.
Gaynor called this a "dreadful political decision, which transformed New Zealand from the potential Switzerland of the Southern Hemisphere into a low-ranking OECD economy."
An assessment by Infometrics some years ago said the Third Labour Government's scheme would have been worth $278 billion in April 2015, if it had been left alone. If the fund had made a similar rate of return between 2015 and 2023 as the NZSF, then that $278 billion would have more than doubled.
Meanwhile there was one final attempt to fix this problem. In 1997 Winston Peters forced a referendum on a compulsory, contributory scheme.
But the referendum was decisively defeated.
97 Comments
We now have the largest and longest living generation in history drawing the pension and need to find the money from somewhere before it implodes. Although it doesn't appear now to have been a good decision to scrap the Labour super scheme back then, it is what said generation voted for so it wouldn't cost them and businesses to contribute. Vote for no compulsory super contributions to keep a little extra change in the pocket in the 70's, and now they worry about the prospect of means testing from the accumulated wealth from the extra available cash they voted for?
Perhaps its time to bring back the inheritance tax. Not a generic one that taxes everything, but one that sees the pension as a debt owed to the Govt, and upon death, the amount that was paid out is then taken back as tax. That would encourage people who don't need the pension to not take it. And the pension scheme then effectively becomes self funding.
I am also ok with inheritance taxes, I won't need the money when I'm gone, and as they say, you can't take it with you. The only problem with an inheritance tax is that it encourages tax avoidance through gifts, so Gift Duty is usually part and parcel of the tax regime. But then, don't try to avoid tax by giving your money to your kids before dying. I'm also all for kids making their own way in life, rather than doing nothing in the expectation that their parents will eventually fund the lifestyle they wish to be accustomed to.
Yes, people get very funny about this topic. You'll talk to people who got enormous satisfaction from making their own way in life, succeeding in building up a nest egg based on their own hard work. They want to pass this on to their children to spare them from the very journey that gave them such satisfaction, as if being gifted the trophy without doing the work will be just as enjoyable.
I encourage my own parents to enjoy their money - they earned it and I have no right to expect it.
Two comments. Death duties were scrapped as the costs to administer them were higher than the actual duties collected by the government. They are very easy to avoid especially when there are no gift duties. I for one have already given my children and their partners significant gifts and will continue to do so. Why should I have surplus capital I cannot spend and they have loans especially at todays interest rates. They both have tertiary qualifications and work hard. Why wait until my wife and I are both dead. We both hope to die virtually penniless as one thing is for sure you spend less as you get older. My only vice. A nice car but one day they won’t let me drive if I live long enough so make the most of it while you can.
Costs would be high if you had to chase everyone who died and then try and prove the value of their estate in order to levy tax on it. However, its a lot simpler if you just present every estate with a bill to be paid based on how much the Govt has paid out. There is no argument over estate valuations, or inclusions or exclusions, its simply a demand for payment. What happens to those who die with nothing in their estate is where the problem would lie. Forgiveness of debt? Unwinding of trusts? Auditing Gifts/Loans made to family?
The worst part is by not making small, reasonable adjustments in our taxation & superannuation system now. We risk having to make significant and unfair knee jerk adjustments in the future. A stitch in time saves nine. You must remember that old people also require a massive amount of health care services. This is often ignored.
It is unsustainable by any means or method. Fundamentally enough children must be born who have the capacity to maintain our civilization and to fund all these entitlements, which we have not done for decades.
The reality is, boomers have to face the fact they will be impoverished in old age and will die without expectation of the immense medical system that exists today continuing to work or to exist.
Your life span will be shorter and quality of life will get worse for many. Adjust your families and lifestyles accordingly.
4 words. Show me the money
Where is it coming from? Who pays for this huge gap in need for NZS or how do we address it? Grill em. Also, vote for the long term future of NZ, not just what benefits your pocket tomorrow, or your investment portfolio. Ask yourself which is better, your own wants now or; young people being able to hope to afford a house and have a family (which helps pay into the NZS, just saying), taxes distributed more equitably, infrastructure actually able to be afforded for long term planning. Personally, I want to have children, it has always been so, but I want them to have a better NZ than we have today, with less incentive to leave and never come back.
Then again, if nothing happens from this election, then this years election will pave the way for the next election where most baby boomers are on the pension and everyone left working will be asked to pay the ever mounting healthcare and NZS bill which by then will be exponentially bigger. Watch and wait when they have to pay doctors and surgeons even ore to entice them to hold off retirement or come to NZ to work, this will add to the cost.
This is not about Boomers. it is about everyone. Millennials from one perspective are potentially the best off of all generations, while Boomers are the worst off. Millennials because they know there is an issue and have the opportunity to provide for their retirement from a relatively young age. Every earlier generation, but especially Boomers are the worst off because their supper scheme was stolen from them with the promise that the Government would ensure they will be OK in their retirement. So they really had no understanding that they might need to be able to provide for themselves in retirement. (The pollies would probably not wanted to have them understand this, as it would immediately have disqualified that political party from ever running for office again!) Gen X will have heard this from their parents primarily, or the early ones may well have their own memories of it. Gen Y are in between, but again the early ones will be the same as the later Gen Xs. But the core problem is in Chippies comment.
"“We believe with the right economic management we can fund superannuation for the longer term," the Prime Minister Chris Hipkins told journalists recently." History teaches us that the politicians are truly hopeless at economic management, and there is little hope in any improvement. Treasury are looking at the actual economic management not Chippies clear strategy of hope.
My biggest issue with means testing is that there are so few truly wealthy people that any real savings will be minuscule. But there will likely to be a number of parasitic landlords with income streams that will should disqualify them.
"My biggest issue with means testing is that there are so few truly wealthy people that any real savings will be minuscule."
I don't think this is fair. In Australia which means tests the pension only 62% of people get the pension. I would assume NZ would have a similar means test. This means that we would be able to cut our pension spending by 38% if we means test. Means testing is probably the most intelligent and pragmatic way to deal with our pension issue.
https://www.aihw.gov.au/reports/australias-welfare/age-pension
So who sets the threshold for living standards for retirees? Because that in the end is what is being decided. Invariably it is people, bureaucrats, who won't ever have to suffer under it, or believe they won't. In Australia basic salaries/wages are higher than NZ. They get more bang for the buck and so on. Is Australia then a fair comparison?
I don't agree with means testing because history teaches us that the politicians and bureaucrats just can't be trusted. They are in most respects worse parasites than landlords. I simple don't accept that any outcome will be fair to working class Kiwis.
I would not assume that NZers are as wealthy as Australians. First off, Australia has had a compulsory super scheme for over 30 years now and contributions to it are taxed at 15% and not your marginal rate. Secondly, there are over 1.1M people in self managed super funds (for which the minimum balance is $500k), which are tax advantaged vehicles for buying residential investment properties, shares, and owning businesses (tax on rental income and dividends is 15% while capital gains is 10%). NZ has neither. NZ has not had a long history of encouraging citizens to save and invest, and providing them with tax advantages for doing so. In fact, NZ does the opposite - it discourages investment in international shares, and now residential property through punitive tax measures.
I would be happy to be means tested. So long as if I was denied a pension because of a means test, Government refunded every dollar (+ the gain made on it over time - Ms Erikson could calculate it, I'm sure) I paid to Government in expectation of that pension. Don't go using my retirement money to pay for others retirement lifestyle.
I wonder what the added longevity has done to wealth transfer via inheritance.
Thanks to the advances of medicine we in the west have seen years, if not decades, added to life expectancy. I remember reading a study suggesting we've done a lot to address issues up to 90 years of age, but not really anything afterwards (the estimated rate of death 90+ was 25%/year). But that extra life expectancy has also come at significant cost, which requires increased taxation of the younger workers to pay for the medical bills of the aged - let alone their increasing burden on super.
As to the observed increasing mortality, when we have more people than ever before hitting those numbers, one would expect to see an increase in the death rate (as the death rate has been supressed as longevity stretched). Nevermind all the weakened immune systems from reduced exposure to pathogens via extensive lockdowns and isolation, either. Covid is but one cause among many.
I was recently reading up about some workers in Europe through early 1900's. Given a piece of family land, and a house, would work from 13 to 50 years old, when they would be allowed to then retire at home where their family would look after them until they die.
Reading this comment in comparison makes you realise there is no direct burden to getting old in NZ. There is no need to ensure your family have the support they need through adulthood to ensure they are in a position to look after you into old age. This is a massive success in our country and we should be proud, but at the same time this undermines the nuclear family. There's a pot of money someone else can pay for which can be tapped into indefinitely, and I do not need to have had children to support me in my age, so unless there is a great desire to have children, to sustain our society in order to support us in the future, we will always be relying on somebody else to do the work, paid for by somebody else.
This is entitlement. I am entitled to a healthy, hassle free retirement regardless of my individual or family contribution to society.
Imagine the reversal, all children up to the age of 13, are fully funded by the government as it is important to us as a society to provide a stable and healthy outcome for our future tax payers. The funding has a direct impact on future cash inflow as we support better outcomes. Super exists but is means tested to ensure no retiree goes without.
Comes with it's own implications, sure and I'm not suggesting this is a better idea. Simply a different angle. (ref from Kate yday)
The pension scheme was never designed to support a person for 20 years. When it was introduced in most nations (1896 in NZ, 1908 in UK), the average life expectancy was 48. Even by the 1950's life expectancy had only climbed into the 60's. Now its 84. Its gone from being an old age "disability" style benefit to now being a lifestyle option. Talk of Maori getting access to the pension at 55 because they have a lower life expectancy is a prime example of viewing the pension as an entitlement to a period of taxpayer funded leisure. This attitude needs to change.
Plenty of people are capable of working into their 70's these days - my father worked until he was 75 and only retired because of the Covid lockdowns and border closure. It needs to go back to being only available to those who are too infirm to work, and the minimum age should be at least 70 (the JobSeeker Disability benefit is still available to everyone under 70). People in physical jobs have the ability to transition to non-physical work in their 50's and still get another 20 years of work, and a higher pension age would encourage them to do so. Combined with a compulsory personal superannuation scheme that can "top up" the pension.
As for means testing, since we hardly have any "rich" people here (eg. the Greens wealth tax is estimated to only affect 0.7% of the population) would means testing achieve anything? Or are we going to turf most of the middle class out of the pension scheme as well, because that's what it would take to make any significant savings. Since we are being discouraged from investing for our retirement (see War On Landlords, FIF tax, proposed Wealth Tax) then most people in the future are going to sink all their money into their own home rather than an investment property or share portfolio. Are we going to be forcing old people to sell their family homes and move into one bedroom social housing units in order to free up their "wealth" and not pay them a pension?
The next issue will be the pharmaceutical benefits scheme. There are very expensive alzheimers prevention drugs coming. Every elderly person is going to want to take them. How are we going to pay for that?
If it is for Alzheimers prevention, it will be patented and sold at a near insurmountable sum that only the most wealthy can afford it. I will be blunt on this one; the world cannot spare the resources to allow everyone to have access to this, and as one of my parents got dementia in their early 50's I'm well aware of the implications of this.
I'm more of the volition that it is your own life to do as you please with, and if you get to your later years, feel you are happy with how things have gone and wish to see yourself off, then you should be able to do so peacefully and without legal repercussions. Let the family know, spend some time, and they'll have better acceptance and less trauma than watching you decay joint by joint, brain cell by brain cell.
https://www.stuff.co.nz/opinion/300864371/backing-barbies-bill-kiwis-sh…
Except most disabled people cannot access disability supports. There is no disability benefit, just jobseeker with restrictions. Supported living (now out of date) did not cover most severely disabled people (even those so disabled they are mostly bedridden or need 24/7 care). Also many people have desire for human contact, a sense of romance or living with others, this would disqualify them for any income support even after the second date to the movies (as happened to blind friends and those with severe neurodiversity). Losing the income to afford housing because you want human contact once every 6 months is a breach of human rights. This also makes them highly vulnerable to violence. Many people disabled by illness are trapped into relationships they cannot leave because they need a place to live and cannot access disability supports. So they are often physically, emotionally abused and their family financially abused.
Even though most of those on jobseeker are severely disabled and even though that does not cover even half the total population of severely disabled people the government will be much less likely to provide changes allow disabled people an income to live on with some equity, including allowing them to see a doctor, buy food, and afford basic housing. The government is more likely to fund winter subsidies and a benefit to millionaires than they would a crippled homeless disabled person born with disabilities and further disabled by preventable illness from denied medical care. It is just less popular than giving millionaires with large incomes non means tested benefits.
Not so much 'tall poppy' more 'slash and burn everything around the tall poppy with glyphosate'.
Yes, Norman Kirk was way ahead of his time, for sure;
- Establishment of compulsory pension savings' scheme.
The elderly were the one group of New Zealanders not entitled to non means-tested income support when they were unable to work. Both parties attempted to address this issue: Labour with a compulsory savings scheme and National with a scheme to be paid for out of general taxation. The superannuation scheme introduced by the Third Labour Government benefitted 750,000 workers who previously had no other form of retirement pension aside from the age benefit.[3] Labour's short-lived scheme was abolished by the third National government and replaced with universal superannuation.[11]
https://en.wikipedia.org/wiki/Third_Labour_Government_of_New_Zealand
Personally I think compulsory pensions are deeply flawed. It's only with the benefit of hindsight that we think an investment in the 1970's would be worth a small fortune now, but no account is taken for the loss of earnings, extra mortgage debt, less money in the economy, potential poor investments. We've had a massive tailwind over the last 40 years from demographics and the financialization of everything, there is no guarantee this will continue into the future.
We seem to be trying to solve the problem of longevity but promoting self insurance (Kiwisaver) when the government is the one entity best placed to cover that risk. Look across the Tasman where employees lose 10.5% of their wages when they're young and (relatively) poor in order the receive a pension when they're old and rich. By some accounts 90% of the wealth an average Australian enters retirement with remains unspent when they die. And that's before we begin to talk about those in temporary or unpaid work. So it's effectively a means to transfer wealth to an already wealthy younger generation. Well I say younger but they'll be in their 60's and 70's, so it will probably finance a few overseas trips while perpetuating the current wealth inequality.
The way it is structured in Australia is that the employer pays it, not the employee. So there is no evidence that if the employer no longer had to pay the super contribution, that that money would end up as higher wages in the employees pocket. If you work in Australia you pretty much ignore the super contribution, as you are more concerned about what the rest of your salary package looks like. This will consist of wages, and salary sacrifice benefits. Wages and salaries are advertised exclusive of super. If super disappeared overnight, salaries wouldnt increase by the same amount because that's not how your employment contract is structured.
That makes no sense at all, both employers and employees look at the all-in package, you can't ignore the cost/benefits of pensions. Of the course the employer would try to avoid passing on the cost savings if they weren't contributing and maybe employees would accept slightly less if they received cash but in a functioning employment market there should be very little difference in the total package before tax. From the Henry Tax Review “Although employers are required to make superannuation guarantee contributions, employees bear the cost of these contributions through lower wage growth.”
I'm saying if there was no super scheme at all, there would be no difference between salary packages, so wages wouldnt automatically go up by the difference in super costs. It might if some employers were paying super and others werent, but if nobody did, the wages would be still be equivalent. The employers may choose to pass the cost savings on as higher wages, but they could equally pass the savings on by lowering prices, hiring more people, expanding the business, or doing any number of things with the money.
A lot of people here need to remember this basic statistic before blaming the country's woes on single mums/Maori/dole bludgers/greenies/<insert easy target group here> - "total Crown revenue would remain constant until 2061 at 29% of GDP, but total Crown expenses would rise to 45% of GDP..."
Superannuation & healthcare costs are already overwhelming us.
This is a huge screaming alarm to revise our taxation and entitlements today, not at some vague point in the future. I'm 40-something, so it's obvious to me that the taxes I am paying today will not be available to support me when I'm old. Others will have already spent that money.
There's a distinction people need to draw though:
- we have a pay as you go taxation system, where today's workers are paying for older and younger dependents
- lifelong bludgers aren't contributing to that system in a meaningful way today, and when they reach retirement age
The fact we havent kept up with population replacing birthrates is where the former system is coming undone. If we had too many of the latter, the system doesn't work at all.
lifelong bludgers - are you meaning those who faced no discrimination in school, got free university, got government subsidized housing loans, got child support and could easily get a job but still claim benefits including when over 65 while they still work.
Nope you are once again beating up disabled people with hate speech because you think they don't deserve to live in quite plain language.
Hate speech that abolishes the right to live from disabled people including their right to access their community to coexist, their right to access housing and medical support and right to income to afford essential necessities deserves no space on this website. Unfortunately at this rate the government parties on all sides would be criminal if they ever enacted hate speech laws because no one likes abusing and stripping the rights of access, self determination & income away from disabled people more than politicians & government departments. It is their day job and personal pleasure.
All animals are equal, except some animals are more equal than others.
Who exactly faced no discrimination at school, no on I know has lived a charmed life. We can cherry pick good and bad things about each others live forever to make our point.
The words hate speech is now used to describe any thing that anyone finds slightly offensive, In that light I say your statement:
lifelong bludgers - are you meaning those who faced no discrimination in school, got free university, got government subsidized housing loans, got child support and could easily get a job but still claim benefits including when over 65 while they still work.
Is hate speech against older people so could you please refrain for doing. It has no place on this website.
1. Governments current and future bound to put a fixed percentage of GDP into the Gov Superfund.
2. Gradually ratchet up both employee and employer contributions to a minimum of 6%
3. Employee contributions come from gross income
4. No cashing up KiwiSaver for housing
5. Common accord that KS is inviolate and can’t be changed by Gov. Kudos to Cullen and Clark for KS (I hate them both). Epic failure by Key when he tampered with the scheme. Destroyed the trust of many.
It's a benefit, simple as that. Needs to be means tested like all other benefits. The taxpayer doesn't owe old people anything more than that, it's not a loyalty rewards scheme. Paying taxes all one's life is not some sort of exceptional achievement that needs recognition when you hit a certain age, and it is certainly not indicative of a person's contribution to society as a whole.
A step in the right direction would be a) introducing means testing and b) using the savings to increase the rates for those who are eligible so they can retire in some comfort.
First I am for the UBI so no means testing a benefit is a good thing, second all that will happen as a result is people will be discouraged from working, this is actually makes what I see as the real problem of not enough working people to support the non working population worse.
I see one of the major problems with our current benefits system is there is little to no gains to coming of the benefits, with its accommodation supplements, and no work related cost like travel and clothing. Unless you can magically jump into a high paying role you are better of just being unemployed and not giving up 40 hours a week of your life to work.
Superannuation is not a financial issue it is a productivity issue. We need to be building a productive economy which can support the retired population with all of the goods and services that they will require. All the money in the world is of no use if the products and services are not available to be purchased. We will need more doctors and nurses and healthcare for example and so we need to be training these people and building capacity now,
Alan Greenspan explains this here.https://www.youtube.com/watch?v=DNCZHAQnfGU
Isn't how productive an economy is the result of the inputs, work, investments and decisions made by the generation before us?
Superannuation is a financial issue because those entering retirement have left the economy in a very unproductive state, yet expect to be rewarded with universal pensions under the illusion that it is a productive economy.
Should people get universal and adequate pensions at 65, I think so.
Others might argue that the pension should be means tested... you could do I guess (and I quite like Susan's idea actually).
Should we build up a vast portfolio of financial assets, shares and bonds etc so that we can afford to pay Super in the future? No, of course not, what a truly stupid idea. Why?
Because Govt can always pay pensions - they just write a cheque. Do they need to bid up the price of shares and equity holdings to 'save up'? No, of course not. They just write a cheque.
Now, you might argue that Govt is being a 'wise investor' by building up a fund that could grow faster than inflation. Don't be a dummy! If Govt is taking more money out of the economy than it has put in, that's called a tax. So why not, errrm, tax instead? And, don't tax in advance to 'save up', tax at the time that people need to get their pension so that the extra taxation creates the space in the economy for the extra demand that those extra pension payments will create.
What matters most here is making sure that we have the real resources required to support older people - the extra healthcare capacity, accessible housing options, well trained care workers, community infrastructure etc. The focus on building a SuperFund basically detracts from the reality of what we need to do - kicking the can down the road and somehow expecting the market to magically create the things that a growing older population will need as and when they are needed.
Okay, let's tax. But who do we tax? I know! We tax the pension, at an abatement that scales based on means from 0% to 100%.
If it were that simple, why doesn't the Government write a cheque for several trillion dollars to buy all the world's resources, fully fund pensions, give everyone houses and solve child poverty? Build a 6 lane highway the full length of the country, next to a passenger rail line for those who would rather not drive. Our country can be rich, we just need the will power to put ink to the cheque book.
Govt can buy whatever is available for sale in NZD. The limit is what it can buy without causing inflation (or other perverse impacts - eg huge trade deficit). Answer me this, what is the difference between govt spending $100bn and taxing $100bn and Givt spending $200bn and taxing $200bn? We are no richer or poorer either way are we? What matters is whether the economy has the productive capacity to cope with $200bn of govt spending plus whatever we spend.
Say we have hit that limit of what the Government can buy/spend before it causes inflation. NZ Super spend was $17.7b in 2022, up from $10b in 2016. That's a 10% CAGR. If the spend was up just 3% p.a., then it'd be a $12b super spend by 2022. So we're at $5.7b per year, that cannot be spent elsewhere without causing inflation.
Assume 1/4 of all recipients would fail an Australian style means test, that's $4.4b. There are 54k nurses in NZ, 60k teachers, 1.8k fire fighters, 11k police. We could give each of them a $35k pay rise using that $4.4b.
https://www.stuff.co.nz/business/industries/97281269/chart-how-much-nz-…
It would be quite easy to scale votes by age demographic so each age band gets the same proportion of say. I guess it would open a mine field though, every race /gender /etc would want equal proportion too.
The easier equaliser would be to make voting internet only.
I blame the younger generations for not having enough children to support them. Ok I don't we live our to lives and most of the things in the world our out of our control.
Do you feel like you have any real say on what politician say or do, I sure don't feel that way. I assume that is the same with boomers, most of them had absolutely no significant say in what happened, politicians said one thing, got into power and did what they wanted anyway. They had the same choice or even less, labor or national, even less so now we have Act, Greens and Maori party but in effect just labor or national. I don't remember my parents saying Oh joy of joys, we have to pay university fees for me. I see voting is mainly pointless and more of a show so the people think we have some sort of say.
Also I think you meant "university fees" not "no university fees".
Younger generations have had very little say in the price of shelter. Shelter that is suitable for raising children, is generally at minimum 2/3rds of a single wage earners take home pay. That in itself suggests 2 x workers, mainly full time, to support a family.
Have 2 kids, and you're paying $7 - $8 per hour per child for daycare. After 20 hours free, that remaining 20 hours per week is $150 per week per child / $300 per week total (assuming both parents work full time).
Couple of thoughts:
-For those retired or soon to retire, the deal was pay your taxes and you will get universal super until you die about 12 years later. Trouble is that medical advances have pushed that out to 20 years and somebody has to pay for that. Maybe at 65 you make a choice trading the level of modern medical care for super weekly amount and starting age. I would accept medical care of 25 years ago in return for full pension, others may opt for contemporary medical care but a lower pension only starting from 70.
-Tie a reduction in pension you receive to the number of rental properties you own (or have settled into a trust). Kill 2 birds with one stone.
Also remember the top marginal tax rate was 66% when that promise was made. Then by 1989 it had halved.
Yes GST was introduced, but much easier to avoid paying GST than a top income tax rate. Especially if your income greatly exceeds your basic living costs, which tends to happen when your income breaches top tax brackets.
Convenient timing too, given many who voted Muldoon would have moved into their prime earnings stage of life in the 80's, encroaching into that top income tax bracket.
The age should have risen combined with giving people greater means to develop personal savings - read compulsory KiwiSaver. But we missed that chance. Now there is a massive equity issues with making changes. The boomers are all through the gate. Have voted themselves favourable arrangements, no way we pull up the ladder on the following generations. The age change of it was going to happen, should have happened 15 years ago. The only solution now is immigration to lower the average age.
The age change could happen now. Raise it by two months every year. In 12 years it will be 67. But a delayed change like National are proposing is the worst of both worlds, my generation will pay for the huge number of boomers to retire at 65 and then not be able to do so themselves while also not being able to save due to the huge tax rates needed for the boomers.
I agree here do something, or don't. Saying you are going to change it in X years is just stupid all that will a lot of wasted money talking about it.
I personally think they should do it now, or at least by 1 year 2 months is just too confusing.
Personally I think we should raise taxes and provide free tertiary education again, having an efficient high paid labor force is the only real way out of this bind.
What's interesting about tertiary education, is that the average annual student loan draw down is ~$1b p.a.. Yet our annual superannuation spend increased from $10b in 2016 to $18b in 2022. We have no issue finding an extra $8b per year to fund non-means tested superannuation, so why not offer free tertiary education for sectors of our economy that need it? Health being one.
Better still let's do away with the whole super/pension and go to q 401 like the US no super if you don't save for your retirement you don't retire. That way the people who want to live life frivolous and party etc can do it and the ones who work two jobs and save etc can . Level playing feild then. Dosnt everyone say how great the US is low taxes or no taxes etc etc. Another thing with the 401 if you and your partner both have one and one of you dies before retiring the living one has to decide which one to keep as the federal govt takes the other one. All never seems to look good when you have the facts
The USA has social security.
https://en.wikipedia.org/wiki/Social_Security_(United_States)
401k accounts are personal retirement savings. Income from a 401k doesnt impact your entitlement to receiving Social Security payments either, although it may impact the tax you pay on it.
https://www.investopedia.com/articles/personal-finance/103015/can-your-…
The problem with means testing is the way it’s sold to people is all: “surely you don’t want billionaires getting NZ super.”
And people say: “No that’s silly they shouldn’t get it.”
Then the means testing threshold is announced and like 60% of people are deemed too rich to deserve superannuation.
The problem with retirement is your savings need to last 30+ years. Even if you are wealthy at 65, you need that money to last a long time. Assessing someone as rich at 65 needs to be done very carefully.
Also, is means testing going to assess property wealth including the family home? Because if it doesn’t that is going to be pretty easy to avoid and will set all the wrong incentives.
I agree. Better to test the ability to work than the means. I know people on 6 figure incomes who get NZ super and free bus into work every day, they work until 70 plus. Why give NZ super to people perfectly capable of working. Just raise the age to 70 and give super to those that can’t.
We never question the ability of the banks to create money out of thin air and then lend it out on housing and look at the price of houses now. Around $330 billion lent on housing. What else could we have done with that amount of money now sitting in our bank accounts? Something more productive surely.
Means testing is so wrong, people who have worked their whole lives with the promise of a pension for their retirement, need this to enjoy their actual retirement. Any extra that they have managed to put away using their already taxed income should not be used to reduce their pension from the government at the 11th hour. The various governments over the years should have prioritised reducing wasteful spending and actually planning for population growth, budgeting and pensions.
People can have savings, buy gold or silver or shares and other things to put by for their retirement, why do to assume housing with capital gains? I guess landlords are an easy assumption and easy to take pot shots at, lets blame landlords and second home owners for everything?
Ironically a person who draws an income in the highest tax bracket gets access to the largest quantity of benefits that they do not need. They have also come from an era where home ownership was at its highest, so they can own property and still claim access to state and council public housing. While a disabled person denied equitable education and denied employment can get no income support or benefit (especially should they seek human company) and can be homeless and denied access to the state housing waitlist.
Yet the disabled person is the scape goat for the large number of NZ benefit costs. The disabled person is the target for abuse because it is assumed they chose to be born disabled, they must have chosen to be denied access to their community and they chose to be denied education and employment even though they would have sent out hundreds of job applications that never get responses because of disability discrimination.
NZ is a broken discriminatory system which targets the largest number of benefits, grants and funds towards the wealthiest and then those same people practice punching down on those who have no access to income or housing. How morally bankrupt do we need to be before we wake up. Oh what about disability residences starving and abusing the disabled. Following a long tradition of hiding the premature deaths from abuse behind closed doors long since 1970s.
they have also come from an era where home ownership was at its highest, so they can own property and still claim access to state and council public housing
That sounds great I own a property, where can I apply for my public housing, without committing fraud. If this is true I don't see why all home owners don't do this, you can deduct expenses while getting the state to do all maintenance your house.
Although from here https://www.workandincome.govt.nz/housing/find-a-house/who-can-get-publ… doesn't state you can't get public housing if you own your own home, its very much implied buy things like:
You must have a serious housing need.
So unless the house you own is falling apart you and not suitable for living in the answer will be no.
How about some new ideas.
Let people opt out of NZ super but pull forward the benefit of it through tax deductible contributions to Kiwisaver.
Let's say super would cost $30k a year for 15 years on average, give anyone who wants to opt out 10k a year of deductibility. They need to put 30K'ish a year into Kiwisaver a year to take full advantage and if they do should be well set up, even if they can only afford to do that once the kids have left home.
Probably plenty of details to figure out but incentivising people to provide for themselves has got to be a good starting point.
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