National’s proposal to raise the Super age from 65 to 67 between 2037 and 2040 received a strong airing in Parliament on Tuesday, with Prime Minister Bill English and Finance Minister Steven Joyce receiving questions from all corners during Question Time.
New Zealand First leader Winston Peters asked how National could be trusted, claiming it had gone back on its word over superannuation eight times in recent memory.
ACT’s David Seymour asked why the government would not start raising the eligibility age now, in gradual steps. He pointed out that countries referenced by the government in a supporting document to its policy proposal would all start raising their eligibility ages during the 2020s.
The Maori Party’s Marama Fox sought guidance on how the government would treat workers who could not work through to 67 (the response was this would be reviewed in 2030). Green Party co-leader Metiria Turei asked Prime Minister Bill English why ‘generation X’ would bear the cost of the super policy.
And Labour’s Grant Robertson attacked Finance Minister Steven Joyce for not making contributions to the ‘Cullen’ superannuation fund during the past eight years, when the fund’s returns had exceeded the government’s cost of debt since 2009.
Unfair to raise age now
Joyce was first to respond. The age was not being raised now because it would be unfair to do so, he said. People affected would not have had long enough to plan for such a change, he said.
Meanwhile, he and English revealed that the proposal would mean that someone aged 67 once the changes took effect in over 20 years’ time, would actually spend a longer proportion of their life receiving super than someone at 65 now.
The government also did not need to rush into the age rise, Joyce said. New Zealand super costs were significantly lower as a percentage of GDP than other developed nations he said – 4.5% versus an OECD average of 9%.
Labour Party leader Andrew Little accused English of “kicking the can down the road for the next 20 years” on the issue. Little and Labour are against raising the age.
English invited Little to reconsider his stance – even pointing out previous comments made by the Labour leader a few years back on how superannuation cost increases were “scaring the bejesus” out of him.
Another reference from English was of new Labour Party co-leader Jacinda Ardern saying how soon superannuation costs would surpass the government’s education budget due to the setting of the universal age.
Gen-X to foot the bill?
It was up to English to defend the government against claims from the Green Party that Generation X would foot the bill for raising the age, having also had student loan debt and high house prices imposed on them.
English agreed that today’s 30-35 year olds did face pressures that required support. However, the government’s policies meant they faced a future with supportive lower taxes, economic growth and incomes that were rising moderately but consistently. He disagreed that the policy would fuel an inter-generational struggle.
Olive branch to NZ First
Winston Peters raised various policy “betrayals” by the National Party since the 1990s on super, including it replacing a 20-year timeframe for raising the age from 60 to 65 with an eight year timeframe in 1990, and cutting super payments from 65% of the average wage to 60% in 1996.
“How can New Zealanders trust National when they promised not to change superannuation settings in 2008, then stopped government contributions into the Cullen Fund, and then started taxing it?” he said.
English responded that Peters was probably better placed to remember policies of the 1990s than he was, to which he received the retort that “it’s a trust factor, son,” and a reminder that English too had been a cabinet minister during the decade.
However, English also sought to hold out an olive branch to Peters, perhaps with one eye on post-election coalition negotiations. He asked Peters to reconsider his stance, saying he believed the policy was one Peters could potentially support, partially if not fully.
Super fund returns vs govt debt costs
Labour Party finance spokesman Grant Robertson took on Joyce on a different aspect of the debate – the resumption of contributions to the Cullen Fund. The government has proposed only resuming payments into the fund when its net debt to GDP hits 20% - still a few years away.
Would the fund not be up $20bn if the government had not stopped contributions in 2009, Robertson asked, pointing out that its average return of 8% over that time was higher than the cost of government borrowing.
Joyce accepted the fund’s returns have been higher than the rates paid on government debt. However, he warned against making the comparison as global equity markets could have performed worse, and that the government would have had to borrow an extra $13bn to make the contributions (and add an extra $0.5bn in interest costs). Either that or raise taxes or cut spending.
The response didn’t sit well with Labour: “Where did the tax cut money come from,” they shouted back.
73 Comments
Yeah stop whinging about having to work into your 80s even though your health may be failing. Go live under a bridge and stop being a bludger when you live into your 90s.
We should just raise the retirement age to 115 then by your logic no one will have anything to complain about.
I don't think leaving retirement planning to the last minute is likely to be a successful strategy. With retirement savings investing over 25-35 years is more likely to work out better than trying to save for your retirement over 5 years or less. If short term retirement planning for individuals is bad, then why would it be acceptable for a Government to do that?
That's because Piggy Muldoon pillaged it when he screwed the economy. Another National Government running roughshod over ordinary working Kiwis.
Note though that while doing this to Kiwis, all Government ministers are very well looked after in their retirement packages after they have served for only nine years. Something no other Kiwi has.
Agreed.
It is pretty simple; it is about affordability. The Retirement Commissioner has been very clear that with increasing life expectancy to retain universal superannuation there is need to raise the age of eligibility. She has also made it clear that the length of time one on average will receive superannuation is increasing.
Increasing the age of eligibility seems fair and reasonable.
The alternative is to means test and that is both highly inequitable and fraught with risk of it being open to abuse.
I recall that when the qualifying age was raised from 60 to 65 for exactly the same reasons - and baby-boomers such as myself were affected - it was accepted and there wasn't the whinging about our parents generation having received it at 60.
Universality and absence of means testing are what makes NZ super so elegantly simple. And who would have anticipated the unintended consequence of the significant rise in over 65's remaining in the workforce at the very time they are needed?
You don't want to make make sudden dramatic changes to super. Gradualism is a virtue.
I agree with you there. More money needs to be set aside than kiwisaver and the puny Cullen Fund. I don't recall anyone complaining about the change from 60-65 (well limited complaints). A lot of people I knew either didn't make it to 60 or died not long after 60. Lifespans have changed a lot since then.
That's called universal basic income. Simple and we could fire most of MSD and pay them only UBI. A lot less administration and overhead. It would also take away the punishment system for people that work or start businesses.
Why should those over 65 be the only ones to get UBI? A lot of them are unwilling or unable to work. Most would not bother starting a business.
I think you've convinced me HeavyG. Let's put the working age population on Super and the over 65s can go on the dole.
What possible long-term electoral consequences could there be to repeatedly telling the under-35s to go eff themselves have? It's not like they're real people who have jobs and lives and needs and ambitions. Affordable housing? Nick Smith says go eff yourselves. Would like to have kids? Go eff yourselves. Jobs? Go eff yourselves. Living wage? Go eff yourselves. Future water quality? Go eff yourselves. Just generally go eff yourselves and get out of the way of the only people who matter, our donors, the boomer investors we see in the Koru Club. And on your way to go eff yourselves, empty out your pockets and leave it with us. No, it's not going into the Cullen Fund. We're going to spend it on somebody else.
National have told everyone 45 and under to get f'd. Those that are 55 and under will receive a pension up until the time that NZ runs out of money and the IMF has to bail us out. Those 65 and under will probably get kicked out of their retirement home and have to live in the streets.
I'm a swing voter but after this fiscally irresponsible bullshit from National they're not getting another vote from me ever as they are the enemy of my generation and everyone younger.
National is protecting their vote bank by not targeting them (many young do not vote so who cares- hope the young attitude changes in this election and then national realises it's mistake of ignoring them) and national is also tryin to divert the debate from immigration and housing in the election year as world over polticans who have not listen to the voice and concern of the people have lost.
It's an attempt at a distraction but retirement issues, housing, and so on are just adding to reasons to get rid of the current Government. I'm putting time into getting people to spread the word that they must vote to protect their interests. Of course what BIll English has done is calculated to win proportion of votes but he's doing it at the expense of future votes.
I think it is best to use the label inter-generational theft to explain what National's retirement policy is. Even though it was David Seymour that said it. The same that the issues with housing must be called a crisis.
It's clever timing. Will be yesterdays issue in a few weeks and English will go down as the guy who had the balls to finally do something, even if it's just tokenism. Everyone agrees there has to be changes, even most of the mythically selfish boomers depicted in some of the postings here this morning. This is a toe in the water stuff. English will be quietly pleased with the way reaction is already muting.
I agree that the change needs to be made, but I disagree with National's cynical approach to it, foisting it solely on the young who already bear the brunt of student loans and investor-favouring housing policy, while being careful not to affect boomer investor-voters at all.
National should not doing it in such a cynical fashion.
On the other hand, if they were to address housing affordability, that would show a less cynical approach. But they've said in a rare moment of honesty, "We don't want to see house prices come down", and they'll do nothing to implement law that will have this effect.
I agree with labour on the super fund.
point one all monies paid by the government for all services comes out of the consolidated fund, so to specify they could not borrow for one item while ignoring the rubbish they did borrow for, flags, Saudi farm, Hillary Clinton. is missed by most
http://www.taxpayers.org.nz/waste_watch
second point it has been the lowest interest rates, highest asset prices increase in history over a short period an opportunity lost
third point the government taxes the superfund and since this government has been in power they have collected 3 billion, why not enact law to exempt it instead of contributions
https://ar2016.nzsuperfund.co.nz/investment-performance/case-studies/ta…
so in conclusion when it comes to saving or long term thinking it has and is not in this government DNA.
all they know how to do is borrow, spend on roads and other silly things while cutting services,
national parties through the years have always been terrible economic custodians of the books.
everytime they leave the benches of power we have more debt and less assets
Abandoning the Cullen fund out of - what, pure spite because it was a good idea from the other team? - is something that should be more widely acknowledged as right up there on the list of National financial dumbarsery. Look at the returns that fund could have been making if they'd had a clue and kept it up.
No, it wasn't out of pure spite, it was because at the time there were better uses for the money - like earthquake recovery and seeing the country through the GFC.
If you think money should have gone on being put into the Cullen fund, you need to specify exactly where you think that money would have come from, and what impact you think that would have had on the future prospects of today's young people.
If National did continue contributions they would have had to borrow the money. With hindsight that would have been a good decision to make given the compounding returns on the fund greatly exceeding interest costs. In fact it would be not different to getting a mortgage on a house for capital gains.
I thought the given the number of property investors here people would get behind Government borrowing to invest in the superfund.
Their logic at the time was that the markets were down so they did not want to invest. This is the opposite of truth as the returns are always better after a fall (see Cullen Fund performance from 2008-207 for proof). The gains on borrowed money (borrowed at record low rates) would be have left the country in a much better position.
Hindsight a wonderful thing. How quickly the dark memories fade, of the GFC and the massively high risk period for investing that followed it. I personally went contrarian during hat period and had a ride that I've never before experienced in a lifetime of investing. But I also remember the white knuckle sweating as well.
National debt had to come down. Borrowing more to punt on volatile markets would have been folly.
National debt had to come down. Borrowing more to punt on volatile markets would have been folly
please explain, we now have 100 billion MORE debt on the books since the GFC.
also we sold 20 billion of income producing assets
like you in 2009 I jumped onboard with every cent I could find, now mortgage free and income producing assets that give me freedom to live a nice life.
I guess only some of us could see what was happening and took advantage
Crown debt (vs private debt) as a percentage of GDP is in good shape and trending down due to the govt having exercised sound fiscal management. Even rabid lefties have to concede that.
As an investor you'll be aware that looking back with the benefit of hindsight and making negative judgments about the outcome of decisions that were made back then for sound and prudent reasons, borders on dishonesty.
I'm not so sure that we will live longer than our parents after during our lives we were fed chemicals with our milk and meat and we swam in polluted rivers. We grew up breathing fumes from increasing traffic and in 20 years time our antibiotics will have lost their efficiency.
Yes that excuse for a rise should be challenged - it is such a weak and silly argument. And if used it then opens the gates to expected lifespans of different races (and jobs).
If we follow the logic of English and Joyce ...we might need to bring forward retirement age!!
"Unless effective population-level interventions to reduce obesity are developed, the steady rise in life expectancy observed in the modern era may soon come to an end and the youth of today may, on average, live less healthy and possibly even shorter lives than their parents. The health and life expectancy of minority populations may be hit hardest by obesity, because within these subgroups, access to health care is limited and childhood and adult obesity has increased the fastest "
The truth is working over 60 gets harder. People are going to need to save more, invest more effectively and borrow less to get through a much longer old age as it is. The average 60 year old will live another 30 plus years, and many 40 plus. Whether govt comes to the party at 65 or 67, many people will slow in earnings by 60 and they'll need more than a nest egg of $100-200k. The savings and investment rate needs to step up massively. Generation rent needs to turn into generation invest. Property in much of NZ is now a lottery and diversified invest is as about sure as you can get.
Even if people exit generation rent and buy people are buying houses later in life, or upgrading to the next house. Still paying a mortgage into your retirement can deplete a retirement fund much earlier.
Buying a house at 38 or later with a 30 year mortgage is likely to be troublesome. We need to encourage people to start looking at 15-25 year repayment of mortgages and at the same time have them invest enough to retire. That doesn't leave a whole lot of money for lifestyle or having children.
15-25 year mortgage terms? You really do want to stick it to the Ponzi scheme.
There is no way banks are going to head in that direction without a huge kick up the jacksey from some where.
I thought National were going to sleepwalk to another term, now I think they're just looking for the next issue to lose on.
In reality the age has no effect. If your still stuck with larger bills at 67 you will not be able to retire anyway. Fact is I have seen people from the age of 60 on the unemployment benefit instead of super because they KNOW that no one will employ them at that age so they just cruise through to getting the super. If you cannot live on $225 a week then you probably have no hope of living on $330 a week either. If you don't have the mortgage paid off or your renting then be prepared to work till you die.
Well, that's the crux of it. National is stacking the higher pension age on top of the higher housing costs on top of student loan costs, all on the back of the younger generations while being careful not to reduce the laws that benefit his core boomer voting bloc in any way. How will they expect to live on the dole at age 60? They'll probably need to resort to burglary or cooking meth - maybe Tony Alexander can recommend a place in which to cook it.
That's why the young should call them out.
Yes, all is as it should be. National is also developing a life extending drug in a secret lab so the boomers iron grip on the wealth of this country can be extended indefinitely. And you silly millennials thought that one day you'd inherit the earth when we carked it !
I would have liked a student loan but I had to leave school and start work at aged 15. Of approx 150 pupils in my school age group only 4 went to to a university. We all had to do 2 years National Service, virtually without payment. We accepted our lot and rolled our sleeves up. Ownership of a the most modest house involved working long hours and going without dozens of things that people today regard as essentials. We knew we had much better lives than our parents and we are happy that our descendants' lives are far far better than ours. Unfortunately, each generation seems to be more selfish than the previous generation and arguably less happy. It is not difficult to work out why: materialism (for want of a better word) breeds jealousy and discontent.
So, a company paid to train you for a job rather than you having to take out a student loan? And for those who did degrees, they were free and most received allowances to boot. Most people can't get a job at all without a degree these days.
Things factually are much worse today:
transportblog.co.nz/2017/03/07/no-boomers-its-not-like-it-was/
You're confusing the fact that some things that were expensive when you were young are now cheap, and vice versa. But the young generations today are in fact less profligate.
It's quite bad all the materialism. Younger generations are struggling with human rights such as food, clothing and shelter while older generations marginalise their objections to the trickle up effect. Greed is driving up homeless population and has significantly increased child poverty. It's rather pathetic to see.
Bill English certainly walked into a minefield
We all know its necessary to do a whole host of things to keep the Super going , but all the parties are just being opportunistic .
The fact is someone has to pay for it and our surplus ( which is the taxes we have paid ) should be going into the Cullen Fund
Think I might be tempted to vote National now, for the first time ever. Doing a 'right' thing, and having it exploited by party politics and the rants of the idealogically obsessed is pretty sickening.
But I voted labour last time, because Cunliffe was brave enough to address other unpopular areas that needed addressing (capital gains) .... and that didn't work out very well. Maybe this is a warning bell that English is doomed ......
So NZ needs a) shut the tap of immigration, b) stop overseas property ownership, c) make property speculating uneconomic with DTI, d) put retirement age back to 65, and e) stop our biggest export money generator draining our rivers and filling what is left with cow poop.
Pretty much rules out every option then. You probably have to pick two and be happy with that.
The opposition have swarmed all over this like flies on an Outback turd .
There is more to this Super argument than meets the eye ............. National are simply saying what every Kiwi knows , the Super is a problem in the future and has to be addressed .
As a result there is no cohesive idea from the intended coalition partners with everyone buzzing around excitedly saying the first thing that comes into their minds about what they think should be done .
It is likely to be their undoing , not National's
This shows how Kiwisaver is the lastest scam and new form of extra tax to fund the pension system. Those under 45 in Kiwisaver will never get their money back. Unless of course they want to use some of their "savings" to buy their first home which contributes to the raising property market.
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