SUPER SUMMIT Thursday 21 March 2024 Wellington 9.30-4.30pm

Notes

I attended this Summit on NZ Superannuation on the invite of the Retirement Commissioner, representing the Incorporated society Kaspanz www.kaspanz.com

My comments are notes and perceptions only, formal reports of the day will emerge

Summary

An excellent day. Well run, solid range of commentators and presentations, the more youthful contributions stimulating!

From a Kaspanz (www.kaspanz.com perspective, a group who have lived with the NZ Superannuation issue for a long time now, we can all take a bow. We emerged as an incorporated society in 2013, following shared concern about the Crisis rhetoric on NZ Superannuation, putting forward the view that the narrow focus on costs and age entitlement, was not only non-reflective of the research evidence, but was far too narrow a view with the conversation dominated by economists, not public policy experts.

Superannuation was more a safety package for old age poverty and providing a platform for all retirement income discussions and policy, a generational package, linked to social outcomes, health, and a wide-ranging suite of linked retirement issues.

This is exactly what has now emerged in 2024, a much more broadened view of the whole retirement income scene, and the Summit revealed that the “young generation” can see this and are supportive.

Summit per Panel discussion and brief presentations touched upon NZ Super and the excellent Retirement Commission paper NZ Super Issues and Options 2024.

Any commentator on NZ Super, should be asked “have you read the paper above”. If the answer is no, be cautious of their comments!

Summit topics

1. Super-a fiscal challenge or opportunity
2. Super and the next Generation: Hopes fears and realities
3. Purpose and principles-what’s NZ Super for?
4. Politics: Is political agreement on NZ Super possible

Presenters. Most came across well e.g. Peter Dunne, Alison Connell, Max Rashbrooke, Sarah McMeeking.  Moderators Linda Clarke and Jack Tame shone, but the stars of the show to me were Kendall Flutey, Ricardo March, Olive Neas with the younger age group respective.

Notes

Retirement Commission began 1993. Important role, do not devalue.

MMP parties the Act party approach to retirement income, does not reflect the Summit consensus

Louise Upton came across better than I had expected. Retirement Commissioner should focus on developing a relationship with her.

Any changes to retirement income should be attempted during periods of calm not crisis.

Poverty aligns with dignity of old age, a key issue

Super issues are background noise for the young. Not yet tangible, unable to control, somewhat irrelevant. Yet that safety net element does impact younger minds

Intergenerational argument and inaccurate perception/myths sometimes came through. The lessons of history and current trends must always feature in any analysis, frequently forgotten. It was good to see Retirement Commission Policy staff bringing to the forefront past key decisions

• Remember seniors provide the bulk of child care support.
• Inheritance transfer from the Baby Boomers is a tidal wave-transformational.
• Seniors Supporting young, is in the top ten of mortgage providers.
• Free rent and housing for those who do not leave home, and a safety net for those returning after marriage and early work is a huge trend
• Voluntary work

Why is part work recorded by Stats NZ, “one hour per week “is counted as part time work”? This should be one day a week or more? 1 hr. per week skews the figures

Lack of a helicopter view for critical decisions. Is this the curse/legacy of the right-wing community?

Most OECD countries have a lower age of entitlement to Superannuation than NZ

NZ GDP 5.90% to fund 2060 Super. Includes NZ Super fund component. Real Low!!!

NZ Super is now a generational contemporary retirement income product, anti-poverty tool, a safety network. Great Policy.

Some of the Levers to resolve financial costs, are outside of universality, policy tailored to meet community needs always there. Does MMP allow that element of refinement?

NZ Super simple, a key pre-requisite for policy. Complexity in policy kills good outcomes

Kiwi Saver requires attention. Is the Aussie compulsory savings scheme, effecting the hardship cases emerging at 65 or not?

Māori Kiwi Saver initiative at 55 yrs. -interesting

Do not change NZ pension and retirement income system, strengthen it. Tinkering with eligibility etc., is counterproductive, holistic view required.

Social consciousness. Exchange of reciprocal arrangements, across culture and time frames. Dignity of old age. Social insurance across all age groups a key factor

Minister Social Development and Employment and Acting Minister Women, Louise Upston.

• Healthy debate, Current settings, model, and future
• Proactive
• Goal is across party agreement
• 90,000 per annum join NZ Super
• Universality of scheme, simple, efficient, effective, a great platform
• Security for people at 65, sustainability
• Non contributory of scheme, a Key. Requires more focus on that point
• Do not forget women
• Dignity
• No change to Super settings as part of Coalition agreement.

What were the recommendations within the 2024 Retirement Commission NZ Super Issues and Options

1. Conclusion and recommendations This paper attempts to weave together several strands that impact different aspects of the retirement system in general and NZ Super in particular. The paper concludes:
   1. NZ Super is the Government’s primary contribution to financial security for a person’s later life and ensures an adequate standard of living for older New Zealanders.
   2. The system needs to be fair, stable, and affordable.
   3. NZ Super is the eighth least expensive pension in the OECD, as a proportion of GDP.
   4. NZ expenditure would continue to be well below the OECD average in 40 years without any change to the age of eligibility.
   5. The current age of eligibility for NZ Super is not low relative to other OECD countries: 70% currently have a pension age of 65 or below, reducing to 53% by the 2060s.
   6. Discussion around changes to NZ Super needs to consider a wide range of data to inform decisions.
   7. Any change to the age of eligibility would disproportionately disadvantage manual workers, carers, and those they care for, and those with poor health, due to differences in savings and wealth and ability to remain in paid work after the age of 65. Women, Māori, and Pacific Peoples are overrepresented in those groups.
   8. Extra benefits to support people through to a later age of eligibility would reduce fiscal savings from raising the age.
   9. Introducing income-testing would be fairer than raising the age of eligibility.
   10. Political support for a stable long-term system is crucial. We recommend:
   11. A long-term political accord is important to best serve citizens and there is an opportunity to secure this. The Government should encourage Te Ara Ahunga Ora Retirement Commission to investigate the possibility of a new cross-party accord on the retirement income system to provide stability and certainty for future generations of retirees.
   12. At the very least, the number of parties who have made a political commitment under the New Zealand Superannuation and Retirement Income Act 2001 could be expanded. This would signal their ongoing commitment to current policy settings and impose special obligations on the Government to disclose whether consultation has taken place with other listed parties and the results of the consultation.
   13. The age of entitlement to NZ Superannuation should remain at 65.
   14. Only if fiscal savings are essential,
   15. alternatives to raising the age of eligibility should also be considered, and eight options have been outlined in this paper.
   16. income-testing is a fairer way to reduce expenditure on NZ Super, compared to raising the age of eligibility, so NZ Super would not be paid to those who continue to earn significant income (for a period after 65, or while significant income is being earned). • enhancements to KiwiSaver should also be simultaneously considered with any NZ Super change, to assist future retirees to maximise their private savings.
   17. A legislated and periodic review (for example every nine years or so) should be undertaken to enable environmental, fiscal, and population changes to be formally and independently assessed by Government. This will provide data and a framework to inform political debate and decision-making and help encourage trust in the system which is important for younger people as they navigate their lives and try to save for their retirement

Alec Waugh: Chairman Kaspanz alwaugh@xtra.co.nz

Notes taken on site Super Summit