Inter generational impacts:the sustainability of New Zealand Superannuation

This is a seminal paper (70 plus pages) , and a foundation document for policy analysts, historians and informed commentators on NZ Superannuation. Susan and Claire are 2 of New Zealand’s foremost academic researchers on retirement income issues, strong contributors to all topics, well done!

Some qualifying comments re the detail of their paper, I don’t share their inter generational equity impact view, like long term future projections, both measures and outcomes are subject too to many variables, never take into account the adjustment factors each decade brings, and are close to worthless in their assumptions and conclusions.

The value of their paper is their meticulous research and statistics and the clear outline of possible options and approaches to NZ Superannuation.

The paper includes a “Blue Sky” proposal, requiring significant policy change, and includes the assessment of the impact of raising the age of eligibility, lowering the rate of NZ Superannuation, and means testing, all based on the conclusion that projected outcomes of cost based on current settings are not sustainable.

One principal that stands out when discussing NZ Superannuation is their is no magic formula or approach, all models/systems have trade offs.

This writer holds the view that no suitable alternatives to current arrangements and costs has yet emerged, the current settings are sustainable, albeit only minor tweaking required, e.g possible residency qualifications, introducing in general taxation a wealth tax etc. All other options are not politically marketable , or the perceived impact is outweighed by the trade off required. Its not fashionable to hold to the position current model and settings are as good as it gets, but alternatives suggested to date have only superficial appeal, just don’t stack up, are invalid or not sound public policy.

The assumption that savings found in NZ Superannuation costs will be used in a beneficial manner to balance other areas of Government spending, is naive, robbing Peter to pay Paul never works.

The paper is also silent on the other elephant in the room, the entrenched NZ practice of asset protection and trusts to camouflage/mask income. Means testing or income evaluation requires the removal of all such practice, so all income a business or individual receives is transparent and measurable. New Zealand is awash with such trusts, and it is most unlikely such measures will ever be removed.

Intergenerational impacts: the sustainability of New Zealand Superannuation

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