OPINION PIECE   BY ALEC WAUGH 2021  :NEW ZEALAND SUPERANNUATION: GENERATIONAL WELLBEING

Len Bayliss a well-respected New Zealand economist (1927-1918) said in 1996, ”Doomsday rhetoric characterizes NZ media handling of retirement income policy”. Twenty-five years later his comment still retains validity.

I suggest some of the language about NZ Superannuation over the last two decades has moderated, and there is now a growing awareness that our superannuation scheme is excellent public policy, supported by the sound Kiwi Saver scheme. The recent Q+A with Jack Tame, New Zealand Superannuation discussion (29^th August), was an example of how commentator knowledge  has improved over the last two decades.

Knee Jerk reactions do continue, pop up commentators with dubious credentials are everywhere. Talk back radio is one example; social media platforms another. Fascinated by their own one-line rhetoric, and often conservative political orientations, some talk back hosts run the risk of becoming on-air trolls .

No issue here with voicing opinions, just be more transparent about your leanings. Those with the strongest bias are often the most strident in disguising their rigidity of conviction. The media continues to do a poor job in the transparency stakes about the faces  and voices  engaged in 2021 communications, and the bias they bring to the microphone.

Long term projections often appear in the Retirement income discussions. Time-frames around 2050-2080 projections are useless and can be disregarded. Why disregard? History shows such assumptions are so wide of the mark they lack value, and the projections cannot factor in society changes over time. Inevitability, commentary over states the extent of existing knowledge and its degree of certainty.

Those who are prepared to research NZ Retirement income policy should start with Roger Hurnard, previously a  consultant on NZ retirement issues), with his 2011 paper “Mixed messages :the future direction of NZ retirement  income policy”[1]. Then read the 2019  Retirement Commissioners Review paper to government[2] It is  a thoughtful and restrained discussion paper. Add in Michael Littlewood’s various superannuation papers published throughout the two decades 2000-2020. [3]

Commentary by commentators Martin Hawes, Mary Holm, Rob Stock and analysis work by Susan St John and Dr Claire Dale further add substance to readers’ knowledge . They all help provide the platform for useful contributions to the topic and the further development of sound public policy.

 The  myth “burden of  the ageing population” continues to be aired,  rarely understanding the fact that superannuation policy is far more than a monetary formula. It is linked to issues of physical security, personal well-being, economic productivity, social health and the distribution of income and wealth.

New Zealand’s superannuation scheme is a recognised world leader, with a simple structure, low-cost administration, and with no exceptions. Be alert and wary to those suggesting means-testing or removing universality, as these are wonderful pub fare one liners, but are poison for the greater public good. Be sceptical of those saying “throwing younger generation under the bus”. Referencing such throw away lines usually means one is unable to sustain a coherent argument.

The dollar cost of NZ super as a proportion of GDP is also exaggerated. Unlike many other countries New Zealand does not pay a tax free Superannuation pension. That needs to be factored into the numbers. The current after-tax figure is 4.5% of GDP, a low figure, and future projections within a reasonable time frame (2030) show around 6%, also a sustainable figure.

Many of today’s seniors are  economically active, boosting the participation rate and paying tax.  We should talk about “multipliers”. More people working means increased output, stimulating the economy, and increasing productivity. Conversely rampant discrimination and the fact many of the elder generation have many quality-of-life health issues, means the vision of working seniors does not apply. Research strongly suggests that usually it’s only the well-educated who can find regular income after 65 years of age. The next paragraph shows a paradigm shift in New Zealand’s economic landscape .

Voluntary and unpaid work needs to be factored into all economic  costings, with seniors involved in less crime, road accidents etc. Seniors are the backbone of New Zealand family child care arrangements. Seniors are also assisting with many housing deposits, and early inheritance lump sums, frequently at their own savings disadvantage. The input of the older generation in providing  a place of abode for those who often don’t leave their child hood home is now everyday living arrangements. Many children who have departed are also returning to their original ‘nesting place’ after the ravages of failed marriages and independent living arrangements  All these issues are the new normal, and represent a significant community adjustment.

We are talking of a fundamental societal shift over recent years. Seniors are now the backbone of many of the family  economic arrangements in New Zealand.  New Zealand Superannuation has become a generational transfer entitlement wrapped around family, equity and wellbeing principles.

[1] The assessment of retirement income system options A paper for the External Panel on the Treasury’s Long-Term Fiscal Statement October 2012 Roger Hurnard

[2] CFFFC Review of Retirement Income Policies 2019

(3) Michael Littlewood. Our pensions are affordable for future taxpayers, 17 Aug, 2018