KASPANZ MEMBERS NEWSHEET 30: 2023
Kiwi saver |Annuity Superannuation | Protection Association of NZ.
10 years established: the Consumer voice
EDITORIAL
Shamubeel Eaqub, on News hub nation (2 April), in a bitter rant, talked about means testing and raising the eligibility age for NZ Superannuation to 70 years. Thank goodness he is not a public policy commentator. He could not recognize sound policy if he ran over it. Longevity is stalling, health issues creeping across the age ranges with obesity out of control, and remember we have a wonderful simple scheme, low in cost and efficiency. Note Eaqub talks about means testing, usually suggested by those with high incomes and camouflaged by trusts and assets protection, to conceal their own income. At a current 5% of GDP extremely low, we could comfortably afford 10% over the next decades, and of course Eaqub steers clear of a wealth or land tax, if revenue was an issue. The myth that the baby boomers have abused their working years, and continue to look for freebies, is a historical myth and perception. In his spare time this commentator along with fellow economist Cameron Bagrie needs to study history and Public Policy 101.
SNIPPITTS
Dr Luck Chin Anaesthesiologist, 59 years working in the system. 2 April 23
We have underfunded our health system for years. We do not train enough doctors and we do not train enough nurses in NZ… We are in a trigger situation. The health system is gong to take years to build up, and basically, we must rely on importing our medical experts. Lack of medical schools, low graduate pays and a competitive neighbour in Aussie, with better service and pay,
Comment. Why has this occurred. It would be a sentiment most of NZ over decades support, so where has the political failure been. Both main parties to blame, but history would say the National Party has been the dominant factor in cutbacks, austerity measures, unsupportive funding policies.
We have roughly 74 GPS for every 100,000 people-nearly half the rate of Aust. In November 2022 a govt commissioned review into the sector estimated a high need general practice would require a funding increase of 231% to function properly. To maintain a homegrown general practice workforce at least half of each year’s medical graduates would need to become a GP, far more than the 30% who currently chose this option. Dr Kyle Eggleton, associate dean of Auckland School of medicine, says of that group, only a tiny proportion decide to work in rural areas
Comment
Heard that for last 40 years, who listens in Government?
OBESITY
Nz 3RD highest rate in the OECD.
This links to the stalling and probably falling longevity rates in the UK, Europe, USA which are starting to appear. The shrill commentator call, that we are all living longer is reversing, what will the trend be showing in 2040. We all know it is the health issues and quality of life in the last 10 years of an individual life that is the issue, and the trend is not promising.
ROYAL COMMISSION ON SOCIAL POLICY
Noted that NZ Super is paid in recognition of the continuing contribution to society through voluntary work and care giving. This remains true today. The value of unpaid and voluntary work undertaken by older persons was estimated between $13,9 and 15, billion per year in 2021, and is projected to increase to between 69 and 77 billion by 2071. Taken together these benefits more than offset current and future projected expenditure on NZ Super.
GREY POWER
The March 2023 Issue 53 of Grey Power Magazine, did an excellent job of highlighting key segments, questions and answers relating to NZ Super. This organisation has got its act together re having a good knowledge of NZ Super, past issues, and future considerations. The NZ political parties need to follow their lead, and reflect on NZ Superannuation, move past gut perceptions and knee-jerk reactions, and simply reflect on good public policy, simple, efficient, and compared to nearly all others, cost effective.
REVIEW OF RETIREMENT INCOME POLICIES 2022: RETIREMENT COMMISSONER
Praise to this publication. 81 pages of informed comment, research, and results, on NZ Retirement Income issues. Compulsory reading for policy people, researchers and anyone who wants to obtain knowledge on Retirement income issues. Easy to read, broken down into segments and topics, solid research, it is online and hard copies can be sought from the Commission itself. My bet is most commentators and NZ political parties, have not bothered to read and reflect. Nationals leader Christopher Luxon talks about being driven by evidence, he and his team need this as compulsory reading time.
BANKS CURRENTLY REGISTERED IN NEW ZEALAND
Do you know the Credit rating of your bank. See below.
Total number of registered banks: 27
| Name of registered bank | Registration date | Name of credit rating agency and rating | ||
| Standard & Poor’s | Fitch | Moody’s | ||
| ANZ Banking Group (New Zealand) Limited ANZ National Bank Limited ANZ Bank New Zealand Ltd |
1 April 1987 Amended 28 June 2004 Amended 29 October 2012 |
AA- | A+ | A1 |
| ASB Bank Limited | 11 May 1989 | AA- | A+ | A1 |
| Australia and New Zealand Banking Group Limited (B) | 5 January 2009 | AA- | A+ | Aa3 |
| Baroda (New Zealand) Limited Bank of Baroda (New Zealand) Limited |
1 September 2009 Amended 1 September 2009 |
– | BBB- | – |
| Bank of China Limited (B) | 29 March 2018 | A | A | A1 |
| Bank of China (New Zealand) Limited | 21 November 2014 | A | – | A1 |
| BOI (New Zealand) Limited Bank of India (New Zealand) Limited |
31 March 2011 Amended 31 March 2011 |
– | BBB- | – |
| Bank of New Zealand | 1 April 1987 | AA- | A+ | A1 |
| China Construction Bank Corporation (B) | 21 December 2017 | A | A | A1 |
| China Construction Bank (New Zealand) Limited | 15 July 2014 | – | A | A1 |
| Citibank N A (B) | 22 July 1987 | A+ | A+ | Aa3 |
| Commonwealth Bank of Australia (B) | 23 June 2000 | AA- | A+ | Aa3 |
| Heartland Building Society Heartland Bank Limited |
17 December 2012 Amended 31 January 2013 |
– | BBB | – |
| Industrial and Commercial Bank of China (New Zealand) Limited | 19 November 2013 | A | – | A1 |
| Industrial and Commercial Bank of China Limited (B) | 18 May 2020 | A | – | A1 |
| JPMorgan Chase Bank NA (B) | 1 October 2007 | A+ | AA | Aa2 |
| Kiwibank Limited | 29 November 2001 | – | AA | A1 |
| Kookmin Bank (B) | 14 July 1997 | A+ | A | Aa3 |
| The Bank of Tokyo-Mitsubishi, Ltd. The Bank of Tokyo-Mitsubishi UFJ, Ltd MUFG Bank, Ltd (B) |
1 March 2004 Amended 4 January 2006 Amended 1 April 2018 |
A | A- | A1 |
| Cooperative Rabobank U.A. trading as Rabobank Nederland (B) | 1 April 1996 Amended 12 January 2016 |
A+ | A+ | Aa2 |
| Rabo Wrightson Finance Limited Rabobank New Zealand Limited |
7 July 1999 Amended 15 September 1999 |
A | – | – |
| Southland Building Society | 7 October 2008 | – | BBB | – |
| PSIS Limited The Co-operative Bank Limited |
26 October 2011 Amended 26 October 2011 |
– | BBB | – |
| The Hongkong and Shanghai Banking Corporation The Hongkong and Shanghai Banking Corporation Limited (B) |
22 July 1987 Amended 16 January 2001 |
AA- | AA- | Aa3 |
| Taranaki Savings Bank Limited TSB Bank Limited |
8 June 1989 Amended 29 November 1989 |
– | A- | – |
| Westpac Banking Corporation (B) | 1 April 1987 | AA- | A+ | Aa3 |
| Westpac New Zealand Limited | 31 October 2006 | AA- | A+ | A1 |
Project your retirement income: From Lifetime Income NZ Lifetime Retirement Income was awarded Best Retirement Wealth Management Firm – New Zealand
in the Retirement Planning Awards 2022.
STEPS TOWARD MORE CERTAINITY
So, in these challenging times, what is the outlook for New Zealand banks? The Reserve Bank is continuing to increase the intensity of its supervision of banks. A recent development is the introduction of the Deposit Takers Bill, currently under consideration, which would provide a deposit guarantee up to the amount of $100,000 in the event of a bank failure. This is expected to be in place by late 2023. Such a scheme will bring New Zealand into line with most other developed countries, which already offer deposit guarantees.
*Editors Comment. My understanding is this Bill will be delayed further to 2024, as Government grapples with the complexity of the Bill
Additional security
In addition to the deposit guarantee, New Zealand has an Open Bank Resolution policy which is used in response to a bank failure. This is designed to prevent a run-on bank funds. If a bank gets into difficulty, it will close temporarily and put a freeze on a portion of each depositor’s funds. A statutory manager will then be appointed, and the bank will re-open, with customers being able to access the non-frozen portion of their deposits, which will then be Government guaranteed. The frozen portion of the deposits will be used by the bank to resolve its issues. Once the issues are resolved, all remaining deposits will be fully accessible by customers. Under this system, all depositors would lose an equal share of their deposits, sufficient to get the bank out of difficulty. This is sometimes referred to as a deposit ‘haircut’ – that is, deposits are trimmed back across the board. This is a much more equitable system than a ‘first in, first served’ approach where the first depositors to withdraw get all their money out and the last get nothing.
Investing safely
Every investor needs a certain amount of money in bank deposits to provide ready access to cash. As a general principle, it is a good idea to have sufficient cash in the bank to cover your cash needs for at least the next two years. That is because bank deposits offer certainty of value as well as liquidity. Keep in mind that money in the bank is primarily there to provide those benefits more so than investment return. Money that is not needed in the short term can be invested elsewhere in less liquid investments offering a higher return.
To invest safely and effectively in bank deposits, follow these tips:
- Check the credit rating of your bank.
- Make sure you understand the level of risk that is associated with your bank credit rating.
- Consider depositing funds with more than one bank.
- Invest your funds in several deposits with different maturities to match the time frame in which you may need to access your funds.
- Do not chase after high bank interest rates.
FAMILY SUBSCRIPTION FOR THE PERIOD APRIL 1 2023-MARCH 31, 2024
YOUR $10 FAMILY SUBSCRIPTION PAYMENT GOES TOWARDS OPERATING COSTS, SEMINARS AND CONFERENCES AND REPRESENTATIONS TO GOVERNMENT. SEND PAYMENT TO: KIWI BANK 38-9015-0111409-00—DIRECTS BANK TRANSFER, OVER THE COUNTER AT KIWI BANK (IDENTIFY WORD KASPANZ AND ACCOUNT NUMBER 38-9015-0111409-00).
REMEMBER ITS ONLY $10 AND PUT YOUR SURNAME WHEN YOU PAY, SO WE CAN IDENTIFY THE PAYMENT
DISCLAIMER
The information in this newsletter is of a general nature only, and is not professional advice. Kaspanz accepts no liability for its accuracy. The newsletter is principally the work of the current chairman of Kaspanz, and articles and views are not to be regarded as Kaspanz policy. The intent of the newsletter is to provide information only, to assist the reader in their own various view points, and is not paid content, it is compiled on a voluntary basis, to be helpful to readers in retirement income matters.
No liability is assumed by Kaspanz for losses suffered by any person or organisation relying directly or indirectly on information published on this site. Views expressed in any article are the views of the authors individually, and or the editor and do not necessarily reflect the view of Kaspanz .
Alec Waugh: Editor and Chair