Retirement Savings
The Kiwi Saver special “On the Money “ July 27 made informative reading. But the issue of a compulsory income stream in the form of an annuity, over a lump sum on retirement requires addressing. The Australian Superannuation Industry acknowledges this is a real flaw in their system, and New Zealand should learn from their mistake. The gender factor and how to deal with intermittent breaks from employment also needs attention. Equally the fee issue is understated in the article. Percentage fees structures should be avoided, and there is enormous duplication in administration and back office functions. In the retirement income and age discussion it’s important to recognize that the New Zealand Superannuation model with its simplicity and universality is a world leader, with low administration costs. This principal requires reinforcement and highlighting, there is no evidence to support any viable alternative. In contrast to many countries New Zealand does not pay a tax free pension, the current after tax figure is 3.7% of GDP and over the next 20 years, any projected expenditure rise is very manageable, contrary to the alarmist’s propaganda.
Alec Waugh-Takapuna, Auckland