YES – the UK’S reform of pensions have lessons for New Zealand

Kaspanz Chair’s (Alec Waugh’s) Report on Meeting

An audience at the Auckland Business School on 23 September 2013 were enthralled listening to Dr Alison “Connell talking about the evolving United Kingdom Pension system and the transformation from a messy and complicated system to a much more simplistic one, a change adopting similarities to the New Zealand model?

Dr O’Connell founding Director of the UK Pensions Policy Institute and now residing in NZ, out lined what had occurred and also shared “Enduring themes” including

  • Longevity-Living longer must be addressed. Future cohort life expectancy rates!
  • Don’t increase relative Poverty, Be wary of bad indexing practices, which attempt to save costs
  • Complexity is not a good thing. Unforeseen consequences inevitability arises.
  • Simplicity should be paramount. Has economic benefit
  • Be cautious of merging Government and Market roles. Don’t substitute bits of this and that.
  • Be cautious of restricting membership e.g. don’t take the rich out of schemes. They have a blending affect, which retains cohesion and assists.
  • Universality is a key factor which should be retained

Dr O Connell also talked about the need to Reinvigorate Work Place Pension schemes, and talked about defined contribution schemes placing all the risk on employees and this needed more balance with employers and Government taking their share of the risk, referred to the huge body of analysis on Retirement Incomes done in United Kingdom and Canada (Don’t reinvent the wheel) the lack of depth and media attention to retirement income issues in NZ compared to the UK, the mosaic and downside of complexity etc.

Dr Alison circulated a paper Ready for Ageing, a 2012 House of Lords Select Committee paper which included this recommendation along with many others

The Government elected in 2015 should, within 6 months, establish two commissions based on cross-party consultations: one to work with employers and financial service providers to examine how to improve pensions, savings and equity release, and one to analyse how the health and social care system and its funding should be changed to serve the needs of our aging populations. Both commissions should be required to report within 12 months and to make clear recommendations for urgent implementation.

Kaspanz suggests something similar to the above, would be of value in New Zealand. Whose listening!!!

One thought on “YES – the UK’S reform of pensions have lessons for New Zealand

  1. Jan McKeogh

    Agree wholeheartedly with principles outlined.NZ Govt should take a leaf out of what is working in other countries and listen to what is being advised to take place in terms of reform to the country’s current system. Instead this Govt allocates $12 m to hunting down the overseas pensions of 10,000 individuals who apply for NZ Superannuation each year so they can relieve them of their entitlement plus in some cases,even that of their spouses.This is not taking care of our aging population,nor is it decreasing relative poverty which is occurring with many of the 70,000 pensioners currently affected by this draconian law of 1938.
    A government has to be prepared to listen and act, but setting up commissions and acknowledging respective recommendations is not going to happen here in NZ. If there is is any threaten to the systems in place which appear to be financially advantageous to the government such as the cash cow of almost $250m per year through using other countries’ publicly administered pensions,it will brush any idea of commissions aside. It is unlikely any NZ Government will listen in the way Kaspanz is suggesting.

    Reply

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