Monthly Archives: June 2014

? The Future

With “advisors” encouraging people to re-mortgage their houses and pay off the loan with their Kiwisaver when it matures, is this the future even for those who belong to Kiwisaver?

retirement

Stephen Wealthall

Susan St John/Alec Waugh Views

Contribution: Susan St John’s original articles and rejoinder, and Alec Waugh’s comments from Kaspanz, all indicate that the debate about retirement income can be broken down into specific components that can be analysed. This approach, rather than the simplistic global statements of many politicians and instant experts, is to be applauded. It does not matter that there are different interpretations of some of the components, the aim of Kaspanz should be to get those specific components out into the open, let them be debated, and then hopefully educate the Treasury dwellers and their political masters about the real facts.

Stephen Wealthall

Susan St John’s Rejoinder

Great article thanks Alec.
For someone who despairs that the lack of interest in these issues it is refreshing to see you starting the debate.
The RPRC have updated the 2013 figures on labour market participation for 65+ group and it is clear that many more people are staying in the work force longer. (They are living on average longer too). I agree that NZS is brilliantly designed to encourage this, but I argue we pay full time high-income earners too much in net terms, and that is precluding other things we could do with the money to aid the working age population and children. Just tax them more!. And you are right that we will all adapt to the demographic change except that from 2031 the numbers of frail elderly will begin to mushroom to around 4 times as many as today by mid-century. Their income and care needs requires planning today.
The point of the series was to start to jolt the political process to look seriously at ways of helping middle people protect themselves against outliving their capital and needing expensive long-term care. At the moment we expect people to manage their own lump-sums in an often dangerous and risky investment world.
These are big issues- lets keep talking. The RPRC are putting the best brains together from NZ and Australia to work out a unique annuity solution for NZ. We will show case this later in the year.
Susan St John

Susan St John articles. Kaspanz comment!

Susan St John recent series of articles made interesting reading. As usual her scholarship is sound but please Susan doesn’t join the prophets of doom circus. We know that 40% of current receipt ants of New Zealand Superannuation have no other income, and the next 20% limited additional income. Very few seniors moving into the retirement age perimeters are retiring they cannot afford to. The trend of seniors remaining in the workforce is more than just a trend; it’s an explosion which will only accelerate, realigning economic growth and tax coffers.

People over 50 want to work by necessity due to the combination of the 1980’s stock market crash, the tech bubbles of the 90’s, and the collapse of the financial markets in 2007. Increasing divorce, and the widening inequality over the last 30 years between the few wealthy and the rest of society, have actively discriminated against the savings of women and the low economic group, now in the 50-80 yrs age bracket. Most of today’s seniors are actively involved in both child care arrangements, and the return to the family nest of children and separated/divorced family members, many of those not paying their way? Any use of long term projections is questionable in their accuracy or usage, due to the crude quality of the measurements used, and the period of time involved. It was good to see a 2031 example quoted, rather than the usual 2060 or 2080 projections which are worthless. In 2031 the NZ Superannuation GDP will be about 5.5% after Tax, a low international rate. As an aside the Kaspanz focus is on the retention of the universal model of NZ Superannuation, nothing else suggested comes anywhere near the overall benefit of this approach!

While the above comments help restore some balance, there are 2 issues which your articles seem to bypass. The senior group have always been very adaptive, change agents in their own right, and the impact of that approach is likely to continue, producing new assumptions, alignments and realities. The Generation X and Y cohorts will also bring elements of their creativity and expectations to the table, creating new approaches, opportunities and measures.

My point is that every generation is equal value; there is no need to adopt rose tinted glasses, or reflect back with a golden glow, or attempt to compare generations. To get into that game and the assumptions one has to make, is very difficult. How do you validate comparisons! I also think too many commentators have expectations about the future resting on their knowledge of the recent past, and all should be cautious of believing they can see the future outcomes from their current perspectives. Playing the Generation game is unproductive.

Posted by Alec Waugh