Kaspanz was formed in February 2013, as a voice for consumers in the retirement income discussion. Such discussions have previously been dominated either by industry groups, or economists, or on occasions, by political parties seeking a tactical advantage. Consumers are defined as those in receipt of or paying into Kiwi Saver, NZ Superannuation, annuities etc.
Kaspanz adheres to the principles of transparency, fairness and reasonableness, attempting at all times to provide balanced commentary. Financial prudence and safeguarding of consumer rights is espoused.
Two primary concerns behind the formation of Kaspanz, continue to feature. Firstly the regular interference by Government in retirement income policy affects public confidence about future retirement conditions. Government changes/intervention in retirement income policy, takes place too frequently. There is a need for consistency and time to digest change. Serious consideration needs to be given to seeking a cross-party political accord on retirement income policy. This is a trust issue, which political parties need to take account of. Kasapnz is not averse to change, but supports well researched policy adjustments with adequate public consultation: it is wary of ad-hoc amendments.
Where significant change is required Kaspanz suggests long lead in times and/or phased transition arrangements, because not only do people need to adjust saving habits and retirement planning habits, but economic well-being is fundamental to social harmony. A minimum of 10 years is suggested for significant change, with even longer periods of notice or substantial transition elements to be incorporated for changes such as increasing the age of entitlement for New Zealand Super.
Secondly a trend continues of New Zealand media commentators, writing articles about the alleged spiralling costs of New Zealand Superannuation; including negative long-term fiscal projections e.g. out to 2050/2080. Research on the contrary, shows that the New Zealand superannuation model is recognized by many as the best in the world, both simple and low cost in comparison with many OECD countries. Long-term projections are notoriously unreliable; there are unknown factors that occur over time in societies and many variables that can affect economic outcomes.
Kaspanz recognizes the inherent difficulty in projecting a universal voice on key retirement issues, the topic range is vast and the issues often complex and difficult. Accordingly, there will always be differences of approach.
Accepting that there will always be different views, Kaspanz has a role to play through its website in presenting this diversity of viewpoints. The principle however is that Kaspanz wants a voice in the retirement income discussion and, where possible, the topic under examination should take into account research available on the issue, what trends over time periods have applicability, and whether lessons of history have relevance.
KASPANZ SUPPORTS THE FOLLOWING
- New Zealand Super is internationally recognized as a very sound model, and alternative models/approaches fall far short of being viable alternatives. There is no reason why New Zealand Super should not be available for both current and future generations. Discussion on areas like age of eligibility, residency rules and the spousal component of Section 70 issues (overseas pensions) are important, but in essence the approach should be minor adjustments to the model, rather than any major change in the absence of compelling reasons for such change.
- KiwiSaver is a voluntary, largely work-based, savings initiative. While relatively new, it appears to be a sound model. A higher contribution level may be warranted, and whether or not to make participation in the scheme compulsory merits further discussion, with Government underwriting the scheme.
- ‘There is a high level of complementarity between NZ Super and KiwiSaver (or equivalent retirement savings schemes). NZ Super provides for a very basic underpinning of economic welfare in retirement and some form of private savings is essential for a comfortable retirement.’
- Government insurance or guarantee of depositor funds is required.
- Retirement income policy needs to take into account gender issues, e.g. what is the impact upon women, when policy is being set.
- Pension eligibility and portability issues re access to New Zealand Superannuation require attention. E.g. Section 70 of the Social Securities Act needs review. The spousal issue relating to overseas pension deductions and NZ Super is unfair; it is inconsistent with the treatment of other personal income and needs urgent attention. The Social Security agreements NZ has with a number of countries require transparency and monitoring.
- Means testing of income and/ or assets is a complex issue. The universality of New Zealand Superannuation entitlement has many advantages.
Posted by Alec Waugh