Don’t panic on pensions
Sunday Star Times Oct 13th, 2013 D1, D5
Fears of a massive unaffordable pensions blowout in future may be easing as analysis suggests a sustainable solution is achievable.
Measures proposed by the Retirement Commission are estimated to cut the cost of NZ Super to about 6.5 per cent of GDP by 2060 – a level seen as costly, but affordable.
Retirement Commissioner Diane Maxwell said the measures were designed to be the last big changes needed to make the universal state pension sustainable in the face of an ageing population.
Her comments follow analysis from the University of Auckland’s Retirement Policy and Research Centre showing a consistent decline in Treasury’s estimates of the future cost of NZ Super.
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On Wednesday in the Focusing on the Future report the Commission for Financial Literacy and Retirement Income proposed progressively raising the age of eligibility for NZ Super (currently $21,336.64 before tax for a person living alone) as life-spans increase. Continue reading
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
The Kiwi Saver scheme is now 6 yrs.’ old, with budget changes announced in 2008 and 2011 respectively. Máire Dwyer’s paper is a timely review of Kiwi Saver principles and the fit and place of Kiwi saver, within the evolving retirement income system.