National backs Super Fund
November 26th, 2004 at 10:36 am by David FarrarThe media are reporting that the National Caucus has decided not to abolish the Government’s Superannuation Fund, when it is in Government.
Personally, if I was a member of the Caucus, I would have voted the other way. I do not believe that having the Government build up a $50 billion fund is a great idea as it will give the Government indirect control of a huge portion of our economy, and also that the key to future sustainability is increasing NZ’s GDP faster, not a fund which will only cover 15% of the future cost.
Having said that, it is not that the Fund is a bad thing per se. It is not the best use of surpuses, but neither is partial pre-funding without some merits. And it does avoid the dishonest scare tactics that National is going to steal $10 billion off pensioners and give it all to Sir Michael Fay, which no doubt Labour were going to push.
What I would caution people, is not to think that what now appears to be the guaranteed continuance of the Super Fund, means that they should not save for their retirement. The current Superannuation scheme is not sustainable with or without the fund as our population ages. Regardless of which party is in office, it is inevitable the age of eligibility will increase. And if one wants a comfortable retirement, you should have private savings to top up the state scheme anyway. Those over 45 are fine, but if you are under 45 you should start saving or investing (property especially is good) now.
Incidentially I think it is ridiculous that superannuation is not means tested. But this is about as popular with Grey Power as free seminars from Dr Kevorkian, and is unlikely to be ever changed.
One bright side is that when National is in Government, John Key will be Minister of Finance. John used to be head of global currency for Merrill Lynch and was reputed to be amongst the best in the world at making money from investments. So when John is Minister of Finance, he should sack the Board of the Super Fund, and just invest it all himself as he sees fit. I reckon he’d have a good chance of doubling it within six years 
November 26th, 2004 at 11:21 am
Whats in your coffee this morning ?
Vote:John Key wasnt in the investment side of merril Lynch. Currency trading as you correctly say was his job is soley speculation.
Actually a very good series on Slate about wall street investment advisors said they never beat the market, and just relied on a rising tide lifting all boats. My AMP investment brochure gives my fund as below inflation over the past 5 years- this is a broad based fund which would be suitable for superannuation
As with your other comment on Achmed Zaoui, the PAROLE laws were indroduced by National( remember the MP’s you said werent around anymore so it doesnt matter???), but Zaoui will be considered under the BAIL laws, a different thing
November 26th, 2004 at 11:40 am
I meant investing in currency. John can play currency buys and sells for six years and make us all rich.
As for Zaoui don’t comment on other threads, in this one. It is a good way to get banned. Stick to the topics where they are.
Vote:November 26th, 2004 at 11:53 am
David – faster GDP growth won’t solve the pensions problem, unless you want to make pensioners relatively less well off than the rest of the community. This is a problem we cannot grow our way out of.
In the long run I would like to see the age edge up, since as you say the chances of ending universal provision are low, and I would oppose cutting the floor from the current level. Maybe add on two weeks a year for forty years.
Vote:November 26th, 2004 at 12:29 pm
I don’t know if two weeks a year would work from a practical point of view but agree in principle. If it weren’t such a political football (and if the sky wasn’t blue!) it is an area that screams out for long term agreements – after all to allow people the opportunity to prepare for retirement the warning time for change really has to be longer than any government tends to last.
As for National’s decision, I am not enamoured by it but sometimes politics outweighs good sense. The joys of a democracy! My only concern is that the public seem to have brought into Cullen’s spin that the Fund is some sort of panacea for our future woes.
Vote:November 26th, 2004 at 12:38 pm
Good to see the lefties contributing globalisation by putting their personal investments with overseas companies.
David and Jordan, I would imagine an increase in the age of eligibility for Govt Super will arise from natural causes as well as economic nececity. People are remaining fit and healthy longer and many don’t want to retire at 65. So, I dont see a change in the age as a problem. Sure the shouters will scream and moan for a little while but they’ll get used to it.
Vote:November 26th, 2004 at 12:49 pm
I intend on retiring at 50, so I will be retired for at least 15 years before I get the government pension (probably by the time I get to that age the eligibility will be higher) so I have no choice but to have my own scheme. Thus the likelyhood of me actually seeing very much of the pension are pretty miniscule, and certainly I won’t be relying on it.
Vote:I feel that the government shouldn’t do everyone’s saving for them, it should be the responisbility of the individual to ensure that they have a comfortable retirement. So why are we keeping the fund, when it is essentially a savings scheme? The people of NZ are naive if they think that letting the government have control of such a huge cash reserve isn’t dangerous.
Bring back the dancing cossacks!
November 26th, 2004 at 1:20 pm
I am concerned about that portion of the Cullen fund invested here. What will it be invested in? If it is invested in the sharemarket it will simply push prices up making them more expensive for private investors. Dividend yields will be down so who really profits? What of money going into property? Ideally the money should go into new business ventures and building up current businesses. But then we are back to picking winners with a huge money chest.
I don’t think there should be a fund. Lower taxes and boosts for businesses across the board to give us the economic ability to pay the demands of superannuation in the future would be best. An improved economy will also attract overseas money instead of us sending Cullen fund money to boost overseas companies.
Vote:November 26th, 2004 at 1:57 pm
While I strongly agree with you about the lack of means testing, David, and it sticks in my craw that Bob Jones is eligible for a chunk o’my money, the idea that we will simply rely on future growth is the 1975 fantasy that got us with a huge mess in the first place.
And investing the money overseas is an excellent way of balancing our international books. Let foreign companies pay for our retirement!
Vote:November 26th, 2004 at 3:21 pm
If we had a sensible and liberal immigration policy we could actively prevent, or at least reduce, the efefct of an aging population.
NZ is massively underpopulated – it would be an uncrowded place with 20 million people.
Vote:November 26th, 2004 at 4:04 pm
Rodger – this is a v good point that people do overlook a bit. If the fund grows to 50% of GDP, that will be about $120bn at the time. If it makes a 6% return we’re talking about an inflow of returns that will pretty much match the current account deficit — a very useful place to be indeed.
Vote:November 26th, 2004 at 4:18 pm
Roger, the present super is pay as you go, and as Robert Jones tax payments are zillions more than yours- even with the most agressive tax planning- he is paying his super, yours and a few 100 others. Your tax ,poor fellow doesnt even pay for the photocopiers at parliament much less anything else
Vote:November 26th, 2004 at 5:01 pm
I agree with Bob Howard the avalanche of money into local managed funds and thence the sharemarket will reduce yields and distort values making private investment very difficult.Brokers and fund managers will make a fortune clipping the tickets all the way as will the gravy slurpers selecting them. No-one will be accountable for poor results . I am against the fund for all the reasons National opposed it…The surplus should be used to reduce debt and invest in infrastructure.
Vote:November 26th, 2004 at 7:35 pm
“my fund as below inflation over the past 5 years- this is a broad based fund which would be suitable for superannuation”
ztev, ztev, ztev. If your fund is running at below inflation, then it is quite clearly NOT suitable for superannuation.
Vote:November 26th, 2004 at 10:12 pm
the market cap of nzsx is small compared to gdp and housing stock. more investment in new zealand will boost the economy.
Vote:the money is under control of the “Guardians” who have demonstrated competence to date. They can determine which funds/companies to invest in apolitically
national has the opportunity to put the cullen fund against individual taxpayers names and increase national saving
there is no difference between compulsory saving and compulsory taxation.
November 27th, 2004 at 9:41 am
Why should the Government have control of $120B (or even $30B) of taxpayers money? It’s our money so we should be able to keep it instead of giving it to Aunty Helen and Comrade Cullen to look after for us. If I want someone to look after my money I would prefer to choose who it is.
Vote:I reiterate Muldoon’s theory in the famous Dancing Cossacks ad – they could have the facility to buy the whole country, and we all know what that is. Bring back those ads man!
November 27th, 2004 at 10:23 am
Don Brash’s Adultery and National Principles??
The history of Nationals approach to Super is so farcial, that its no wonder they are sliding down the polls ( back to where they belong)
Vote:back when Norm Kirk indroduced individual accounts( compulsory) but now seen as the best solution, which could have been improved by giving individuals a choice over which fund they invested in national opposed this and bought in a pay as you go taxpayer funded low retirement age scheme ( and gave back the money in the individual accounts).
Then in the nineties they broke an election promise to remove the super surchage targetted taxation, and then reneged on their broken promise to go into coalition with winston peters.
Now they are sniffing the shifting winds again and reneging on their previous policy of opposing the state fund and now support it- for now or as long as Don Brash lasts as the only self confessed adulterer to lead the national party.
Labours Cullen fund is even more of an affront to nationals ‘principles’, as the original scheme from Norm Kirk had individual accounts but Cullens has a giant State fund.
Nationals political position must be so weak that they are throwing away any of their fiscal principles, probably to campaign on moral issues. A big laugh considering Dons infidelity
November 27th, 2004 at 11:45 am
ztev – you are now on your final warning for inappropriate off topic comments. One more and you will be banned.
Vote:November 27th, 2004 at 12:28 pm
Ban me !!.
Vote:yeah me and Xtra’s 900,000 IP addresses.
Foolish man
November 27th, 2004 at 4:25 pm
ztev – this blog is not a public resource. It is privately owned and paid for by me. If I tell someone they are no longer allowed to post comments, I expect them to comply, regardless of whether they have their IP address blocked. Just as you don’t enter someone’s house after they have asked you not to come back, even if the door is unlocked.
If someone whom I have banned (and it is a last resort I have done only once in 18 months) and they continue to post I will complain to their ISP. Xtra’s terms and conditions have several clauses which you would be in breach of if you continued to ignore being told not to post.
I can also delete posts retrospectively, and/or bring in a registration system for comments. I would rather not do that but can.
Vote:November 27th, 2004 at 5:57 pm
Ha! National and Labour agreeing on something! What it really all about is a bunch of baby boomers looking after their own. The baby boomers have everything handed to them on a platter throughout their self righteous self centered lives they sure anit gonna miss out on getting hand outs when they are at what these days his the young age of 65. Pack of selfish bastards couldn’t even save for their own retirement.
Vote:November 27th, 2004 at 8:07 pm
My reading of Xtra’s terms and conditions says they reserve the right to limit activities on their websites and chat rooms, but I dont see where they would take up the flame for action against a third party site. They see my $1000 pa spend on their telecommunication services and see a happy customer, my so called off topic is to be expected in a political website and adds to the colour and certainly your 50,000 hits per month for november doesnt come from just from your happy snaps and innocuous political chit chat that you serve up
Vote:November 28th, 2004 at 4:40 pm
Blaize I understand that Balanced managed funds over a ten year period made 2.9% above inflation before fees according to Consumer. Bank fixed interest made more…SageNZ… If these guardians are so competent have they matched the passive NZSE50 index + 24% in the past year, but it’s what happens in the bad years that counts.
Vote:November 29th, 2004 at 9:45 am
The super fund is a terrible idea, I think it is far better to give it to the people to decide if and how they invest it, rather than leaving it to a minister who I wouldn’t trust as far as I could throw him. That’s the big problem with such a fund – no matter who is in government a large number of people won’t trust them to do the right thing with their money, and there is no way to withdraw it if management changes.
Vote:November 29th, 2004 at 1:44 pm
Gaz: The best evidence we have, based on New Zealand debt levels and the like, tends to suggest people will take the money and piss it against a wall.
Unless you’re proposing to remove superannuation entirely and simply allow the elderly to work into a grave or beg in the streets, your solution is grossly fiscally irresponsible, as the costs of super will only go up. The elderly are already the single largest bloc of welfare recipients in the country.
Vote:November 29th, 2004 at 1:49 pm
Gaz: Along with the dancing cossacks, would you also bring back wage and price freezes that tell us what we could earn, what we could charge, pissing money away on trying to fix a currency, white elephants, and massive national debt?
Vote: