Compulsory Super?
August 15th, 2010 at 10:10 am by David FarrarThe SST reports:
Kiwis could soon be made to save for their old age, with compulsory savings back on the political agenda.
The government will put compulsory retirement savings on the table as part of a review to boost Kiwis’ retirement nest-eggs and reduce New Zealand’s dependence on overseas borrowing.
The fate of the Cullen superannuation fund, KiwiSaver and tax breaks for savings – which could halve the tax paid on some bank deposits and other investments – will also be in the mix.
A working group, based on last year’s Tax Working Group, is close to being finalised, and ministers plan to use its findings as a centrepiece of next year’s Budget, and for the election campaign.
Government sources said PricewaterhouseCoopers tax expert John Shewan would be part of the group, possibly as its chair.
I am not a fan of compulsory superannuation, as it forces people into superannuation funds, when a better investment for them may be paying off the mortgage or investing in their own business.
However KiwiSaver is close to de facto compulsory as it is opt out, and the subsidies are so great you have to be very poor or very stupid not to take them up.
August 15th, 2010 at 10:18 am
Reminds me of our parents who were asked to contribute 1 shilling and sixpence from their earnings a week (hour?) to pay for their super.
Guess where their savings went.
The same place any compulsory super savings will go today.
Into some sticky fingered politicians fingers to spend on their must have project.
Muldoon was in my lifetime and I can remember what he did with the Labour super fund.
Super should be in the hands of the private individual. Never ever the state. They simply cant be trusted, as history has shown.
Vote:August 15th, 2010 at 10:19 am
What do you call a National government that likes big government, forcing people to do things, buys into junk science hype in order to raise new taxes and and generally likes to control the population?
A LABOUR GOVERNMENT. If we’d wanted one we would have voted for one.
Vote:August 15th, 2010 at 10:25 am
Depending on the design, compulsory super saving does have a range of advantages – and disadvantages – for both the nation and individuals.
One potential advantage, seldom recognised, is the potential for the Govt or Reserve Bank to adjust the minimum rate of savings up or down in response to macroeconomic conditions.
Forcing people to save more when the economy is running hot would reduce the need to cool things by putting up interest rates, avoiding a host of negative side-effects such as crimping business investment. Contrariwise, the savings rate could be eased in a recession, putting more money into people’s pockets and boosting spending thereby.
The best consequence of this is that putting up the savings rate stores up Kiwis’ money for the future, as opposed to putting up interest rates which (net effect) simply shovels more of our money to overseas creditors.
This arrangement is used by the government of Singapore and seems to work very well. It deserves consideration.
Vote:August 15th, 2010 at 10:30 am
David, the Kiwisaver subsidies are paid for by workers, not their employer. That is the standard result that flows from wages being capped by productivity. Wages have to adjust downwards (or more slowly upwards), not immediately but over time, to compensate for Kiwisaver. Yes, there is noise, but it must wash out over time.
The obvious risk with compulsory super is that government takes the money and puts it into schemes that would otherwise be paid for by taxes. Like rail or health. Then super is simply a tax increase. It is already happening in the Cullen fund. Surprise surprise.
Vote:August 15th, 2010 at 10:32 am
COMPULSORY! There’s that word again.
Get your hands out of my pocket.
Next the employer will be required to match Australia.
Wouldn’t it just be nice if the Govt. bent its tiny minds to allowing our companies to do that first.
I have no intention at all of giving my money to some crackpot in a super fund to rip off with fee’s and waste as been the case forever.
Vote:Some clowns never learn.
Arkinstall and his mates can fuck off to Aussie or Pakistan They need their help more than we do.
August 15th, 2010 at 10:47 am
The Australians have a model of compulsory super that works. We should follow them. It is a key foundation of their prosperity.
Vote:August 15th, 2010 at 10:54 am
KiwiSaver works quite well as it is, there is plenty of incentive to use it but choice to opt out. It effectively involves a tax refund, but far more successful (ultimately for participants) at getting people saving for their retirement than a straight tax cut would achieve.
The incentives could be eased back a bit without causing many to exit, as long as the incentive still adds up. But it doesn’t need much of a change.
One improvement would be allowing for you to periodically transfer lump sums to your home mortgage, say annually. That still keeps the habit of saving intact.
Vote:August 15th, 2010 at 11:04 am
And like Argentina, the State simply ‘annexes’ the private pension schemes in total for cash flow.
The Elephant in the room is the ridiculous and not balanced State Worker Super Funds. They need the most urgent review.
They should NEVER be index linked for life, merely pragmatic and humane.
Vote:August 15th, 2010 at 11:10 am
Introduce a phased withdrawal of our existing tax-paid-for pension payments.
The you’d see people sit up and start saving for their own retirement.
Vote:August 15th, 2010 at 11:13 am
Compulsory superannuation is a New Zealand First policy.
I guess the Nats are either trying to woo Winston or get his supporters
Vote:August 15th, 2010 at 11:18 am
I used to think that Compulsory Super was a bad idea, taking away my freedom and rights.
Then, since living in Australia I have seen that it is a huge boost to free market enterprise, and the economy in general. On the whole it has been a huge factor in Australia’s success over the last 14 years.
In that time, can anybody here remind me of where NZ has gone? (sorry, Rhetorical question ..).
Vote:August 15th, 2010 at 11:32 am
With New Zealand’s excellent savings rate, why the need for compulsory super?
Vote:August 15th, 2010 at 11:33 am
Kiwi saver is a step in the right direct, as the pre-existing regime is a spectacular failure predicated on pre-WWII work patterns. What we need for modern work patterns and investment risks is:
- Absolute portability
- Abolition of vesting
- Abolition of defined benefits
- Creation of individual accounts
- Fee regulation to control the ticket clippers extracting of economic rents
Aside from anything else, it would benefit the families of those who die soon after retirement. Defined benefit schemes represent a transfer of wealth from those with low life expectancies to those with high life expectancies. Guess who that benefits?
Vote:August 15th, 2010 at 11:38 am
I would rather I had the option to save for my retirement in my way, not some clueless manager in some fund. You never know who is looking after your money, what they believe in and financial experiance they have had. Just look at Gareth Morgan and how he has changed since he came into money, or is this the real Gareth Morgan we are seeing now.
Vote:August 15th, 2010 at 11:38 am
The ‘one and sixpence’ referred to was one and sixpence in the pound levy on earnings to pay for ‘Social Security’ (health, welfare and pensions). Of course over time health and welfare soaked it all up and pensions became a ‘pay as you go’. The Super Scheme as it is, (non-means tested, and available at 65yrs), is not viable long term but any change brings in the ‘Winston’ factor.
Vote:August 15th, 2010 at 11:41 am
@ Michael I agree, however
Most reports (mainly by the treasury and OECD) suggest New Zealander’s have an “adequate” savings rate among the low income (because of the generosity of NZS) and the high (for obvious reasons). Middle income earns have trouble replacing their before income retirement, in retirement – thus KiwiSaver was targeted at benefiting them most. However the tax incentives have meant that those in the higher income brackets benefit most.
There is also a big issue with the purpose of kiwisaver, the use of tax incentives and how it fits within NZ’s long term savings and retirement policies.
For more check you my blog.
http://duncanjessep.blogspot.com/
Vote:August 15th, 2010 at 11:44 am
TimG_Oz says:
Come on now, that’s not a fair comparison.
Australia was founded by Criminals (Penal Colony).
New Zealand was founded by Luddites (English country folk running away from the Industrial Revolution).
It’s hardly surprising that New Zealand will always lose out to Australia, it’s build in to the very fabric of New Zealand Society (i.e. Natural Born Losers)
Vote:August 15th, 2010 at 12:51 pm
I agree with compulsory savings. To me, it corrects a clear market failing. If we understand the market to mean “the sum of all the actions of the people of the country”, then compulsory savings corrects the problem that many people save less than they need to so as to pay for their retirement. Mostly due to many people not thinking far enough into the future.
For those who say “but that’s nanny state”, think about it a different way. Govt provided pensions are also correcting for this same market failure, but they’re correcting for it much more inefficiently, by washing the money through the tax system, forcing this generation to pay for the last (rather than each generation paying for themselves), and effectively debt funding it rather than funding through savings. Given a choice between the two, compulsory savings is far preferable.
Of course, the other alternative would be to agree that the govt simply won’t pay for pensions. Then it would be reasonable to not require compulsory savings. Unfortunately, I don’t see that as politically likely any time soon, so we’re left with a choice between two different compulsory regimes.
Vote:August 15th, 2010 at 1:03 pm
Compulsory savings is not the issue. The issue is who holds the savings in trust. Since there is no financial institution capable of lowering the risk below that of a private bank, it is none of the government’s concern, unless they intend to steal it. In which case it would become another, very slowly accumulated, tax.
Vote:August 15th, 2010 at 1:07 pm
So we’re having less paid advisors, but the government is paying for more advice which it already should know the answer to. In fact they should have developed a proper savings policy years ago in opposition- which they should be enacting now. Are they just incompetent or too scared to make up their mind.
BTW- what is wrong with our current super scheme- if we supported and funded it properly it would be fine.
Vote:August 15th, 2010 at 1:11 pm
I have always said I would have to fund my own Pension and retirement. That government Super will not be available when I retire or the age of entitle ment would have considerably increased. This I accept and are preparing for. My problem though is the generational unfairness of this. Not long ago people only had to pay for the retirement of only one generation, which was the people who were currently drawing down a pension. Now it would seem I am paying for the retirement of at least 3 generations: 1)Myself, 2) Baby Boomers via the Cullen Fund, 3)Existing pensioners. In view of this, the impact of funding retirement hits generation X and Y very hard. I am sure they have the right to feel aggrieved that baby boomers and older did to have the foresight for future planning. Such incompetence and selfishness has meant younger generations are left picking up the tab for their largess.
That said there are many positives to self funded retirement as many posters here have stated. Unfortunately it will need to be compulsory to get people to participate. On the bright side, if you die early the government will not be able to thanklessly spend your contributions but it will form inheritance as part of your estate (unless death duties are reintroduced!).
Vote:August 15th, 2010 at 1:40 pm
Compulsory savings, a qualified yes , but certainly not in the hands of the government of the day, far too tempting (read kids in control of lollies).
Vote:Carrots and Sticks, too many sticks when carrots will do fine and Broccoli for those who hate Carrots.
For the waged with no urge to create wealth for their own security over the certainty of regular pay then some merit in compulsory levy but why extract valuable working capital from those who choose to build something better and create their own economic security when the reality will be a fund under the control of politicians, far too many of who have never created a single dollar in their whole miserable life of troughing. Therein lies the rub when the filtering is complete that diminished fund will rely on 10% of the likely recipients dieing before they get any of it, to survive.
August 15th, 2010 at 1:48 pm
The other side of savings is their critical role in growing an economy and building a country.
A huge amount of our savings are sent out of the country. Community assets, too, like the funds from the trusts formed to hold returns from the privatisation (and ending) of our national savings banks (except for Taranaki’s, now the TSB bank) have largely been invested abroad.
The financial industry sells putting money overseass on the ground that we need to have money overseas as a safeguard against poorly performing NZ. However, what if this outlfow is causing the poor NZ performance?
The money shipped overseas is twice ticket clipped – by the NZ fund managers and by the managers of the overseas funds they use.
These overseas investments have performed poorly in recent years. Part of this is because of the international economic crisis. The other part, however, is the effect of the crazily high NZ dollar. When it inevitably falls, there will be one-off gains, which will have the NZ fund managers crowing about how wise it is to put money offshore.
While our economy chokes from lack of savings, the banks clip the ticket of incoming savings funds from Tokyo and other savers. Unfortunately, thanks to the Reserve Bank’s until-recent high interest policy and to NZ banks’ salesmanship overseas, this flow of funds has been pouring in. Hence the property bubble, and the ensuing finance-company crashes that have wiped out or locked up billions of NZ savings.
Bankers, from holding the purse strings, sometimes develop a habit of lecturing us plebs about what we should or shouldn’t do. IMHO, the bankers should look at some in their own ranks. Several of the leaders of finance companies that crashed or almost crashed have came from the banking sector. Some of these ex-bankers took once highly conservative lenders into lending to property developers, and hence, disaster.
Savings are needed for growth, but how savings are handled are just as important. So far the Government is underperforming in sorting out this side. Not that Labour is any better. It let the blowout occur, and its former Commerce Minister, Dalziel, still chairs the Parliamentary committee that could be well placed to restructure the savings/investments channels.
There is always risk in savings and investment, but we need governments and regulators to lean against the renown “irrational exuberance” of the financial industry as well as of investors.
It’s all very well for politicians to lecture, lecture, lecture NZers on the need to save, save, save. Our politicians have a job, too. This is to make sure the savings industry is efficient, clean, and effective. It ain’t yet.
While they are at it, the politicians could line up savings under their own command. I’m thinking of the credit card fun of some ceo’s of state owned enterprises. The politicians could also make sure Government enterprises’ capital is put to work within NZ. For example, WTF is Meridian, whose reserves are built on NZ consumers’ payments, doing ploughing capital into building Australian wind farms?
Vote:August 15th, 2010 at 2:24 pm
“On the whole it has been a huge factor in Australia’s success over the last 14 years.”
That’s right TimG, and for one reason. It provides a huge boost to their own capital markets.
This fundamental point strangely is usually ignored when the compulsory question comes up. Our capital markets simply suck. They do.
Over time compulsory super would solve that, as it has for Australia. This obvious reality is so significant to me it rides over every single counter-argument in exactly the same way that a really angry barbarian Mongol on a very angry horsey also usually rides over things.
Vote:August 15th, 2010 at 2:25 pm
“the subsidies are so great you have to be very poor or very stupid not to take them up.”
Or morally opposed to socialist government.
Vote:August 15th, 2010 at 2:28 pm
“It provides a huge boost to their own capital markets.”
Exactamundo. Or let the people decide how to invest, and pour their money into overpriced junk from China.
Vote:August 15th, 2010 at 2:53 pm
What an excellent discussion. Two further points:
Vote:- Compulsory super in Australia is saved into private funds, not government funds. I agree it must be private.
- If National don’t do more in this area, Labour will use it as a clear point of difference and source of political traction. David Cunliffe has already signalled that.
August 15th, 2010 at 3:14 pm
In addition to the variation on the contribution rate mentioned above by s.russell, the Singapore scheme has a number of other features: the employer also contributes; the funds are available for investment by the individual in several asset classes or can be left in the account to receive simple interest; funds can be used in part for education and medical care; and most important of all, the majority of the funds in one’s account are available for the purchase of housing, while contributions can be used to cover the mortgage.
In fact, right now, the combined contributions by myself and employer are covering my mortgage repayments in full. It may be compulsory but it results in a small nation having home ownership and savings levels at the top of the league.
Vote:August 15th, 2010 at 3:21 pm
Compulsory superannuation was one of the key things that drew me to NZF, and that was before I had the chance to experience first hand how well it works in Australia.
For those concerned that they can do better than fund managers, Australia also has an answer: Self Managed Superannuation Funds. You don’t have to let a fund manager make decisions (though the vast majority of people do), just so long as you’re putting aside the minimum amount.
The advantages are many, and commenters above have done a pretty good job outlining them. What particularly attracted me was that pointed out by s.russell:
Australia’s recovery is already wobbling because the Reserve Bank has stamped on any signs of a recovery based on indicators like the price of apartments in Sydney’s CBD. So small business owners and employees are suffering, yet again, as a result of greedy speculation by a small group of people and ridiculous over-reaction by an even smaller group (the Reserve Board) who are now suprised that the productive sectors have either stagnated or grown much more slowly than predicted. Well golllleeee, as Gomer Pyle would have said.
Compulsory superannuation provides a much better tool for achieving the same aim. And that’s just one of the benefits.
Vote:August 15th, 2010 at 4:02 pm
Well said Rex, and you could replace Australia for NZ and make exactly the same point, replete with the apt Gomer reference, which if you don’t mind I shall use frequently in future re: Bollard unless he does something different.
Speaking of which, heard that Wall Street punished Cisco 10% for only a slight drop in forecast profit, but they said what it means is, it’s a forward indicator. Because Cisco does networks, it’s across every single industry, and if their customers aren’t buying…
Combine that with the growing threat of deflation in the states and ca-boom, blammo, ka-pow.
This is brilliant.
Harvard professor extremely respected accurately forecasted GFC discusses the future and where he sees NZ right now. Andrew Patterson. He has other interviews just as good.
Vote:August 15th, 2010 at 4:05 pm
http://www.radiolive.co.nz/Professor-Niall-Ferguson-of-Harvard-University-extended-interview/tabid/506/articleID/15056/Default.aspx
duh, forgot the link…
Vote:August 15th, 2010 at 4:16 pm
So many of you prattle on about the Aussie super. Well Wander around Aussie and ask some of the near retires and newly retired and not so newly retired how many of them have been left with no funds. Much the same in America for the second time in 20 odd years.
Like any outfit that is given money and no responsibility they all manage to waste it. Aussies funds are not finished losing yet.
As for the boost to Aussie. Well stop and think about the enormous effect that they had here in our commercial property market. They were coming here with an endless supply of cash and paying more than properties were worth. The had to because they couldn’t make the properties in their own markets pay. So they screwed us and our industry. There are going to be a few taking a bath in the next wee while here. That’s where our property boom came from. Commercial Property at 5% yield. what crap.
Take a look around at the empty commercial. Plenty of it and no tenants or new tenants at a very reduced rate.
Vote:Did the same in their own sharemarket. Overpriced everything and some of them wondering how they are going to get the funds back and many others like our property developer financiers, stuffed, leaving investors broke.
August 15th, 2010 at 4:20 pm
Interesting to see how this debate has evolved today. After the initial and inevitable “nanny state” comments, there has been some very constructive debates over the actual merits of what is, at the moment, just a suggestion. That suggests to me that the decision for the government to include this in its brief to a working group is a very good move. It will be interesting to see what sort of recommendations the working group comes up with down the track.
Vote:August 15th, 2010 at 4:31 pm
Viking2 yes, but unwise investment doesn’t destroy the efficacy of the proposition.
The idea is to AVOID unwise investment and then everything works out fine.
Inventory2: “It will be interesting to see what sort of recommendations the working group comes up with down the track.”
It will also be interesting to see if Key has the guts finally to make a decision that some people aren’t going to like. C’mon John. Just the once. It doesn’t hurt after awhile. Go on.
Vote:August 15th, 2010 at 4:32 pm
Its called a “No Brainer”
Those countries with compulsory super (savings) are also the very same countries that have solid economies. Seems obvious doesnt it.
Vote:August 15th, 2010 at 4:57 pm
I am cautious about this. In an ideal world nothing would be compulsory. But we deal with the real world, and in the real world people other people’s poor economic decisions contribute to a sluggish economy which limits the economic prosperity of others.
If we had REAL RMA reform, instead of the “screw your property rights even faster” reform promoted by Nick Smith, we wouldn’t need compulsory superannuation, because those funds would be more attractive than property investment, which contributes very little to economic growth. But I can see the necessity of it for a while, at least, if politicians are too chickenshit to do other things. A high saving economy is a strong economy, even if people are forced to do it.
Vote:August 15th, 2010 at 5:04 pm
Makes you wonder why broke retirees don’t just do enough to end up in prison.. three meals a day…freemedical care… beats sitting round freezing in winter unable to afford the power bill.
Just Saying..
Vote:August 15th, 2010 at 5:08 pm
I have an Aussie super fund – it lost half of what I put into it. Some bright spark when I lived there said all the super funds weren’t doing so well because the population wasn’t putting enough money into them. He suggested 20% of everyones salary would do the trick. I’m sure that way all the fund managers could increase their fees and make even more money!
So, totally against compulsory super. It’s a great way of tying up money which can whittled away before the person whose money it supposedly is gets to see any of it.
Vote:August 15th, 2010 at 5:11 pm
What rubbish. China is a very poor saver but still leads the world. Japan is a very good saver and its basically stuffed and has been for the last 6-7 years.
NZ is not a bad saver but is hide bound by rules, regulations and taxation. Most of the rules are dumb, many of the regulations are either ineffective and are anti growth and and taxation is a mess, to high and is used to run 40+% or more of our economy.
NZ struggles because we have a nanny state that spends most of the money. Those that can take their money elsewhere.
Compulsory super is just an excuse for action in removing the govt. from our lives.
Where is RED when you need him?
Easy to see the socialists here! More nanny state anyone?
Vote:August 15th, 2010 at 5:14 pm
Oh Lordy, I found something to agree with Lucia Maria on.
Now stay on topic you lot.
Vote:August 15th, 2010 at 5:38 pm
“I have an Aussie super fund – it lost half of what I put into it.”
Well crikey didn’t what I said above cover that?
Just because sometimes it’s not used wisely doesn’t mean that it cannot be and never is used wisely.
If you had removed from your pay packet 10% of what you earn from day one of your first job, you would never miss it. Most of us aren’t self-disciplined enough to do that voluntarily, me included, but if that happened from day one of your very first job, personally, I know I would never really have missed it and now, imagine how much 10c of every dollar you ever earned would be worth?
Vote:August 15th, 2010 at 6:26 pm
Australian super funds have recently lost money because there has been a massive international financial crises and plunge in asset prices. The fact that there has been a bad year or two does nothing to undermine the soundness of the principle. However, they Aussies are currently moving to regulate fund management fees, as the ticket clippers have been squeezing returns with high management fees.
If you want an investment that only goes up, year after year, I’m sure you can find a finance company somewhere that will promise you that
Vote:August 15th, 2010 at 6:38 pm
Anyone see Paul Holmes article in the HoS today.
Apparently, Muldoon wrecked the opportunity for millions to over flow our coffers by denying a pension fund back in the 70′s.
Vote:August 15th, 2010 at 6:51 pm
What a load of socialist tosh. There should be no super, not one fucking cent. The government and the the thieving fucks that hand out the super should be covered in honey and pinned over an ants nest. If those who have worked all their life were not robbed blind by the state and weren’t told that the pot of gold was there when you got to 65 things would have a totally different outcome, from the way things stand at the moment.The state has created a monster in the way of pension, welfare etc. I have the attitude that government and the fuckwitts the spring from said organisation say they want to save me and my kin. They do not! I do not expect a pension, given it’s a fair way away. I believe the individual should be the maker of their own choice, not some bastard that claims he knows what is best for me. The welfare state has created a dependent population. I personally believe a population that know their obligations when they are born will result in a better society then what we have at the moment. And as a, by note. No I don’t want a fucking cent form a pension.
Vote:August 15th, 2010 at 7:06 pm
Viking, I think China is quite a good saver, they invest enormously in capital stock, and own half of America (well, a lot of US govt bonds anyway). True, it’s the govt doing a lot of that saving, but it’s still saving.
Lucia, the fact that you lost a lot in Aus super doesn’t mean everyone does. You have a choice of funds, like anything you need to choose wisely. Nothing the govt can do will remove risk from savings, and nor should it. The only thing that removes risk from savings is not saving, and I’m not sure why we’d want that choice to be made.
Vote:August 15th, 2010 at 7:18 pm
So how else do we solve our problem in our capital markets, ssb?
Vote:August 15th, 2010 at 7:24 pm
Pension Funds careful planning, even on a Self managed Scheme, all fall apart when there is a compulsion to buy an Annuity. That is when it really goes to Ratshit. The Life Companies are systemically dishonest. Then the Governments screw the bobbin again on Corporation Tax. The whole system is one big Rort. Having worked with Insurers closely for years, they think it is just fucking wonderful. And they ARE the Bankers more shadowy mates.
Vote:August 15th, 2010 at 7:38 pm
Crikey Guy, sounds serious.
What should we do?
Vote:August 15th, 2010 at 7:51 pm
Do you guys want to live in a better country? Then I can’t see a much better way than compulsory super.
As the President of the NZ Venture Capital Assoc said, we have a chronic lack of money flowing around within NZ and being invested into VC. I firmly believe that NZ’s growth exists in tech and similar areas, however currently the lack of institutional investment is stifling VC and the tech sector in general because companies just can’t raise proper growth capital. We have the ideas, we have the talent, we can compete with the world in the tech space, but we aren’t because our economy’s still an agrarian backwater. NZ needs to tell agriculture that we’ve had quite enough of their bleeting and properly structure its economy to enable fast growing companies to actually grow, not plateau. Compulsory super will help this by injecting more cash into the capital markets thus making it more attractive for institutional investors to invest in VC due the decrease risk of the investment as it will make up a smaller proportion of a larger whole. It’s worked over in aussie.
Oh, and as a side note. John key can go fuck himself for not including tech or biotech on his scholarship list. what the fuck
Vote:August 15th, 2010 at 8:35 pm
vibenna notes:
Exactly. Those who have “lost half” as Lucia Maria claims (or was that half of one year’s contributions in the past year, which would be about right) and the retirees who’ve “lost everything” that Viking2 refers to are often SMSF owners who were lured into plunging all their money into one too-good-to-be-true “opportunity”. And there’s been quite a few of those exposed of late. While Australia could (and now is) do more to regulate the sueprannuation market, a few anecdotes don’t make a trend.
The long term performance of superannuation funds in Australia, as measured by the Federal regulator, shows a five year avearge of from 4.4 to 9.9 percent, even if 2008 is included. So to say they’re collapsing in great number and taking people’s savings with them is to extrapolate out the frankly pathetic MSM “reporting” of the failures as applying to the entire industry, and is plain wrong.
Oh, and as somewhatthoughtful has said, the greater availability of venture capital is the second major boon, and one we’re not going to get any other way unless the government finds the balls to clamp down on property speculation… and as if that’s going to happen.
Vote:August 15th, 2010 at 9:12 pm
Rex
I think that as part of a broad asset and investment base, Kiwisaver or similar is a good idea.
At the very least why Key hasn’t moved to protect it from any future raiding by politicians I don’t know.
Also he has had the opportunity to make it compulsory for all and make it’s proceeds tax free after age 55yrs which for the low-medium income eaners would make it attractive.
Plus he could have signaled that those entering the workforce next year would have no super in 40 yrs so get with the program and a pro rata % for different ages out to 40yrs.
he not very statesmanlike to me.
Vote:August 15th, 2010 at 9:18 pm
All good ideas MikeE. As to why it hasn’t been done, you’ve answered your own question. Timid (unless it’s on some easy vote win like “tough on law ‘n’ order” stuff), visionless, unstatesmanlike. The polar opposite of what we need. But then again, so are they all.
Vote:August 15th, 2010 at 9:50 pm
Somewhatunthoughtful, “NZ needs to tell agriculture that we’ve had enough quite enough of their bleataing” . Up yours you townie dick puller. I haven’t bleated for at least a year and I’m part of your despised agriculture sector. I hope when your get out of bed tomorrow tosser your don’t take to chewing on the bed post because if you are are inclined to be hungry, perhaps you may like to consider where your food came form before you start your bleating.
Vote:August 15th, 2010 at 10:00 pm
Reid asked, how else do we solve our problem of capital markets ? Easy, let people invest their “own money” and make sure that scum suckers and scumbags and evil rip off merchants are dealt to. Make sure all finical rules are followed to the letter of the law and more importantly make sure the government governs.
Vote:August 15th, 2010 at 10:16 pm
I’m all for compulsory savings for retirement. As Grizz @ 1:11pm said;
I’m not happy that it’s my generation mopping up either, but the socialist dream of pay your high taxes now and be looked after in retirement was always folly and now we pay for it. Lets not repeat it.
Much reference is made to Peters Scheme. The idea of compulsory super wasn’t the only issue with Peter’s scheme. The other issue was the requirement to take an annuity & the fact it defined a ‘magic threshold’ which had the classic socialist one size fits all about it. Any future referendum need to be clearly questioning “compulsory saving” as an idea separately from any one politicians scheme.
Vote:August 16th, 2010 at 12:14 am
Paul, no it does not mean that everyone loses money. But the problem is that if ALL the super funds are on a downward trend (which they were at the time, everyone lost money) then you can’t pull your money out. If the money was in a bank, and the interest rates started to go negative while the bank charged massive fees for the privellege of managing the money, at least you’d have the option to remove the money. But the best you could do with a super fund in Oz (this was 2003) was to create a self managed fund. Still costs a heck of alot more to run than a simple bank account – which is what it effectively was for a while.
Vote:August 16th, 2010 at 12:19 am
Rex, as I said in my previous comment, this was 2003 and prior. The husband and I were self employed, and we’d been paying super since the compulsory scheme started in Oz. We lost (from memory, as I don’t like to think about it and consder all the money lost anyway) 35k & 20k respectively by 2003.
Vote:August 16th, 2010 at 10:53 am
@side show bob.
I PAY you for my food, not your sector’s selfish parochialism. I recognise that you guys contribute a lot currently, but the sectors environmental recklessness and failure to see what’s coming (in terms of competition from cheaper countries for low value milk powder) and prepare itself accordingly is quite galling to this townie dick puller (something i’ve worked long and hard at….). Not to mention refusing to do R+D unless the govt’s paying (because your margins are too thin, I’d imagine)
Vote:August 16th, 2010 at 11:24 am
Have more of my money taken from me against my will, then have that same money “invested” by the same idiots who already run businesses in NZ?
No thank you.
The quality of NZ business people is a world wide joke, just think of the damage these idiots could do with our pension fund.
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