United’s Super Policy
July 22nd, 2011 at 9:00 am by David FarrarUnited Future released yesterday their superannuation policy which allows for a retirement age of between 60 and 70, with the amount you get increasing the longer you leave off claiming it. They also propose making KiwiSaver compulsory.
Their policy is designed to be cost neutral. what it would mean is the choices for a single recepient might be:
- Age 60 – $249/week
- Age 65 – $339/week
- Age 70 – $546/week
I think the policy is a good step in the right direction. However as it is cost neutral I think it also might not be sustainable over time.
July 22nd, 2011 at 9:07 am
As I said on GD I think this policy could make it easier to eventually nudge up the overall age of eligibility and nudge down the costs.
It addresses one of the criticisms of a straight hike in the eligibility age, that if the age is too high it disadvantages people who can’t keep working in demanding (especially physical) jobs.
And it offers choice rather than the often awry one size fits all approach.
Vote:July 22nd, 2011 at 9:10 am
It’s alright if everyone works in a sedentary job but what about the non-sedentary jobs e.g. coalminers. There is no way they would last to 70. Or are we just going to absolve our hands of them and say “Hard luck, you chose the wrong job. Oh, but thanks for all that tax money”.
Vote:July 22nd, 2011 at 9:12 am
mpledger – this policy gives coalminers a choice to start taking super at 60 so addresses what you are talking about.
Vote:July 22nd, 2011 at 9:14 am
Oh dear, SO out of date.
United Future has subsequently issued a new superannuation policy whereby National would not stand against the encumbant in Ohariu.
Vote:July 22nd, 2011 at 9:21 am
Two major problems with this policy:
1. Proposed by Peter Dunne so will never be implemented.
Vote:2. Doesn’t make super overall more sustainable.
July 22nd, 2011 at 9:26 am
mikenmild:
Vote:1. At least it is promoting debate and options which is more than other parties seem prepared to do (and Dunne does have some influence on Government policies)
2. It may make it easier to address sustainabiity.
July 22nd, 2011 at 9:30 am
The Maoris will hate it. They will say the numbers are back to front.
Vote:July 22nd, 2011 at 9:32 am
Some Maori should like it – lower life expectancy benefits from this approach.
Vote:July 22nd, 2011 at 9:34 am
I like the policy however the 60-65 bracket should be scraped so only 65 & 70. Kiwisaver should be compulsory set at around 10% with taxes cut to make up for the income shortfall. As Rodger Douglas points out over the years of working for a person on the average wage could retire on $1.8m at 7% nominal intrest. No doubt that would buy back our assets! If fact with a super scheme we could sell some more!
Vote:July 22nd, 2011 at 9:34 am
I agree with Pete George. Maori with low life expectancy will be better off taking a pension from age 60 to say age 67, rather than a pension form age 65 for just two years.
Vote:July 22nd, 2011 at 9:35 am
smttc
Actually, I think the Maori Party may have promoted this before on those grounds.
Vote:July 22nd, 2011 at 9:45 am
mikenmild, I don’t dispute that the age band suits Maori. Let’s see what Pita Sharples has to say about the numbers though, eh?
Vote:July 22nd, 2011 at 10:00 am
mattyman1010 (2) :July 22nd, 2011 at 9:34 am, is on the right track:
“I like the policy however the 60-65 bracket should be scraped so only 65 & 70. Kiwisaver should be compulsory set at around 10% with taxes cut to make up for the income shortfall.”
Vote:July 22nd, 2011 at 10:31 am
I’m pleased that the rate is the same as the current rate for people retiring at 65. Interesting that you appear to be eligible for superannuation once you stop working. I understand that, currently, you can work, and receive super at the same time.
I don’t like the suggestion to make Kiwisaver compulsory, simply because there are people who simply can’t afford that contribution out of their wages at a particular stage in their life.
Interesting to see if Dunne will keep Ohariu- looks like Chauvel has some pretty strong grips on the electorate. Might be wrong but I wouldn’t be surprised if this is United Future’s last term in Parliament.
Vote:July 22nd, 2011 at 10:42 am
What’s wrong with a bit of means testing so those who don’t need the old age pension don’t get it? I remember processing tax returns as a clercial cadet for triple dippers – those getting govt super, national super and working a new job!
Vote:July 22nd, 2011 at 11:22 am
Why should those with wealth be means tested Anthony. I’m sure they have probably contributed “their fair share” over their lifetimes, socialism don’t you love it. Why can’t we opt out of paying super if we agree to take no payments after 65, what would have been paid to a super scheme is given back in tax credits. Of course nothing like this will ever happen as once again those that Anthony want to subject to a means test are the very ones carrying the can for the vast amount of super payments. I would be more then happy to save $250 a week but the thieving bastards wouldn’t like seen all that cash sitting in bank accounts.
Vote:July 22nd, 2011 at 11:58 am
I think there is a lot of merit in this idea. But I doubt it would really be cost neutral: people’s choice when to retire would be influenced by their personal life expectancy. Healthy people likely to live to 100 would retire later at the higher rate and collect more in aggregate because of their longer-than-average life. Unhealthy people would retire sooner to get some cash before they die, and also collect more than they otherwise would.
Re means-testing. In practice this would be a double tax on saving. If I save for my retirement, the Govt will take it away from me via reduced pension. I therefore pay the income tax and the (effective) super tax on the same money. That is both GROSSLY UNFAIR, and economically stupid as it discourages saving.
Vote:July 22nd, 2011 at 12:53 pm
s.russell – I suspect you could be right about pressure on cost neutrality.
Another thing that needs looking at are people on benefits like sickness or unemployment, but I presume they are greater than the early retirement levels so people wouldn’t switch down to “retire”. A good case for a more universal type of benefit system?
It’s a policy that would have to be agreed by all parties or at least all major parties so it wasn’t changed in a few years. The key to this working is it being a long term structure.
Vote:July 22nd, 2011 at 12:54 pm
Good policy. Gives people the choice.
Means testing, no way- all the wrong incentives.
With regard to sustainability, I think what United Future is implying is that this is an interim super system, until compulsory Kiwisaver is introduced and takes effect. Compulsory Kiwisaver is the last word in sustainable superannuation. End of story.
Ultimately, compulsory Kiwisaver is necessary and good. But this flexible super policy is a good interim system until it kicks in.
Just doing the maths now, depending on how my body is holding up, I think I might be able to knock-off at 61 or 62, sell the business, buy an annuity and spend the warmer months tramping. Sold!!!
Vote:July 22nd, 2011 at 12:58 pm
DPF – agree that a ‘cost-neutral’ policy is not sustainable due to the demographics. But taken as a whole, the United Future policy includes compulsory Kiwisaver – so that would, in time, solve the sustainability issue.
Vote:July 22nd, 2011 at 1:28 pm
I like it, let’s do it. Oh, wait. Maybe next PM we’ll look at superannuation?
Vote: