Shearer right on this issue though

May 21st, 2012 at 4:30 pm by David Farrar

Stuff reports:

Labour leader has revived calls to raise the pension age and is calling on National to support the policy.

In a speech due to be delivered today, Shearer said the existing pension age of 65 was unsustainable and the Government should be “straight up” with people about that fact.

“Labour will be straight – the status quo is unsustainable. we need a genuine cross-party solution that ensures a fair outcome for everyone, especially those who need to retire earlier and as we move to a gradual rise in retirement age.”

Labour campaigned on raising the retirement age at the last election but National says it is affordable in its current form and won’t follow suit.

It has accused Labour of needing to raise the retirement age to pay for unaffordable promises.

Prime Minister John Key has pledged to resign rather than tinker with the age of eligibility for the pension or the current level of entitlements.

Being a cynical person I suspect Labour’s stance on this is primarily because they want to force Key to break his promise. But regardless of their motivation, good policy is good policy and Shearer is right that the current scheme is unsustainable.

I also welcome the call for a cross-party solution. This “solution” though should not just look at the retirement age, but also issues such as indexing, income and asset testing and the like. Our current scheme is the most generous in the world as it has no means testing of any sort, and is linked to the median wage. Ideally a cross-party group would take a first principles approach, and say “What sot of public scheme should be operating in 30 years time that is fair and affordable”.

Now any changes to superannuation would not take effect for 15+ years so as to not disadvantage those near retirement, who have made decisions based on current policies.  That means that changing superannuation policy will have no impact on the short to medium term goal of getting out of deficit and into a cycle of sustainable surpluses. However it can make a significant difference long-term.

The first step should be an agreement between all parliamentary parties that the existing scheme shall remain in place for all those who will retire before 2025, so were born before 1960. Even John Key should be able to agree to that without breaking his pledge. Sure it implies a different regime post 2025, but that is different to actually agreeing on any change.

If one could get all the parties to agree on ring-fencing the pre-2025 retireees, then a multi-party group could be formed on the basis they won’t agree on post-2025 superannuation, but instead devise a model that all parties say is fair – and put it to a public referendum. That way it is the public deciding, not the Government.

Tags: ,

35 Responses to “Shearer right on this issue though”

  1. hmmokrightitis (1,507 comments) says:

    Absolutely agree: JK, please for gods sake, yes, you made a commitment but lets have the discussion as a country – its good to talk :)

    We must have this conversation, and for Shearer to be extending the hand is a good thing. For once lets look past why he is doing so and just see the benefits of having such a grown up conversation with ourselves.

    Time to show grown up behaviours, statesmen like JK, front up please.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. orewa1 (428 comments) says:

    Hear hear – has to be cross-party. The darkest day in NZ politics was in the 1970s when Muldoon campaigned to close down Labour’s then new and perfectly satisfactory wages-funded scheme. He cynically bribed everyone to vote for him by promising to give our money back. Like suckers, Kiwis fell for it.

    What a different and better country this would now be if he had let it run. Political consensus is essential.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. rouppe (914 comments) says:

    What of the unsustainability of WFF? Lets see him calling for WFF to be wound back so that only those earning under say $48,000pa are eligible for WFF. The extent to which is goes was, after all, a massive and cynical election bribe in the first place.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. Pete George (22,774 comments) says:

    Super is one of Key’s weakest and most stubborn positions.

    Yes, it should be looked at properly, cross party. Affordability is a major issue in the medium term. Various options have been proposed, including United/Felix’s flexy age, but everything needs to go onto the table and debated, then all (major at least) parties need to agree to committing to solutions.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. Daigotsu (450 comments) says:

    Fuck cross party, what have Labour got to bring to the able on this except whinging entitlement and messianic crack dreams of wrld revolution?

    Let’s let National get this done with proper efficiency

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. Nichlemn (63 comments) says:

    I think the retirement age should be raised (actually, I think it should be tied to the dependency ratio so politicians don’t have to make hard decisions every time the population gets older).

    I don’t support asset or means testing though. It’s functionally similar to taxing the rich in a more inefficient and inequitable way. In order to means test, you have to abate the benefits, which creates higher effective marginal tax rates. You like to highlight the supposed wasteful of taxing people and giving their money back, but it’s not clear this is any less inefficient than taxing people and then auditing them to see whether they are eligible to get some of their money back.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Monique Watson (1,062 comments) says:

    Cross-party consensus is essential for every welfare issue needing to be considered in this country including Super. Super wouldn’t be popularly considered as welfare but to me any money received for no output of labour needs to be put into this basket. Means testing shouldn’t be considered but if you are talking about “those who might need to retire earlier, you need to be looking at UnitedFuture policy, a graduated benefit depending on the age of retirement.

    http://www.unitedfuture.org.nz/dunne-flexi-super-public-consultation-welcomed.

    And I don’t agree that the current scheme should be preserved for those born before 1960. It’s tough titty and swings and roundabouts for all generations. I was born two years too late to get free tertiary education; many of my generation have had to suck that back and have paid back the subsequent student loan.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. labours a joke (442 comments) says:

    Disagree. Leave the pension alone. Instead, nail the parasites on the DPB ( a- la- ure ) and unemployment / sickness benefits. They are takers. They contribute F-all.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Monique Watson (1,062 comments) says:

    A cross party approach should be called on all welfare issues where the majority party sets the budget and all parties have input to the dispersal of welfare.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. Jimbob (640 comments) says:

    It would be using a long bow to say it is the most generous retirement scheme in the World. Pick any European country to find generous.
    In New Zealand terms it is generous because as a country we are flat broke, and still give generously to the middle class,n money as a country we can not afford to. This money should be spent getting the country moving more efficiently through infrastructure and exports. Like R & D is grossly under funded, we are just slowly griding to a halt, relying on too few people supporting the rest. Another servere global recession will spell disaster for NZ as we are way under performing as a country.
    All we think of is welfare. Welfare for the foresters: ETS. Welfare for the middle class: WFF. Welfare for students: Interest free loans. Welfare for the exporters: ahh… no.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. KH (687 comments) says:

    I don’t want to hear any discussion on retirement age eligility.
    Talking about the retirement age as a single issue is stupid.
    Discussion yes. On superannuation but the discussion has to include a number of factors – in detail – so folks have some certainty and can plan and take responsibility.
    The discussion needs
    *Timeframe – Steps defined as what is to happen out to 50 years. And hopefully longer.
    *Compulsion – Yes. Universal Kiwisaver for all. Even those now on benefits. 15% of income is about right. Hardline on contributing. Maybe once you have an minimum amount in you can stop contributing. Complusion is not to protect the irresponsible person. It’s to protect responsible people from those who aren’t.
    *Current National Super phases out and ceases over about 30 years timeframe. As Kiwisaver phases in.
    *A very mimimum,hard to get, safety net benefit, for the truly needy. Probably no different from non aged person.
    Any politician who doesn’t talk the whole picture and can’t see a plan beyond next week – is not helping NZ.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. bhudson (4,734 comments) says:

    Peter Dunne and UF deserve some credit for proposing a model that encourages personal choice, while also helping to address the affordability of Super. The concept has real merit and is a pragmatic approach to addressing a contentious issue.

    There is some devil in the detail for any change that either raises the age of entitlement or create stepped access and/or payments. I fear this would create all manner and number of exceptions which would make the system ripe for litigation, if not outright gaming.

    For instance, would it not be unfair for those groups with lower life expectancy that they should, In effect, almost be excluded from receiving the premium payment level? Would they have a case for received the ‘standard’ payment level earlier (at the same age where others were accepting a lower payment level for an early ‘retirement’?)

    Also, what of those people in physically demanding jobs. Is it not possible (likely?) that they would struggle a great deal more to work throug to an age where they could receive the premium payment.? Likewise, should they get the ‘standard’ payment earlier? What, then, would be the criteria to qualify? X years in a physically demanding role? Would they have to be consecutive years? If not, what rules around the gaps and durations between such jobs? Would the physically demanding job have to be in the later years? If so, then what of those who left/were forced to leave such roles earlier due to the physical effects, which remain long term? Are they then being treated unfairly?

    There is a great deal to be said tof a universal eligibility – not just universal in basic entitlement, but also in the age of entitlement.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. Mark (1,360 comments) says:

    @monique Watson I was born two years too late to get free tertiary education; many of my generation have had to suck that back and have paid back the subsequent student loan.

    Ahh yes also two years too late to pay 60 cents in the dollar tax then ;)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. Falafulu Fisi (2,176 comments) says:

    In a speech due to be delivered today, Shearer said the existing pension age of 65 was unsustainable and the Government should be “straight up” with people about that fact.

    So various state welfare programs as Work for family, interest free student loans, etc,…, approved by Labour are not sustainable but somehow existing pension age of 65 is unsustainable!!! Unbelievable.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. Daigotsu (450 comments) says:

    “Cross-party consensus is essential for every welfare issue needing to be considered in this country including Super.”

    Bollocks and thank god it’s not

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. thor42 (907 comments) says:

    Although I voted for the Nats at the election, this is one policy that Labour *definitely* got correct. If only they could get the courage to ditch the also-unsustainable Working for Families. That was very sloppy policy and it is very poorly-targetted money.

    John Key needs to get real and pull his head in on this policy. Either he is serious about fiscal responsibility, or he is not. If he is, he should be supporting this policy. Enough of the politicking from him.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. Daigotsu (450 comments) says:

    Seriously you guys fuck Labour

    If I ever see Shearer I will take a bit of 2 by 4 and show hgim what I think of hm and his fucking party

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. Andrei (2,499 comments) says:

    If there was ever an issue that showed how clueless the parasitic beltway elite are it is this one.

    Number 1 – while the elite working in their air conditioned offices can maybe continue to shuffle their papers from in tray to out tray and write policy screeds that nobody reads well into their dotage because most of what they produce is worthless tripe anyway so if senility has set in nobody actually notices – in the real world where the real wealth is produced by real work it is not always physically possible for a man to continue to work as he has done for the past forty years.

    Number 2 – in order for the parasitic beltway elite to continue in the style to which they are accustomed they need real people doing real jobs (like digging real coal and milking real cows) into the future but a lot of the crap which they put out is about killing productive occupations – for example the ETS is a tax on productivity

    Number 3 – This country is murdering 1/4 of its citizens before they are even born as well as contracepting itself into non existence so the future workers to support the parasitic beltway class are not being born in sufficient numbers and those who are and who have any merit are for the most part bailing out of this sad dying little country – leaving it too the underclasses and the ruling mediocrity.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. BlueSilver (21 comments) says:

    I agree with raising the retirement age. It’s going to happen sooner or later as the current system is simply unaffordable with the type of ageing population that all western countries have. I don’t see this as a “left” or “right” issue and applaud Labour for having this policy (despite their underlying motives). I have heard this subject debated within National Party meetings and it’s clearly a contentious matter (particular for those with more grey hair than me). I have heard those opposed argue that “people are tired” when they hit 65 and shouldn’t be expected to work any more. I have also heard the good old argument “I’ve paid my taxes for 40 years for I deserve to get what is owing to me at 65″. Such arguments are nonsense. If you want to retire at 65 because you are tired, I say go for it (just don’t expect Gen X, Gen Y and Gen Z to pay for you!). Further, tax revenues as we all know are not ring-fenced in a special fund ready to be paid out (with the exception of what is sitting in the Cullen Fund), so the entitlement argument is BS, and no one is suggesting changing entitlements for those about to retire anyway. Apologies for the rant, but I get sick of hearing arguments against raising the super age from the generation that got free university education and then forced up housing prices by buying multiple Auckland rental properties. I am Gen X, so haven’t had it too bad. If I was Gen Y or Gen Z I’d be mightily pissed off with with the difficult path they face to financial security and stability. Raising the retirement age and introducing means testing would be one way to stop loading them with more inter-generational debt. I expect when I retire to get nothing from the Govt because means testing will be in place, and I say fair enough. Maybe it’s not “fair” that I will miss out because I am planning ahead and saving for my retirement decades in advance, but that is life – better things be a little “unfair” than being Greece in 2040….

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. bhudson (4,734 comments) says:

    just don’t expect Gen X, Gen Y and Gen Z to pay for you!

    BlueSilver, who do you think was/will be paying for those Gen X, Y & Z’ers for the first 20 (or more) years of their lives? As the saying goes “turn about is fair play”

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. PaulL (5,872 comments) says:

    I agree on raising the retirement age. People can retire earlier…..if they pay for themselves.

    I’m not convinced on abatement and means testing. It’s more complex than it sounds. If I’m going to be asset tested, does that create an incentive not to save for my own retirement? To some extent this is a variation of the guaranteed minimum income discussion – better to avoid abatement rates and the like by paying everyone the same amount in “benefit”, and then taxing every dollar of income at a flat rate.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. OneTrack (2,579 comments) says:

    I also agree on raising he retirement age. But I am also in agreement with Andrei’s point about the differences between a lazy office job and a heavy lifting labourers job. I would be quite happy for the labourers to get the retirement benefit at 65 but office workers have to work longer. And I do understand it would be a minefield trying work out who qualified and who didn’t.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  23. rouppe (914 comments) says:

    Mark.

    I am sick to death about people moaning about how in the 80′s tertiary education was free and now it isn’t because of student loans. That, quite frankly, is fucking crap.

    When I went through university 1981-1984 I got:
    1) 75% of course costs paid. Not course-related costs like books, just the course fee.
    2) $30 a week student allowance. That’s equivalent to $80 in todays dollars

    That’s it. There was a ‘hardship allowance’ but it was means tested so only farmers kids got that cause their parents manufactured low income figures. Not much has changed there.

    In order to pay for everything else – not just beer and food and electricity but also transport, text books, note books, pens, everything – I had to generate my own income through part time and casual holiday work. I hitch-hiked around the country when I travelled because I couldn’t afford buses and certainly not a car. I scraped together $1000 ($4100 in todays dollars) by the beginning of the year and ended up with nothing at the end. Did that 4 years running. No breaks, no holidays. Either study or work.

    Now, students get the following:
    1) A student allowance of $170 a week if your parents earn under $60,000 and abated from there
    2) A free loan to pay for course fees

    That puts you on an even footing to what I had. You then have a choice. Generate your own income to pay for everything else, or take more free money. Remember, after getting a BSc in Computer Science in 1984, my starting wage in 1985 was $18,000 – equivalent to $48,250 today. Not a fortune. I would do everything I could to avoid more debt.

    You can take as long as you like to pay your course costs back. No loan fees or interest applies. Any extra costs you put against your loan is completely at your discretion, and provides you an opportunity I didn’t have. If I couldn’t have found work, I couldn’t have gone to university. I had to pay everything up front.

    You also missed out on 66% income tax, 10-12% mortgage rates, carless days and John Minto completely fucking up your first year at uni by generating so much anger towards students that your hostel was attacked by angry drunk rugby supporters.

    So stop bloody moaning.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  24. kowtow (7,590 comments) says:

    Why should anyone get a state pension if they never contributed one cent over their lifetime ?

    State funded education,a life on one benefit or the other and then “superannuation” ?

    And it’s not superannuation,it is a non contributory old age pension . As such it should ,if paid out at all in most circumstances ,be set at a very low level. Why encourage waste and sloth?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  25. Andrei (2,499 comments) says:

    Kowtow this has been a political football for more than forty years – When Muldoon (National) introduced his super scheme it was sold as a “pay as you go” proposition. That is those working would pay for superannuation of the current superannuatitants which would be the premiums for their own superannuation when their turn came.

    Like all political bullshit it was a lie intended to buy votes but a whole generation of kiwis have paid into super and now their time to collect has come (as was predicted at the time) the cupboard is bare.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  26. kowtow (7,590 comments) says:

    exactly Andrei,the cupboard is bare and yet we, the electorate ,still expect to be kept at a standard to which we have become accustomed. It’s actually regarded as a human right…..that some other poor bastard will work hard to keep me in smokes eh?And pollies ,commissioners , academics and the MSM all concur!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  27. PaulL (5,872 comments) says:

    kowtow, it doesn’t have to be right or wrong, it just is. The question is whether our current leaders are brave enough to do something about it, or whether they’d like to keep standing back and admiring the problem.

    It boils down to:
    – Retirement age. And, by the way, not a big fan of the argument that people who do physical work get to retire earlier. Slippery slope – next you’ll suggest women retire later cause they live longer……Maori retire earlier cause they live shorter
    – Means testing. Complex due to incentive impacts and abatement rates. People are taxed when they earn their money, do they get taxed (abated) again when they spend it? Does that disincentivise saving relative to spending?
    – Size of the pension. When it’s universal, makes sense for it to be lower.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  28. rg (197 comments) says:

    NZ needs to raise the age of Super more than it needs John Key to be the PM. Key is holding this country back, get rid of him and lets get on with it.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  29. Anthony (766 comments) says:

    What’s wrong with means testing the old age pension? At the very least government employees shouldn’t also be getting it.

    Nowadays ,with no retirement age some employees just keep on working as the money is too good to give up. My wife works with a pretty useless woman well past her best, who is in her late 60s and getting $80k a year!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  30. hmmokrightitis (1,507 comments) says:

    Just heard on NatRad that JK has said not going to happen. That the decision was made by the electorate at the election – labour campaigned on raising the age, national on keeping it the same.

    Im sorry JK, bollocks. This is about the country having the leaders with enough smarts to know we need to have a grown up conversation. Yes, you made a personal commitment, good for you. But this is about having the courageous conversation this country needs. And youve said no to allowing us the freedom to do that supported by our political leaders.

    JK, give yourself an uppercut from me. Not happy.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  31. Michael Mckee (1,091 comments) says:

    Why asset test, then those who have got a tertiary education, worked throughout their lives and put money away for the future get penalised at the end of their working lives by those who haven’t.
    Bloody silly thinking to me.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  32. Paulus (2,496 comments) says:

    I expect to see Shearer put this as a Policy Promise at the next election.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  33. GPT1 (2,087 comments) says:

    Why ring fence it at 2025 at all? Super is unsustainable now. Life expectancy is up now. Is a gradual increase of 3 months a year (hell make it 1 or 2 if you like) starting next year really going to massively affect retirement plans?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  34. wikiriwhis business (3,883 comments) says:

    Starting to see the Nat/Lab coalition at work yet????

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  35. Pete George (22,774 comments) says:

    Super should be dealt with by an all-party coalition. There’s an opportunity already committed to by National, it’s only a look at part of the issue – Flexi-Super – but that could easily be used as a cross-party template for a comprehensive look at Super. Dunne has given Key a get out of Super free card.

    Parties have to rise above politics on this.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.