UK Fabians say raise taxes on elderly

May 7th, 2013 at 4:00 pm by David Farrar

The Daily Mail reports:

Pensioners’ taxes should increase, their benefits be cut, and a tax on property wealth should be introduced in order to share the pain of austerity with today’s hard-up workers, a think-tank said today. 

The income gap between pensioners and workers has shrunk massively in the last few decades, so taxes should be raised on those in retirement, the Fabian Society said.

Middle-income working households enjoyed an income 93 per cent above that of middle-income retired households when Margaret Thatcher came to power in 1979, but that figure is now 37 per cent.

I don’t think we should raise taxes on the elderly, but I do think NZ should be means tested and linked to the rate of inflation rather than the average wage. Otherwise the gap between it another benefits will continue to grow significantly.

‘Old age is no longer a proxy for poverty’, the Fabian Society said. ‘In public policy and deficit reduction measures, ministers should adopt a presumption of equality across age groups.

‘In financial terms alone, older people are no longer distinct, and blanket policies favouring them should be reviewed.’

I agree.

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50 Responses to “UK Fabians say raise taxes on elderly”

  1. Dave Stringer (182 comments) says:

    MAybe that should happen for the X generation and beyond, but for te baby-boomers that would be a sin of the first order.

    Virtually from birth Baby Boomers were told to pay up now and get the benefits later. For many years contributions to Superannuation were kept separate from the general fund, and retirement benefits were to be predicated on how many weeks you had made a contribution to the fund. When a poloitical decision was made to integrate those “pension contributions” into the general fund, assurances were given that this would not take away every worker’s right to a state pension on reaching age 65.

    THis assurance should not be renaged on, any more than promises made to Maori should be. If the Baby Boom Generation does not receive full pensions as a matter of right by age, I can imagine a few shin-digs around the country that will make treaty claims look like nursery school tantrums.

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  2. Mark (1,360 comments) says:

    Keys dumbest promise yet was not to raise the eligibility age for National super and one I suspect he regrets. It is relatively simple. Means test National super from the age of 65 to 70 and make it universal after the age of 70. That together with the Cullen fund probably makes it affordable.

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  3. flipper (3,539 comments) says:

    But David,

    That is exactly what red melon Norman and his labour princes, Shearer and Parker, are advocating, albeit described otherwise.

    Do we expect to see an erudite piece on this in most MSM?

    Not on your nelly!

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  4. Tom Jackson (2,458 comments) says:

    The boomers took everything.

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  5. SPC (5,356 comments) says:

    If super is increasing beyond relationship to CPI indexed benefits, then maybe this explains child poverty?

    Is there any work on whether the CPI adequately represents the spending profile of the poor? A lower cost of imported cars and electronics may hold down the CPI increase but does not reflect the major spending of the poor on rent, power, transport and food.

    I would support a move to indexing super, but only if work was done on indexing the basket of costs faced by the poor on benefits and those on super (higher costs of healthcare).

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  6. dime (9,394 comments) says:

    Yeah we need to fix this ponzi scheme.

    Dime is 36. I dont expect a cent when i retire.

    Are baby boomers the most selfish generation? they fucked our property market (dime joined the party late because he couldnt afford not to). they expect super, even if they are still working. gimme gimme gimme

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  7. Kea (11,878 comments) says:

    This reveals to the world how little socialists really care for people. They are perfectly comfortable to target the elderly, confident that they would not support their socialist policies anyway, so there is nothing to lose. These are the people who built and payed for the welfare state, through hard work and thrift.

    I wonder if the Fabians are happy to pay out billions to lazy slackers who have never done a days work in their lives or contriubted anything to society.

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  8. Dennis Horne (2,059 comments) says:

    When I started working I paid one shilling and sixpence in the pound for my pension. Then we were kept poor by children and taxes. Nowadays people with children pay no tax; bludgers are even paid to breed. What a fucking joke…

    There is another problem. Income can be hidden in family trusts or converted to untaxed capital gains.

    We lived within our means, still do, and so did the country. It’s the dopey politicians who are to blame, not the old people, at least not the ordinary oldies who have worked, saved, own one house and paid taxes here all their lives.

    Tell you what, I’ll spend the lot and live on welfare. Or on your doorstep, Mr Farrar.

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  9. Jimbo (40 comments) says:

    I disagree strongly. Putting means testing on superannuation is simply another way of exacerbating the effect of already high marginal tax rates. Also, people with “means” have usually contributed a heck of a lot of tax in their lifetimes. Bringing in means testing will simply mean that the very rich will avoid the means testing through asset divestment to relatives and use of trusts. It will be the poor chap in the middle who will continue to be shafted.

    Bring on a flat tax and resist the urge to punish people who have means, DPF.

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  10. kowtow (7,592 comments) says:

    There needs to be a debate over the whole welfare system as it stands.

    For starters it’s not superannuation in NZ. No one contributes (directly) to the scheme. It is paid for out of general taxation (or borrowing).

    can we afford to pay it? Should we pay it?Why should one peron who has worked and paid income tax all their life not get it (cos they are reasonably well off) as opposed to some drop kick who never worked and bludged off taxpayers all their life,who then will get it?

    Watch out for the wealth tax being proposed. This is becoming very fashionable in Europe ,where social democracy has broken the bank.

    Mind you if you support “equality” then you should support 100% death duties and swinging wealth taxes.That’s one way of the favoured ways of ensuring “equality”.

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  11. SPC (5,356 comments) says:

    I am a little wary of means testing as it discourages saving. However I am also wary of paying super to those who have yet to retire.

    We have people struggling to find work or struggling with work capacity by this time and yet they face a raised age for super, whereas others are able to continue to work and receive super at the same time – the disparity is too extreme.

    Mark “Means test National super from the age of 65 to 70 and make it universal after the age of 70. That together with the Cullen fund probably makes it affordable.”

    Instead of a means test – simply halve the super to those still working (we do not want to discourage people from working nor punish people for saving for their retirement).

    A universal rate at 50% net average wage age 65 to 70, and a means tested rate (65%) for those with little other income.

    A universal rate over 70 (65%) linked to the CPI (and falling to a 50% floor across time) and a means tested rate (65%).

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  12. St Hubbins (26 comments) says:

    No surprises from the Fabian Lefties – pensioners are hardly their voting base so they couldn’t give a toss if they freeze or starve to death. As for cutting welfare to single mothers and dole bludgers, well that’s something else entirely as far as the Fabians are concerned.

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  13. Michael Littlewood (15 comments) says:

    David

    I used to be in favour of income-testing New Zealand Superannuation; also of forcing New Zealanders to save for retirement, all in the Australian mode. Then I had the good fortune to be asked to join the first Todd Task Force, probably because the then government wanted the answer to look quite a lot like Australia. I was forced to engage with the evidence, something I had avoided until then.

    Anyway, I was turned on both of these key issues and we just need to look across the Tasman to see what happens when the Tier 1 pension (the Age Pension over there) is income and asset-tested. Here are just two results: first, the overall retirement income system becomes hugely complex. Next, the combination of compulsion and means-testing encourages Australians to retire earlier than their New Zealand equivalents.

    It sounds sensible not to pay the pension to people who, on any reasonable measure, don’t ‘need’ it. The devil, however, is in the detail and also in the way that citizens respond to the signals they are sent (not necessarily as policymakers might wish).

    Since my Todd Task Force experience, I am convinced that we have the overall structure about right and New Zealanders are, broadly, responding rationally to that. That’s not to argue against starting a research-led, national discussion on the size and shape of NZS for future decades and to give savers plenty of time to adjust their personal retirement saving programmes if any changes are needed. We need that discussion now, even if National refuses to contemplate starting it. However, we probably should not have that discussion led by the politicians. New Zealand does not need another political stitch-up on superannuation issues.

    We do need to talk about the state pension age, the size of the pension (and any additional support for the bottom end), the way it is adjusted to reflect both inflation and rising living standards; also the different rates for singles and couples etc. But let’s stay away from income/asset tests unless we really want to encourage the growth of a financial planning industry that aims to maximise entitlements for clients who can afford to pay planners.

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  14. Alan Johnstone (1,056 comments) says:

    The elderly suck on the welfare tit more than anyone else.

    Free this, subsidized that…. blah, blah blah.

    But, the problem with means testing super is the moral hazard that it creates.

    Person A can save for his retirement and end up at 65 with a pile of cash and get nothing.

    Person B can live the high life, flash cars, booze, hookers, end up at 65 without a cent and get his means tested Super.

    Seriously, where’s the incentive to be Person A ? I’m just not seeing it.

    The only way forward is to make it contribution based, remove the link with wages (we have the most generous Super system in the world). Accept that some people are going to be poor.

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  15. Ross12 (1,147 comments) says:

    Tom Jackson (488) Says:

    May 7th, 2013 at 4:21 pm
    The boomers took everything.

    Why don’t elaborate on that Tom. You know get off your chest , you might feel better.

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  16. SPC (5,356 comments) says:

    Yeah Alan remove any moral hazard by adopting a policy that will increase the level of old age poverty to that we have for child poverty.

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  17. Alan Johnstone (1,056 comments) says:

    You know, I don’t care nearly as much about old age poverty as i do about child poverty.

    Anyway, explain why having a contribution system (like in Australia) increases old age poverty ?

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  18. SPC (5,356 comments) says:

    Alan, it is the link to wages that prevents old age poverty, there is old age poverty in Oz.

    I do agree with you that a full means testing of savings income is not good policy, but paying full super to those still working is not either.

    Creating separate universal rate and means tested rates for tax paid super gets around any excessive means testing.

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  19. James Stephenson (2,018 comments) says:

    As if pensioners haven’t been stealth taxed enough by the erosion of their savings via money printing…

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  20. SPC (5,356 comments) says:

    James, that depends on what you mean – for now there is little inflation in the UK and stocks and property are doing OK. How many old people will face any longer term consequences?

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  21. iMP (2,232 comments) says:

    Rob Muldoon started this, with universal superann. We don’t need across-the-board “welfare.” I’d like to convert it to actuals (bus passes, rent vouchers, food vouchers etc). The Winz benefit ‘credit’ card is a good idea.

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  22. s.russell (1,559 comments) says:

    “I do think NZ Superannuation should be means tested.”

    Absolutely not! That would simply be a tax on the people like me who have saved instead of spent their income. I think that would be both morally indefensible, and bad policy – creating the worst of incentives.

    Raising the age of eligibilty, and indexing to inflation I could stomach because they affect all equally, but means testing is grossly unfair to the very people who should be rewarded for their responsibility.

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  23. lastmanstanding (1,204 comments) says:

    The fact is that there is age discrimination in NZ. Those over 55 have a real problem getting work because employers or recruitment consultants in their 30s and 40s see OLD PEOPLE.

    They are gonna have to get over it as older people both want to work and need to work and as McDonalds in the UK has just found out having a mixed age of employees in their stores led to better productivity and working relationships and older people mentored the younger workers.

    Gen X and Y will be OK if they keep contributing to Kiwisaver. Look at Ozzie. Their scheme started in 1992 21 years ago and employees and employers contribute 9% each and that’s going to increase over time.

    The net result is that Ozzie BBoomers who are starting to retire now have a pot of in some cases $500K plus if they have had reasonably well paid jobs over the past 21 years.

    A 30 year old working until 65 or 67 68 in a well paid job will have enough capital to retire on very comfortably.

    The current married rate of National Super equates to having around $600k of capital earning 5% before tax. Alas BBoomers retiring now didn’t have the surplus cash when Muldoon taxed them at 66% on even modest incomes plus company super schemes especially defined benefit schemes have been closed to new entrants over the past 20 years with FBT and other taxes meaning employers were better off paying out cash and letting their employees do their own savings.

    So the bottom line is that as the Kiwisaver generation reaches retirement they will have less reliance on National Super.

    The numbers as explained by many economists are sustainable and not something to get worked up over.

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  24. thor42 (907 comments) says:

    Why not *stop immigrants* from bleeding the welfare system dry instead!

    IIRC, at least 40% of the immigrants in the UK are on welfare (and they would stay on it for a bloody long time, I’m sure).
    Hammer *them* first.

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  25. Alan Johnstone (1,056 comments) says:

    “As if pensioners haven’t been stealth taxed enough by the erosion of their savings via money printing…”

    Which is more than balanced out by the stupendous unearned capital gains in property over the last 30 years.

    Pensioners are a pampered minority. There’s a good reason for that though, there are a lot of them and they vote in vastly higher numbers than any other age group.

    Pension reform has become the third rail of NZ politics

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  26. big bruv (13,227 comments) says:

    “but I do think NZ Superannuation should be means tested”

    Right!….so those in the middle who pay tax all their working life, struggle with a mortgage when young and put away a little each week along with their kiwisaver will be denied some of their tax back because they have never been a drain on society.

    Meanwhile, the bludgers who live in a state house, claim benefits and contribute nothing to society are rewarded with a tax payer funded pension.

    Fuck that for an idea.

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  27. Griff (6,712 comments) says:

    Medical science is a great thing it allows us to live longer.

    The cost of an ever increasing proportion living past their eighties.

    Is a increase in both medical expenditure and superannuation payments.

    Which is being born by a decreasing proportion of young people and decreasing productivity as more are “retired not working”.

    This country needs the fortitude to face the question what can we afforded and what is the priority?

    Either we forgo finical support for those that can afford it or limit medical expenditure to pay super to the well off.

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  28. Viking2 (11,125 comments) says:

    dime (6,108) Says:
    May 7th, 2013 at 4:23 pm

    Yeah we need to fix this ponzi scheme.

    Dime is 36. I dont expect a cent when i retire.

    Are baby boomers the most selfish generation? they fucked our property market (dime joined the party late because he couldnt afford not to). they expect super, even if they are still working. gimme gimme gimme
    =====================

    Go wash your mouth out dime.

    Life is a funny thing. You just never know what’s around the corner and what is going to happen to your dimes.

    Look at all those that lost money in the share market, the finance companies etc etc. It can hapen to you.( and don’t tell me they had high interest rates because that is demonstrably nonsence.) Almost surely will. Markets change and sometimes very rapidly, Govt.’s change policies and rules about all manner of stuff.

    You would be very surprised at the number of people who lost their businesses after the changes of the Lange govt, those that are today losing their business and incomes and assets as a result of companies like Mainzeal. They are always out there and anyone can get caught. Including you.

    Don’t be so smug just because you are coining it presently.

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  29. Griff (6,712 comments) says:

    Dime is 36

    Has dime seen enough to understand the wisdom of cycles and the paradox of diversity? has he Divined the holy line of the risk and return ratio?

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  30. Johnboy (14,911 comments) says:

    Bugger me!!

    I never thought I would see a fully paid up member of the National Parties spin doctor division espousing the policies of a young Brits Labour Party ginger group think tank!!

    Bugger me Redbaiter is right. The left have become right and the right have become left! :)

    Or is little David just hoisting a flag up John Keys bankrupt pole to see who salutes it? :)

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  31. joana (1,983 comments) says:

    Evil. A society which does not care for its elderly, is doomed. This article is about one heavy breath away from compulsory euthanasia. I know women in their nineties who contribute more to society than these tossers ever will.
    How many elderly freeze to death every winter in the UK? Fact alert..even these tossers will one day be elderly , that is if they don’t die of terminal stupidity in the mean time.

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  32. Andronicus (219 comments) says:

    I don’t have a problem with the principle of means testing super, but there are hidden traps. Do you have a concrete cut off point, or a graduated scale?

    Either way, you need an army of bureaucrats to administer and police the system. In the long run the savings versus the cost may not be great.

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  33. slijmbal (1,210 comments) says:

    Damn – !0 ish years from retirement – time to start hiding money or spending it

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  34. Tom Jackson (2,458 comments) says:

    Pretty obvious, really.

    The boomers inherited an economy geared to full employment, with a generous welfare state, free tertiary education, etc.

    You can basically time the period that the boomers entered the years where you pay more into the system than you take out. That’s when the cuts started for everyone else, and the politics of bourgeois Bohemianism, and the infantilisation of culture and society. This is painfully obvious to anyone under 45. Much of our politics doesn’t really have to do with left or right, but with the feckless people born between 1945 and 1965 versus everyone else. They’ve voted themselves an easy ride on the backs of everyone else.

    They’re just fucken useless. Economically, politically, culturally, and socially, they’re just a waste of time (the vapid liberalism that suffocates society is their work). Right now a lot of them are sitting around marking time in well paid jobs that they can’t be fired from (there are stacks of them in my workplace, and in my wife’s), while young people who actually like work sit on the dole.

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  35. UpandComer (506 comments) says:

    Fuck the boomers. They didn’t have to pay for shit, and got it handed on a plate, then have the temerity to accuse younger generations of laziness. Well I would gladly take a house as they had for $40k and free university over, what exactly? Fucking University debt is a yoke, boomers are whining pieces of shit.

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  36. UpandComer (506 comments) says:

    Young people know how to work, the only difference is we get paid the same the boomers got at the same age 30 years later and houses are now $600k, not $60k, and university debt is $50k, not zero. Sooooo, fuck the boomers, they wouldn’t have been able to handle the conditions of young people today.

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  37. Griff (6,712 comments) says:

    Who the fuck is a boomer ?
    when is the cut off?
    Kennedy’s last day?
    shit I dont want to join another hated group
    Seems I am a boomer scum.
    And several commentators want to fuck me and all the other boomer scum.
    I Knew it was the start of the slippery slope.
    First it was mike and mike getting married.
    Now its forced rampant bum sex with grumpy old codgers over fifty…….

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  38. EAD (585 comments) says:

    For a start I would disregard what the Fabian Society has to say. Their organisational symbol a wolf in sheep’s clothing signifies their ultimate intentions. Everyone of their utterances sounds nice and “caring” but is ultimately designed to destroy Western civilisation from within and help implement worldwide communism (disclosure: I was once a naive Fabian/Keynesian before stumbling across Von Mises and Hayek’s writings).

    There really is no easy solution to this problem which has been allowed to fester for generations by the moral cowardice of politicians who have never had to deal with the consequences of their promises and allowed the can to be kicked down the road for later generations to solve – well the baby boomers are retiring and we are just about to run out of tarmac.

    Like the welfare state that was supposed to tide people over for short term unemployment emergencies and/or help the truly needy instead of funding lifestyle choices and country shoppers, the pension was initially meant to cover an expected 2-6 years of retirement for those who reached the ripe old age of 65 back in the days life expectancy was 58 y.o. – not 20+ years of taxpayer funded living as is the case today. Rather than set aside taxes collected by the boomers as a provision for future retirement, governments naively considered these funds to be current income and assumed future generations would pick up the bill – a classic Ponzi scheme if ever there was one.

    What needs to be done is that over the next 10 years, six months per annum is added to the state pension age until it reaches 70. It won’t be pleasant but it is necessary if we want to provide our elderly with dignity in their golden years but also maintain some degree of fiscal solvency. Then at a much slower rate, it needs to go up to 75.

    Western Society urgently needs to go back to what made us great – small Government and personal responsibility but when I look around I see too many people’s free spirit having been broken by the welfare state. What all these people want is “fairness”, what they’re going to get is smacked in the face with reality.

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  39. EAD (585 comments) says:

    I notice quite a bit of antagonism above towards boomers about the massive house price inflation that has occurred since 1971. As a Gen Y myself I can understand why it is pretty hard not to be peeved at what has happened but it is not the fault of boomers – more the inevitable by-product of moving to a fiat money standard that has removed any linkages to real money (gold) so that money no longer has any objective value.

    What really has happened is that the value of paper money has declined dramatically which means things measured in that paper money appear to have increased in value (or got more expensive). When you understand house prices are the result of the biggest credit expansion the world has ever seen and that it can only end in one of 2 ways (currency collapse or a massive depression) you tend not to panic too much. Just save in real money that can’t be inflated away (gold and silver) and wait to the day when money is correctly priced and houses once again can be paid off in 2-5 years like they would in a free market which in the end will ALWAYS reassert itself.

    http://dollarvigilante.com/blog/2013/4/29/rising-house-prices-are-a-central-bank-scam.html

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  40. Kea (11,878 comments) says:

    EAD, moving back to a gold standard would not solve the problem. The problem is our money is debt. A bunch of cheap debt came along and people spent like wankers on housing. There was never a shortage of supply, no shortage of builders, materials or land. The whole thing is artificial. Our houses are probably worth 20% of what we pay for them. If you want to know what a house is -really- worth, take away credit so you have to pay cash !

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  41. Harriet (4,505 comments) says:

    Bob Jones does make a good point – the young inherits hundreds of billions of dollars worth of assets. Both private and public. One way or another. They also inherit jobs when people reitre, as the jobs still stay.

    And I might add that the aged, even if they live till 90, will still one way or another spend money and create employment.

    To argue that the aged and the pension cost is a burdon on society, is the same as not seeing the wood from the trees.

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  42. Scott1 (445 comments) says:

    The baby boomers have carried wealth and political power with them – you can see from the wealth distribution changes.
    As a result they promised THEMSELVES cradle to grave – that isn’t a promise one has to keep on their behalf when they finally run out of that political power any more than they have reserved it while they have had it.

    As to the pension – I see it as a sickness benefit, and the perverse incentive is effectively implying older people with skills that they shouldn’t be working even if they are far more healthy than comparable younger workers we are implying should still be working.

    If we decide that paying money to pensioners is OK because they will spend it anyway or will give it to someone then we might as well hand out money like in a lolly scramble since it will all go somewhere…

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  43. Harriet (4,505 comments) says:

    “….If we decide that paying money to pensioners is OK because they will spend it anyway or will give it to someone then we might as well hand out money like in a lolly scramble since it will all go somewhere…”

    It’s not just a case of ‘spending’ but ‘needing’ to spend to survive.

    And if you don’t want a public pension, than you need jobs, good paying jobs, a super scheme, and favourable tax rates while people are working throughout their lives so that they can self fund their retirement.

    Other issues are women who are out of the workforce for several years, immigrants who enter NZ at say 40yrs, people who have to decress their hours of work so as to care for an incapasitated spouse or child. ect.

    Then you have the issue where some people who had poor childhoods arn’t educated for good paying jobs[and I'm definately not a socialist btw] who won’t have the chance to save.

    The pension is not a lot of money for an individual to live on, and as others have said – “you can’t not pay the pension to those who have had the expense of bringing up families, but pay bludgers the pension for doing stuff all – as where would the incentive be to save or have kids.”

    You also have to remember that those who have money invested overseas -privately or via a superfund- will be bringing it back to fund their retirement, and paying tax to do so. It’s not all that bad.

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  44. Harriet (4,505 comments) says:

    “….The baby boomers have carried wealth and political power with them – you can see from the wealth distribution changes….”

    On that issue Scott you are correct – but you also don’t see the full picture.

    The statistics do show that the boomers have got wealthy throughout their lives -but what that also shows- is that they too, were once poor.

    Individuals start of with next to nothing at age 20, and then get wealthier as they progress through life.

    Kids now have student debt at 20 – but if they then get married to someone else with student debt – they are MORE than twice as better off with the assets that can be bought by their higher incomes throughout their lives.

    They CAN have a $600k house paid off by 40 – with two kids![20-40 on just a joint income of less than 150K = 3mil] And another 40YEARS of high paid work, without kids and without a mortgage – and that’s in THEIR lifetimes!

    And they can easily afford to borrow in their 30′s to fund their own kids degrees!

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  45. Ed Snack (1,734 comments) says:

    Well, fuck the boomer haters too. Some of us started on shit money, worked hard enough until we paid 66% taxation, were poor until we finally made it into middle age and could afford a house (remember you simply couldn’t get loans with any ease until the 80′s), had children without any of this “working for families” tax relief crap, paid taxes for X years and haven’t taken any welfare (and used the hospital system pretty sparingly as well), and still trying to save for retirement. So all I am is an old bludger for wanting a little bit of my taxes back when I can no longer work ?

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  46. tedbear (127 comments) says:

    Well up you Jack, I’m OK.
    How very convenient that as you probably have heaps of retirement loot stashed away, you think you can get away with saying people like myself who have paid tax for over 40 years for a promised fortnightly superannuation payment until the day we die should now have the rules changed.
    You often cross boundaries imho, but you do it because you can. It’s your blog.

    But on to my comments on the UK think tank report..
    “The income gap between pensioners and workers has shrunk massively in the last few decades..”
    So what? It’s not the pensioners fault the workers don’t have a Maggie Thatcher type government anymore.

    “In public policy and deficit reduction measures, ministers should adopt a presumption of equality across age groups.”
    I can just imagine the MPs outcry having their take-home packages reduced around 50%.
    Oh no, silly me, they’d be exempt from age group equality.

    “In financial terms alone, older people are no longer distinct, and blanket policies favouring them should be reviewed.”
    So you agree with this eh DPF, but not to the extent of increasing taxes.
    You may not be needing or expecting government super when you reach eligibility age so it would be a real piss off if your retirement stash was to get cut in half thru a nice new tax.

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  47. EAD (585 comments) says:

    Kea – you are correct that in our current monetary system, debt is indeed money. When you realise that the only way for that debt based system to survive is for the debt to grow exponentially then you realise the hopelessness of this system.

    I’m assuming you’re a so called “greenbacker” or a Positive Money person by your reference to debt free money? Whilst better than our current system, it doesn’t fulfil one of the key attributes of good money which is as a store of value nor does it have any intrinsic value (i.e. it didn’t trade as a good in it’s own right). If the government gave us “debt free money” they could destroy the value of that money overnight by doubling the money supply and the value of your money would be halved thus destroying any incentive to save which is necessary for capital formation and thus real wealth creation.

    Ask yourself after much trial and error, why despite not having contact with each other, did the Persians, Aztecs, Incas, Romans, Gaulles, Chinese and other civilizations all choose gold or silver as their money? If gold is not money, why do central banks hold it? Gold has all the characteristics of good money and once this present experiment of unbacked fiat money finishes (probably in hyperinflation), monetary systems will once again turn to eternal money – the money that has stood the test of time for over 6,000 years.

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  48. muggins (2,983 comments) says:

    I have always felt that a person who is employed full-time should not receive superannuation. My thinking is that a pension should only be paid to someone who has retired from the workforce. Where a person is 65 and working part time they could receive a part pension if the amount they are earning is less than government super.
    I don’t agree with pensions being mean-tested, for exactly the same reasons as given by Alan Johnston and s.russell.
    The word superannuation means “a pension paid on retirement” There might even be a case for having a lower retirement age. I “retired” from paid employment at 60 and received a company pension which I was able to live on with the help of some investments until the government super kicked in, in my case when I turned 64.

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  49. backster (2,076 comments) says:

    I think there is a good case for a heavy tax on people who have secret bank accounts in overseas countries while wailing about poverty in New Zealand.

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  50. Scott1 (445 comments) says:

    Harriet,
    but you have not determined if they need to spend it. The suggestions being proposed is to see if they need to spend it and then give it to just those people.

    “Individuals start of with next to nothing at age 20, and then get wealthier as they progress through life.”

    That is true but I suggest that even if you factor that out you will still see a baby boomer wealth effect and that the peak age for wealth has been progressively getting older.

    But that does raise another issue. At present the peak wealth level is somewhere near retirement age. That means we have a benefit where the working population introduces to the benefit the richest section of the population. Is that not strange?

    Also – although it is drifting from the topic a bit – having an income distribution skewed heavily towards the elderly is an inefficient model. Consider for example that you (and everyone else) might have to wait until you are 60 to afford some sort of expensive surgery and until then you are unable to work at full capacity due to health issues. For this reason and others – one could expect an economy with wealth distributed towards the non working wealthy to be less competitive.

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