Dom Post and Grey Power on flexi super

August 28th, 2013 at 1:00 pm by David Farrar

The Dom Post editorial:

Ohariu MP already has one thing in his favour as he pushes for flexible National : significant public support.

According to a Fairfax Media-Ipsos poll in February, 49 per cent of people would like to choose when they receive their state pension, with reduced or enhanced rates depending on the age they start drawing payments.

Certainly, Mr Dunne’s proposal, which the Government agreed to consider as part of its confidence and supply deal with UnitedFuture, breathes some fresh air into the superannuation debate. It is well worth the discussion kick-started by a Treasury scoping document issued on Monday. 

A more hysterical response from Grey Power:

Allowing national superannuation to start at age 60 would be a cruel poverty trap for people who are short of money, says. …

“This latest idea from Peter Dunne is one of the more cynical, cruel and dangerous bits of stupidity I’ve heard in a very long time,” said Grey Power president Roy Reid.

“It will be a poverty trap for financially hard-pressed people already on low incomes who will be tempted to take an early but low pension with no hope of it ever increasing to the rate that people who can afford to wait until they’re 70 will get.”

Mr Reid says Mr Dunne is a typical MP who has no idea of what life at the bottom of the heap is like.

“It’s like offering a starving family a loaf of bread today, and every day hereafter if you take it now, or two loaves a day and a big box of sausages every day if you wait for 10 years to collect.”

Mr Reid says Grey Power will fight the Government if it takes up the idea – and it wants Mr Dunne out of Parliament.

My God, the hysteria. Grey Power obviously thinks elderly people are so stupid they can’t be trusted to make decisions about what is best for them.

if you are 60 and in bad health, the option of early retirement could be a massive advantage.

Of course there are potential problems, but we need a rational discussion, not mad rants.

I note also that the Grey Power President has declared he wants certain MPs to be defeated. So I hope Grey Power will be registering as a third party for the election campaign.

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30 Responses to “Dom Post and Grey Power on flexi super”

  1. Pete George (23,796 comments) says:

    Roy Reid was the official organiser of the anti asset sales petition. Here he sounds like he is deputy leader of NZ First.

    Under the Flexi-Super proposal current superannuants would not be affected. And if people coming up to retirement chose to take Super from the current age of 65 they wouldn’t be affected.

    I wonder what all the Grey Power members think about their organisation being so narrowly political.

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  2. Paulus (2,707 comments) says:

    Hasn’t it become obvious in the last year or so that Grey Power have now entered the political arena as a left wing party – well suited I suppose to the Green movement.

    Wrecker and Haters – Helen Clark must have thought them.

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  3. gump (1,683 comments) says:

    @Peter George

    “I wonder what all the Grey Power members think about their organisation being so narrowly political.”

    ———————

    The members don’t think about it. That’s the crux of the problem.

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  4. Pete George (23,796 comments) says:

    Grey Power’s Aims and Objectives

    6. To be non aligned with any political party, and to present a strong united lobby to all Parliament and statutory Bodies on matters affecting New Zealanders.

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  5. flipper (4,330 comments) says:

    Grey Power are senile – not the average member (or would be/could be), but the leadership.

    Dunne’s proposal may end up being shelved as too hard, but at least it should be given a very close look. The Maori Party should be backing a detailed examination (not implementation at this stage).

    From a political angle, it would throw Labour into a mud pool. The flexiage scheme could cut the Three Mousketeers and their super age/CGT proposals off at the ankles.

    W. English should initiate the study forthwith.

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  6. SPC (5,664 comments) says:

    Flexi age super and sub prime loans – short term appeal, long term consequences.

    As for those in poor health, the super rate at age 60 c $270 would be close to the invalids benefit level, but being old tired and unable to work the job you once did does not qualify you for that, you just would remain stuck on the $206 Job Seeker level until age 65. If being on $270 a week from age 65 on does not result in poverty induced euthanasia what would?

    The idea is superficially attractive to the MP, and is designed for the current coalition to accept. Like income splitting this is an idea attractive in Ohariu constituents – it allows them to continue working age 65-70 and continue to collect super (either while they are working as they do now or in higher super payments after age 70). This effectively protects them from any measure to means test super against work income.

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  7. SPC (5,664 comments) says:

    flipper, are you saying we can afford tax paid super – flexi age would cost more (being gamed) not less. Especially in higher AS for those on lower super levels and in rentals.

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  8. flipper (4,330 comments) says:

    SPC…

    Choice, freedom of choice.

    Let Treasury look at it and tell us whether there would be greater costs than benefits.

    If there is to be change, economics alone will not be the deciding factor. It will be politics. And as you know there is no chance of that while JK leads.

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  9. dime (10,212 comments) says:

    Quick question:

    If you take the early pension, can you still work full time?

    Double dip so to speak

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  10. ross69 (3,652 comments) says:

    Peter Dunne turns 60 next year….wouldn’t be any self interest here? :)

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  11. Pete George (23,796 comments) says:

    If you take the early pension, can you still work full time?

    You can earn money while drawing Super now so unless that was changed, yes.

    So those who are struggling to work at sixty could cut back to reduced time and choose to take Super. That may extend the time they are able to work, possibly beyond 65.

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  12. SPC (5,664 comments) says:

    dime, good question. I suspect the answer is yes.

    After all people work at age 65 now and get super. If the change is just flexibility in age of receipt, then the answer is yes.

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  13. Pete George (23,796 comments) says:

    Ross69 – very unlikely, he will be on a very generous MP super scheme.

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  14. SPC (5,664 comments) says:

    Pete, more like those unlikely to be able to work age 65 to 70 and collect super as well (as many in the middle class do now) would simply do this earlier at age 60 to 65.

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  15. SPC (5,664 comments) says:

    There is already a developing industry in genetics forecasting peoples lifespans, this will grow quickly in providing a service to those trying to game flexi age super.

    The whole area of insurance assessing human life as a cost (to insurers/to the welfare system etc) is growing.

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  16. dime (10,212 comments) says:

    Ok, heres Dimes scenario. Based on todays market etc.

    Dime turns 60. Dime has plenty of assets. Life is good. Dime takes early super while still working.

    Lets say this is $300 a week.

    Dime buys a house for $750,000. He rents it out for $700 a week. The short fall in mortgage is $260 a week. Dime uses his free money to top up said rental property. The $40 a week goes towards rates/ insurance. Reality is he probably has to throw in an extra $30 a week. (he does get a hug tax refund though so this is only for the first year).

    He sells rental property at age 65 and clears $200,000.

    Dime is way better off taking his super early.

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  17. reversespin (70 comments) says:

    SPC @ 2:01pm…

    It is exactly that kind of actuarial analysis that Treasury will have to carry out to determine rates that would keep Flexi-super cost-neutral.

    It would be very hard. The discussion paper correctly identified an information gap. Individuals can predict their own life expectancy far better than the government.

    All those fish-hooks, problems and risks could be averted if they restricted the flexi-super scheme to deferring the uptake of super and scrapped the notion of taking it early.

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  18. ross69 (3,652 comments) says:

    Ross69 – very unlikely, he will be on a very generous MP super scheme.

    I presume so but is he able to access it aged 60?

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  19. wikiriwhis business (4,192 comments) says:

    “I note also that the Grey Power President has declared he wants certain MPs to be defeated. So I hope Grey Power will be registering as a third party for the election campaign.”

    Grey power will support Winston as flip flopper Key is very well aware and worried

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  20. JC (949 comments) says:

    “6. To be non aligned with any political party, and to present a strong united lobby to all Parliament and statutory Bodies on matters affecting New Zealanders.”

    Grey power is almost certainly a charity.. the rant to remove an MP would probably contravene its charitable status.

    I like the proposal but like Dime I immediately thought there was an advantage to taking the early money and investing it. Also, I dont think you need to nearly double the amount at age 69-70 to make the later option attractive (but a lesser amount might make the early option too attractive).

    JC

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  21. muggins (3,828 comments) says:

    I don’t know if one would be able to collect superannuation at age 60 and still have a full-time job.
    Superannuation is paid at age 65 whether or not a person has a full-time job, which in my opinion is wrong.
    But if one wants to claim superannuation at 60 I would not be surprised if the government would want proof that person has actually retired from the workforce.
    There is certainly a benefit here for women who are not in the workforce. Under the proposed scheme they would be able to take a reduced pension at age 60 whereas now they don’t receive superannuation until they turn 65.

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  22. Pete George (23,796 comments) says:

    Another NZ First attack on Flexi-Super:

    Flexi Super means downsizing – NZ First

    New Zealand First has pledged to fight the unfair and unworkable “flexible” superannuation proposal every step of the way to prevent the Government and its flexi-puppet Peter Dunne changing the superannuation system.

    Associate Superannuation spokesperson Denis O’Rourke describes the proposal as ill-conceived and the first stage of an all-out assault on the living standards of senior citizens.

    “This scheme has been seized on by the Prime Minister to break his promises about maintaining superannuation at age 65 and the current amount.

    “The amount paid to a 60 year old is too low to live on so they will then apply for a social welfare top-up and this will be means tested. This is the thin end of the wedge as full means testing will inevitably follow.”

    Mr O’Rourke points out that the flexible system is also a tax dodge to favour the rich.

    “Superannuation as a universal, non-means-tested entitlement will be forever compromised. This is what National wants, and Labour is just a step behind with lifting the age of eligibility to 67.

    http://www.voxy.co.nz/politics/flexi-super-means-downsizing-nz-first/5/165872

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  23. leftyliberal (651 comments) says:

    “I like the proposal but like Dime I immediately thought there was an advantage to taking the early money and investing it.”

    I suspect accurately estimating lifespan is probably the more important criteria than investment performance. After all, the values specified will be defined based on expected return on investment given lifespan. Getting your lifespan wrong by a couple years is likely to result in a larger difference in payments received than the difference in investment performance.

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  24. JC (949 comments) says:

    “Getting your lifespan wrong by a couple years is likely to result in a larger difference in payments received than the difference in investment performance.”

    Yeah, but you have other factors such as inheritance to consider.. a lot of 60 year olds can be pretty sure of getting $1-300,000 from the death of a parent(s) by the time they are 70 so there’s less pressure to hang out to 70 for the pension.

    I think tax will come into the picture.. it mostly does.. so thats another unknown as accountants do the sums for their clients’ individual circumstances.

    JC

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  25. Albert_Ross (337 comments) says:

    Muggins, if you pay superannuation only to people who have retired from the workforce, people will be encouraged to retire from the workforce. Do we want that?

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  26. SPC (5,664 comments) says:

    Muggins, well spotted – all those Ohariu housewives who never got the income splitting to reduce their husbands tax liability can go onto super at age 60.

    So has anyone assessed the impact on couples super of the separate choices of partners? Current ones or those who are in the future live in partners?

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  27. artemisia (268 comments) says:

    If people who work don’t get superannuation, wholly or partly, then the door is opened for income testing. Otherwise someone who goes to the office, the factory or other paid work is disadvantaged compared to those with income from other sources. Such as income from assets in a trust, dividends from shares, rental income, bank interest. And that in turn opens the door to asset testing, as if assets are not tested funds will divert into them. Particularly into growth assets rather than income producing assets. Then easy enough to, for example, sell a few shares from time to time for tax free profit.

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  28. jcuk (756 comments) says:

    The penny-pickers like Muggins forget that quite a few sensible people have provided extra income either by saving or contribuiting to a superanuation skeme so what is the difference between getting money from the results of past labours and todays labour?

    What should happen is than NS be paid from the age of 60 at current rates with increases for holding back. Current NS is no luixury ride and for many just a subsistence allowance. So a reduced amount would indeed be a poverty trap and not all people are as intelligent, if misguided on this subject, as DPF.

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  29. OneTrack (3,358 comments) says:

    “Grey power will support Winston”.. and get the Greens.

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  30. muggins (3,828 comments) says:

    jcuk
    I contributed to a company superannuation scheme for 40 years, but I had to retire before I allowed to receive any payments from it. I wasn’t allowed any payments until I retired.
    And I reckon the same should happen with government super. No payment until you retire from the workforce.

    artemisia.
    Re income testing. If a person receives dividends from shares then they must have saved money to buy those shares.
    If a person receives rental income then they must have saved money to enable them to own a rental property.
    Why should that income be income tested?
    I used some of my company superannuation to buy shares. Others may have spent their’s on overseas trips and the like.
    Why should I be penalised just because I bought shares rather than travel the world?

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