The media are reporting that the National Caucus has decided not to abolish the Government’s Superannuation Fund, when it is in Government.
Personally, if I was a member of the Caucus, I would have voted the other way. I do not believe that having the Government build up a $50 billion fund is a great idea as it will give the Government indirect control of a huge portion of our economy, and also that the key to future sustainability is increasing NZ’s GDP faster, not a fund which will only cover 15% of the future cost.
Having said that, it is not that the Fund is a bad thing per se. It is not the best use of surpuses, but neither is partial pre-funding without some merits. And it does avoid the dishonest scare tactics that National is going to steal $10 billion off pensioners and give it all to Sir Michael Fay, which no doubt Labour were going to push.
What I would caution people, is not to think that what now appears to be the guaranteed continuance of the Super Fund, means that they should not save for their retirement. The current Superannuation scheme is not sustainable with or without the fund as our population ages. Regardless of which party is in office, it is inevitable the age of eligibility will increase. And if one wants a comfortable retirement, you should have private savings to top up the state scheme anyway. Those over 45 are fine, but if you are under 45 you should start saving or investing (property especially is good) now.
Incidentially I think it is ridiculous that superannuation is not means tested. But this is about as popular with Grey Power as free seminars from Dr Kevorkian, and is unlikely to be ever changed.
One bright side is that when National is in Government, John Key will be Minister of Finance. John used to be head of global currency for Merrill Lynch and was reputed to be amongst the best in the world at making money from investments. So when John is Minister of Finance, he should sack the Board of the Super Fund, and just invest it all himself as he sees fit. I reckon he’d have a good chance of doubling it within six years 🙂