Redesigning NZ Super
Michael Littlewood from the Retirement Policy and Research Centre has a commentary on redesigning NZ Superannuation. He says (and I agree) that we should not just look at one issue in isolation or just the cost.
He highlights eight key design features that should be agreed on. They are:
- Universal or means-tested (I favour means-tested if the administrative costs of doing so are not prohibitive)
- Age of entitlement (I favour increasing it and tying it to life expectancy)
- Residency test – how long should someone live here to quality. The current threshold is ten years and I think it should be higher. It used to be 25 years.
- The level. Currently is 43% of the net average wage for a single person. Set at 66% of the after-tax national average wage for a couple.
- How to revalue? Is indexed to both CPI and the average wage.
- How to pay for it? Pay as you go and partially pre-funded. Should it be both? What should the mix be?
- Payments to single people? Why does a married couple get less than two singles living together?
- Overseas pensions? The rules for deducting overseas pensions are inconsistent
ACT’s proposal to have an expert panel devise a number of schemes that would go to a vote, would be one way we could have a debate on, and decide these issues.