Labour staunch on raising Super age

Labour is promoting it';s policy to raise the age of eligibility of National Superanuation again. RNZ reports:

Labour pushing later retirement age

The Labour Party is using the latest information on the state of the Government’s books to push its policy of gradually raising the retirement age to 67.

It’s not a retirement age. You can retire any age you choose.

It’s the age at which you become eligible for National Superannuation. Many people don’t retire when the become eligible, they receive Super while still earning an income.

If elected on 20 September, Labour would gradually phase in an increased retirement age of 67.

Anyone receiving a pension before 2020 would not be affected, but people turning 65 after 2020 would have to wait until they are 65 years and two months to get their entitlement. The retirement age would be raised by two months every year until it reaches 67.

Labour’s finance spokesperson David Parker says pension costs, which make up about half of all social spending, need to be addressed.

This would extend my eligibility age by two months. No big deal for me personally.

Ironically this policy is what many on the right think is essential but are up against a John Key wall of inaction, while some on the left will be spitting tacks again as they are strongly opposed to raising the Super age.

A past left wing discussion on the pros and cons of this Labour policy – The retirement age debate.

This would also be a no-go for any Labour-NZ First coalition agreement.

 

Standard retirement age discussion

A thoughtful and thought provoking post by mickysavage (Greg Presland) at The Standard on The retirement age debate:

Labour’s policy is to gradually change the age of retirement to 67 with an allowance made for those aged 65 who can no longer work. There are passionate views in support of this and opposing this.

Regrettably the financial analysis is quite clear. The current entitlement to superannuation will drain more and more of the state’s resources and Aotearoa will face a financial crisis in 10 years or so due to the baby boomer bubble approaching retirement.

Labour is trying to show that it is being fiscally responsible by highlighting this as an issue and proposing a realistic solution.

But it is a difficult line. There is policy that a 65 year old whose body is wrecked through work should be allowed to retire now. But allowing everyone to retire gracefully at the age of 65 years means that there will be jobs for 18 year olds to fill. Allowing older citizens to retire later means that there will be less jobs for our young

The debate really needs to be about how we share the resources of our society around. We need to make sure that those of us who are older can exit from the workforce with dignity and those of us who are younger can have jobs.

A commenter points out that Labour’s policy on Super has similarities to ACT’s.

Greg has close connections to David Cunliffe but says he blog comments on a personal basis – but here he seems to be trying to help the Super debate within Labour:

I thought that we should capture the thoughts in one post and let Labour (and the Greens and anyone else) to absorb the thoughts of commentators.

All parties and politicians should absorb whatever they can to try and work out an affordable way of dealing with Super. This must be done on an all party long term basis.

I’ll summarise comments in another post in a day or two.

Transfer of poverty?

Now we have proposals for a transfer of poverty, from oldies to kids:

Cut super to save at-risk kids plea

Two of New Zealand’s top children’s doctors are proposing an increase in the state pension age to pay for more services to stop child abuse.

Paediatric Society president Dr Rosemary Marks and Starship hospital child protection clinical director Dr Patrick Kelly say raising the pension age could fund measures to tackle child poverty and improve health and education services for our youngest children, who are most at risk of abuse.

Also:

Universal allowance needed for children

Prof Boston says New Zealand is unusual as it is one of the only OECD countries to not provide some sort of universal family benefit.

“There’s a good case for having universal assistance and particularly for young children because we know that from a huge amount of evidence having a good start in life really matters,” he says.

The Government white paper on vulnerable children will be released tomorrow.

Ruth Richardson – “NZ flunked the Super debate”

And not just Ruth Richardson.

Business leaders have been told in no uncertain terms that the Prime Minister will not break his word by raising the superannuation age.

Eighty-eight percent of more than 100 CEOs in an exclusive Herald survey said retirement funding should be raised to 67 from 65.

CEOs signalled in the Mood of the Boardroom Survey that the Key Government needed to tackle the eligibility age.

“The only real negative is the failure to address the superannuation debate when the public clearly gets it that something needs to change to maintain affordability,” said a CEO speaking under anonymity.

Jade Software chairman Ruth Richardson – a former National Party finance minister – said “New Zealand had flunked the Super debate”.

Navman chief executive Andrew Blakey said the post-election period “has been disappointing from Key”. He also said there had been numerous examples of poor political management pointing to “the complete head-in-the-sand approach to superannuation”.

Fifty per cent of CEOs also wanted the age-raising transition phase completed by 2017.

Twenty-three per cent said the phase-in should be completed by 2020 and 13 per cent opted for 2025.

But Bill English continues to hang tough:

Raising Super age not an option: English

Speaking at the Mood of the Boardroom breakfast in Auckland today, Finance Minister Bill English responded to calls from CEOs for National to reconsider its position on super.

English said John Key’s stance did not need to be explained again – “a politician made an undertaking that he’s not going to break”.

“If you don’t understand that then you don’t understand John Key. He said he wouldn’t raise it and so he’s not going to raise it.”

Jade Software chairman Ruth Richardson – a former National Party finance minister – said

“New Zealand had flunked the Super debate”.

Shearer correct calling for Super debate, so far wrong approach

David Shearer is again calling for:  “a genuine, open and honest discussion about how we can continue to afford to provide New Zealanders with financial support when they retire.”

I agree with that. It needs to be a wide ranging cross-party and inside-outside parliament discussion.

But how genuine is Shearer? In his latest call for discussion he also says:

“It’s not good enough for John Key to say that he’s worried about governing for today and somehow the future will look after itself.”

If Shearer is genuine about the need for non-partisan debate he needs to leave the political point scoring out of his “requests”.

No response from Shearer

And Shearer doesn’t seem willing to engage in genuine discussion on Super. Several times I have emailed him offering to join him in a campaign for Super discussion.

I have had one reply from his office:

“I am writing on behalf of David Shearer , Leader of the Labour Party,  to acknowledge your email.”

A Labour MP has also said they have passed on my offer to Shearer.

He has not yet  replied.

So I am publicly offering to join David Shearer in initiating cross-party, cross-media discussions on the future of NZ Super.

I await his response.

Pete George
ADASS: http://yournz.org/2012/06/03/adass/
petedgeorge@gmail.com
027 327 3468

NADASS

News About Debate About Super Solutions

Financial Services Council warns of NZ Super unsustainability

Tax rates will have to rise by as much as 28% to sustain the New Zealand Superannuation system in its current form, the Financial Services Council (FSC) is warning.

The council, whose members manage almost NZ$80 billion in savings, is the latest party to sound the alarm about a demographic timebomb which threatens to undermine the security of New Zealand’s cherished pension system.

Kiwis aged 65 and older will by 2015 outnumber younger New Zealander’s by 60%.

The Financial Services Council, in a report on the retirement and savings, predicts that the cost of funding the New Zealand Super will rise to 12% of GDP unless steps are taken soon to increase private savings along with other policy adjustments.

According to its modelling, the current 17.5 % income tax rate would rise to 22 %, the 33 % rate to 42 %, GST from 15 % to 19 %, and the corporate rate from 28 % to 36 %.

Interest.co.nz June 11, 2012

Taxes must raise to pay for super – report

National’s under growing pressure to re-think its stance on the retirement age following a report warning of a pending crisis.

The Financial Services Council says Kiwis are living longer and tax rates will need to rise by almost a third later this century to continue funding super at 65.

It says around half those born last year are expected to make it to 100.

RadioLIVE / 3 News 11 Jun 2012

NZers want cross-party discussion on super costs – survey

A new survey shows 80% of New Zealanders want political parties to hold discussions on future superannuation costs.

The Horizon Research survey was commissioned by the Financial Services Council, which represents the savings industry.

It asked 2500 people whether they supported political parties in Parliament entering into talks on how New Zealand can provide secure retirement income in the future.

Forty-seven percent said they strongly support multi-party talks on the subject, a third merely supported them.

Less than 2% oppose the idea.

Radio New Zealand News 10 June 2012

“Uneasy reality” of demographic time bomb behind Mercer’s call for suite of changes

The financial impact of New Zealand’s ageing population could dwarf the global financial crisis unless Government takes steps now to address the problem, superannuation specialists are warning.

In a discussion document, entitled “Security Retirement Incomes“, Mercer New Zealand (a default KiwiSaver provider) calls on Government to raise the age of eligibility for New Zealand Superannuation from 65 to 67. It also suggests Kiwis be encouraged to defer retirement to age 70, as well as introduce a plan for the “decumulation” phase of KiwiSaver, whereby retirees spend their KiwiSaver funds

Interest.co.nz  June 5, 2012

Class size revision – Super next?

Hekia Parata and National have done the right thing by listening to the cacophony of opposition to and advice on their attempted class size re-arrangement.

They reverted to common sense. It would be good if they could now patch up Government-teacher relatinships and work together towards the best options and outcomes for the kids.

Now National have shown they can listen and readjust their policies, maybe they can have another listen to the huge wall of opinion urging them to look at the Super issue.

ADASS

Advancing Debate About Super Solutions

There are increasing calls for a discussion on the future of our National Superannuation. It is expensive, and is going to get much more expensive. Can we as a country afford to change nothing? Or should we be considering options?

This blog is part of a campaign to promote discussion about our Super, with parties and MPs, in social networks, in the media. See:

During the last election Tim Watkins posted

Finally, we see the elephant in the room

The simple reason superannuation is such a big talking point now – and why Labour’s new policy is so significant – is that the super bill is one of the country’s biggest.

It’s the elephant in any room that has something to do with government spending.

Bigger than the dole.

Even bigger than the DPB. Because there are so many retired folk – many more than there are unemployed or sick.

Here are the numbers. This year’s Budget had a total social welfare spend of a little over $23 billion. So how does it break down?

Sickness benefit: 782.38 (3.40%)
Unemployment benefit & emergency benefit: 1,028.95 (4.40%)
Accommodation assistance: 1,264.23 (5.50%)
Invalid’s benefit: 1,346.84 (5.80%)
Student loans: 1,589.68 (6.90%)
Domestic purposes benefit: 1,894.64 (8.20%)
New Zealand superannuation: 9,575.37 (41.30%)

As you can see, superannuation is over 40 percent of the bill. Nothing else hits double figures. And as a share of GDP, the cost of super is forecast to double in the next 40 years.

And in a Herald column National’s Super problem David Farrar points out

Superannuation last year cost $8.8 billion and in four years time is forecast to be $12.3 billion.

It is a rapidly growing cost – does this make it a rapidly growing problem unless we address it? Should we at least be talking about it? Should our MPs be seriously looking at it?

John Key and Bill English think that nothing needs to be done while they lead National – National’s toes dug in Super and Key locked in opposition to cross-party Super, and Farrar:

He pledged that there would be no change not just if elected in 2008, but for the duration of his time as Prime Minister. He locked in the policy, and also said any breach of the pledge would lead to him resigning not just as Prime Minister, but as a Member of Parliament.

But Farrar thinks this was an unwise stance.

The lesson for both the current Prime Minister, and any future Prime Ministers, is to never ever make any pledge beyond the next term of Parliament. Doing so is both short-sighted and anti-democratic. Elections should be about choices. Policies should change as circumstances change.

So does Fran O’Sullivan:

Key sidesteps that old, old problem again

John Key’s Government would rather play the game of “pass the fiscal time bomb” than confront the real financial pressures that will beggar future New Zealand generations.

That’s the harsh takeout from the Prime Minister’s decision to (yet again) put off the day when a New Zealand Government has to foreshadow the introduction of policies to deal with its long-term liabilities.

It’s hard to believe the Government is prepared to sit on its hands until the 2014 election, by which time 2020 will be only six years off, let alone duck the issue until/or if it gets a third term in Government.

And Duncan Garner thinks something has to happen, starting sooner, for later:

Key’s superannuation position must change

John Key’s entrenched position not to touch the age of eligibility for New Zealand superannuation is unsustainable. He’s simply putting off a decision that must be made.

The Prime Minister is under mounting pressure to take a more responsible position.

No one is suggesting it needs to change now. But these things need lead time, and they need leadership – Key is offering none of the above on this issue.

He has promised not to change the settings as long as he is Prime Minister, but that surely doesn’t mean he can’t debate it. He can. And he should.

I agree. He should. We should. How do we make it happen?

Labour Leader David Shearer is actively promoting discussion on Super. He needs support from within his own party and from other parties.

There is a toe in the door - Dunne has given Key a get out of Super free card - this needs to be used as much as possible.

And we can encourage, cajole, push, insist. We can all play a party, and Your NZ is an active part of that. You can activate the campaign as well.

BADASS

Bloggers Advancing Debate About Super Solutions

List of blogs and bloggers talking abour Super or promoting a Super discussion:

Automation Nation Quentin Todd I am ready
Home Paddock Ele Ludemann I agree a debate on superannuation is a good idea and will post on it in the next few days. (email)
Keeping Stock Inventory2 Having a BADASS discussion on Superannuation
We agree with Pete George; there needs to be a wide-ranging debate, right across the political spectrum, and a bipartisan approach needs to be taken. For that reason, we are more than happy to offer our support to his BADASS campaign.
Kiwiblog David Farrar Shearer right on this issue though
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 superannuation scheme should be operating in 30 years time that is fair and affordable”.
Imperator Fish Scott Yorke Key’s Secret Super Plans
Why does John Key appear so confident that we are not facing a future superannuation crisis?
NZ Institute of Economic Research Inc (NZIER Jean-Pierre de Raad Superannuation dilemma
The government has agreed to investigate United Future’s flexi-superannuation proposal – the idea that people are able to choose whether to take up superannuation at age 60 at a reduced rate or at a higher rate at some later age. It is good that changes to superannuation are on the table. But it is critical that discussion is not limited to just this flexibility.
The discussion will not be easy, as there are some major questions of intergenerational fairness to be resolved. But New Zealand Superannuation cannot be treated as a holy cow. If we choose not to touch it, we are choosing to touch healthcare, education and other areas of government spending that are possibly more important for our long term wellbeing and prosperity. There is no free lunch.
Pundit Tim Watkin Finally, we see the elephant in the room
The simple reason superannuation is such a big talking point now…is that the super bill is one of the country’s biggest.
No-one wanted to touch the superannuation debate exactly because it involved so many people – so many people who vote.Yes, there is a risk that if we’re willing to have the super debate, everything from its universality to its percentages are up for grabs.If it’s changed once, future governments could change it more – cut it, slice it, shrink it.But the plus side is that we can now talk about how we save, as a country, for our retirement.And that’s essential, because contrary to what Jonathan thinks, it really is one of the biggest issues in town.
Public Address Matt Vickers Doing the right thing on retirement
The retirement age is not a left or right issue. It’s an intergenerational issue.
Labour may not be in a position to form a government after the election, but they could submit a private member’s bill on the resumption of parliament.
 The Standard Eddie Key’s future gets shorter
It’s a bit like Key’s attitude to superannuation. While Key continues to deny reality, Shearer is discussing how it could work…
 Whaleoil Cameron Slater Can we have some sensible discourse on super please?
There is a great deal of talk about raising the age of eligibility for National Superannuation. Every single person pushing this agenda misses the point. All that is going to do is push the bubble out a few years but the bubble still exists.Instead of talking about eligibility around age we need to talk about eligibility full stop.
Yea or Nay Monique Watson Superannuation Timebomb
How to fund the wellbeing and health costs of those members of society approaching the age of 65 and over is the political puzzle of this decade. the problem is not unique to new Zealand. With regards to New Zealand’s unique set of circumstances:
The answers are clearer if you take the political ploys of the last decade and unstitch them.
Your Dunedin Pete George BADASS Supporter
Your Dunedin supports BADASS in seeking debate on super solutions. It’s a debate the country has to have, we need to unite to initiate a decent discussion, then let the debate begin.

Bloggers – post and/or advise your support petedgeorge@gmail.com

JADASS

Journalists (and columnists) Advancing Debate About Super Solutions

 Alex Tarrant  interest.co.nz Super age policies: What the different political parties say about whether to raise the Super age, and if so, when
Georgina Bond NBR ONLINE POLL: Massive support for pension age change
Should the age of entitlement for state-funded superannuation be raised from 65 to 70, gradually, from 2020 onwards?
Yes – 81%
No – 19 %
Matthew Hooten NBR John Key’s cunning super plan?
For his part, Mr Key has begun making elliptical statements of his own, saying National has “kicked the tyres” on whether to revisit the promise, hardly an indication it remains absolutely sacrosanct.
While National is formally sticking to the promise for now, government MPs and ministers no longer even bother to defend it and it is unthinkable that Mr Key is really as economically reckless as his public statements suggest. More likely, we are seeing the first stages of a gradual climb down.
David Farrar NZ Herald National’s Super problem
…the stance on superannuation is the chink in National’s armour.
Fran O’Sullivan NZ Herald Key sidesteps that old, old problem again
John Key’s Government would rather play the game of “pass the fiscal time bomb” than confront the real financial pressures that will beggar future New Zealand generations.That’s the harsh takeout from the Prime Minister’s decision to (yet again) put off the day when a New Zealand Government has to foreshadow the introduction of policies to deal with its long-term liabilities.
Jason Krup Stuff Daily Business Paying for the grey tsunami
So far, the leadership needed to steer this debate has yet to emerge from either industry or Government, leaving just two short years until the first waters of the retirement crisis start lapping at the country’s ankles.
Duncan Garner TV3 Key’s superannuation position must change
John Key’s entrenched position not to touch the age of eligibility for New Zealand superannuation is unsustainable. He’s simply putting off a decision that must be made.
Dion Tuuta Taranaki Daily News Retirement law change well overdue
While I can understand where the Maori Party is coming from in their desire for fairness, my preference would be for them to do some work on developing constructive policy which has an effect on raising the average Maori life expectancy, so that Maori could enjoy the benefits of superannuation.
Because the reality is that whether the retirement age is 65 or 60, New Zealand’s superannuation model is unsustainable.
As Shearer himself noted, there are 5.6 working people for every retired person currently living.In less than 30 years – well within the lifetime of my children – that will more than halve to about 2.5 working people for each retired person. On this basis, there just won’t be enough working people to support the retired.
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