David Shearer – superannuation

From a David Shearer speech:

The same principles (see social contract and fairness) apply to superannuation. While you are working you contribute to superannuation, so that when you retire there is something set aside to live on.

That is fair.

In fact, our scheme is one of the fairest in the world because it set aside the same amount for everyone, whether you were at home raising the kids, working to build the dam, or the boss.

It’s a scheme to be proud of, and its crowning success is that in New Zealand we have one of the lowest rates of poverty among seniors of anywhere in the world.

I want to make sure that endures into the future. All New Zealanders should be able to look forward to receiving super – including our children and grandchildren.

Young People

When I speak to young people, I notice they have lost hope that super will be there when they reach retirement age.

They have lost their faith in politicians who have used this issue as a political football and are only interested in the politics of the here and now, not about building for the future.

They can see that we’re living longer, that we have more people in retirement than ever before, and that the numbers are growing rapidly.

I believe it’s our responsibility to find a way to pay for that so our young people don’t miss out when it’s their turn.

Today, for every retired New Zealander there are about 5.6 people working and paying taxes. By 2040, there will be about 2.5 people working for every one retired.

By the time of the next election – 2014 – the cost of superannuation will exceed everything we spend in education – pre-school, primary, secondary and all the polytechnics and universities. And it will continue to rise.

Preserving NZ Superannuation

So how do we preserve NZ Superannuation for future generations?

Dr Cullen helped — he ran a strong economy that achieved good surpluses, and put some of those surpluses into the NZ Superannuation Fund to help with some future costs. But it doesn’t pay the increase in costs, and after the global crisis the government stopped contributing altogether.

The Labour government added to it with KiwiSaver so people in the workforce could set aside something extra for their retirement, and the economy would benefit from deeper pools of savings.

That has been very successful – 1.7 million people are enrolled in KiwiSaver.

Australia has employers contributing 9% into their super scheme – it’s massive now and they have capital in the trillions of dollars.

It was the same scheme introduced by the Labour Government that Muldoon cut in 1975. Just think where we could be now if we’d continued with it.

But the superannuation bill hasn’t stopped growing.

Super Options

So we in Labour have looked at the options. And the overriding principle in our plan is fairness. Much of what we propose is based on the analysis of the independent Retirement Commissioner. That we raise the age of entitlement from 65 to 67 – just like Australia, the UK and the US have done.

John Key says we can avoid the problem by growing our economy faster. Problem is, we’ve barely managed 1% economic growth since he became Prime Minister.

It’s simply not being honest to guarantee we can pay for our super beyond the life of his government. No economist agrees with him.

Instead, we need to take some tough decisions. I’m prepared to do that. But only on the basis what we do is fair.

1. Young able to look forward to superannuation

First, young New Zealanders should be able to look forward to superannuation when they retire.

We can’t expect them to keep paying a growing superannuation bill just because we refuse to take the tough decisions.

A young person starting out today goes into debt to pay for their education. Then they face house prices totally out of reach for an earner on the average wage.

Meanwhile do we want more and more of the tax they pay to go to an expanding super bill when there’s still health and education to pay for? That’s not on. It’s not fair.

2. Time to prepare

Second, it’s fair to give New Zealanders plenty of time to prepare for any changes. They must be phased in gradually so people have plenty of warning.

No one near retirement age is going to lose their current entitlement, because that wouldn’t be fair.

3. Manual workers

Third, we need to be fair to people in manual jobs or who, for whatever reason, cannot continue to work.

If you’re a bricklayer or you’ve been on the freezing works chain for 40 years and your back has given out, there will be transitional assistance for you.

4. No cut

Fourth, we won’t cut the rate of superannuation – that’s not fair to anyone. Let me reiterate that – it’s not fair to make changes for super for people who are already retired, and I won’t.

I want us to look ahead at the kind of country New Zealand is going to be in 10 or 20 years from now, and ask how we prepare for that future. Our plan protects everyone who is retired now, while also guaranteeing younger Kiwis they too will be provided for in their old age.

5. Cross party consensus

Finally, I want to restate my pledge that I will work across the parliament with whatever party to achieve a consensus on how we move forward.

We are prepared to take the tough decisions. But there are other ideas that we are also prepared to look at. It’s time politicians worked in the best interests of New Zealand.

Superannuation is about planning for the future. And planning for New Zealand’s future is what responsible leaders should be doing.

Peters and Key kick Super discussion in the guts

Winston Peters and John Key have double kicked cross-party hopes of a sensible discussion on National superannuation in the guts.

Winston Peters was asked whether NZ First’s position that the super age should remain at 65 was likely to be an issue in such talks

“Of course it’s a bottom line.”

Mr Peters has rejected Labour’s calls for cross-party talks on the issue and he said Labour had made a terrible mistake with its super policy.

“If I was advising them on a political level I would ask them, how does this work?

“You’re sending out a dog whistle to a future voting group but you are not addressing the problem here and now. The here and now is an economic solution.”

NZ Herald: NZ First’s bottom line for super: 65

There have been growing calls for cross-party and outside parliament discussions on the future of NZ Super, so making bottom statements on the 2014 election are very disappointing.

And John Key, already in a self imposed instransigent Super position, has raised the politicking when the country needs leadership in the opposite direction.

“This is my challenge to Winston Peters. I dare him to go out there and say he will not under any conditions form a Government with Labour even if Labour’s policy is to raise the super age from 2020, not in the three-year period from 2014 to 2017.

“I dare him to say that. He will not… because he’s tricky,” Mr Key said.

Key can ill-afford raising trickiness regarding superannuation.

Ironically in the interview with TV3…

Prime Minister John Key is not ruling out working with New Zealand First in the future, saying he will spell out potential partners ahead of the next election.

National and New Zealand First may be the only parties refusing to address the possiblility that the baby boom will become a Super boom and bust.
This is my challenge to John Key – and Winston Peters – to take the growing concerns of many groups, parties and people on the future of NZ Super seriously, and to put aside their self bound straightjackets of no change and no discussion.
Key and Peters have given the Super discussion a bit of a kick in the guts, but a growing number of people have had a gutsful of this sort of politicking when serious leadership is called for.

Sorting out Super – what now?

We should start the discussion now. National may choose to stay out of it for now, but they will have to join at some stage.

Suggested progress:

  • Involve all willing parties and any groups and organisations with an interest in the future of NZ Super in discussion and proposal of policies.
  • Open it to wide public discussion.
  • Gather as much information and opinion as possible.
  • National and United Future have a Confidence and Supply commitment to public discussion on flexi-super – this can be used to develop the Super debate further.
  • In time for next election campaign have a commitment from all (willing) parties on the future direction of NZ Super and a timeframe for dealing with it.
  •  Include NZ Super in parliamentary business early in the next term (first half of 2015)

Let’s make it happen. Starting now.

 

Want a Super debate? Just do it…

Parties, groups and individuals have been calling for a discussion on the future of NZ Super. And calling for it. And calling for it.

It’s time for getting on with it and just do it. A blog has been set up to do exactly that.

All parties have been asked to submit their positions on Super. Any group or individual can submit a topic to be discussed.

The blog is party independent and open to anyone to discuss the future of NZ Super.

Just do it.

Blog: NZ Super Discussion

About

NZ Super Discussion is an open forum to discuss the future of NZ Super.

Many parties, organisations and individuals have been calling for a discussion on the future affordability and age availability of NZ Super. This blog is a means of doing that.

Positive input welcome.

This is a cross-party non-partisan forum, so please don’t use it for political criticism or pointscoring.

Please keep the discussion on topic and abuse free.

Anyone can submit discussion topics for posting to nzsuperdiscussion@gmail.com

Just do it.

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

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.

LADASS

Leaders Advancing Debate About Super Solutions

David Shearer (Labour)
Genuine debate on Super affordability needed now

Political leaders must confront the looming crisis of the future affordability of Superannuation now rather than risking having to make harsh cuts to entitlements down the track, says Labour Leader David Shearer.

“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. As Prime Minister, he has a responsibility to look after future generations too.

“It’s time we had a genuine, open and honest discussion about how we can continue to afford to provide New Zealanders with financial support when they retire.

“At the moment there are 5.6 workers for every retired person but in less than 30 years that will be reduced to 2.5. This is a problem that is growing and we must address it now.

“It’s about being fair. We must be fair to young New Zealanders by making sure there will be a pension scheme in place for them when they retire.

“We must also be fair by giving all Kiwis time to discuss, accept and prepare for any changes that need to be made to the current system.

“Labour is prepared to be flexible and come together with other political parties to work towards a solution. We are interested in genuine cross-party talks and a nationwide discussion with New Zealanders. We must do what is in the best interests of the country,” said David Shearer.

- Labour website, Monday, June 11,

John Banks (Act)
National should reconsider super position

ACT Leader John Banks today said National should reconsider its position on the age eligibility for NZ Superannuation if we are to avoid the situation outlined by the Financial Services Council (FSC) where tax rates would have to rise by one third to pay for it.

- NBR Monday June 11, 2012

Peter Dunne (UnitedFuture) has said it is something we need to talk about.

In the meantime, nothing changes:

  • John Key (National)
    Deal with present challenges first – Key
    Prime Minister John Key says he wants to focus on problems facing New Zealand now in preference to the future costs of superannuation.Mr Key says the Financial Services Council report is looking far into the future.

And according to Duncan Garner:

  • The Greens have said yes,
  • ACT would join,
  • the Maori Party want in,
  • Hone Harawira won’t say no
  • and Winston Peters could be tempted.
  • Peter Dunne says everyone must join up for this to have credibility.
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