National’s Super age proposal

This afternoon Bill English announce National’s superannuation policy, which included a raising of the entitlement age in 20 years time.

There has been a lot of immediate reaction. I think people should think this through and discuss it sensibly.

There are political implications for coalition negotiations but that shouldn’t stop a decent debate without resorting to knee jerk reactions.

This policy won’t affect me as I’ll be on Super long before this takes effect.


Lifting NZ Super age the right thing to do

Progressively lifting the age of entitlement to New Zealand Superannuation from 65 to 67 is the responsible and fair thing to do for New Zealand, Finance Minister Steven Joyce says.

“Average life expectancy is increasing by around 1.3 years each decade and more older people are staying in the workforce,” Mr Joyce says.

“Greater life expectancy is of course positive but it does drive up the cost of NZ Super. While New Zealand has a more affordable scheme than most countries, the increasing costs would require future trade-offs – either restricting spending increases in areas like health and education, or increasing taxes.”

The Government intends to increase the age of entitlement for NZ Super by six months each year from July 2037 until it reaches 67 in July 2040. This means everyone born on or after 1 January 1974 will be eligible for NZ Super from age 67.

Other settings such as indexing NZ Super to the average wage and universal entitlement without means testing will remain unchanged; and the age that KiwiSaver funds can be accessed will remain at 65.

“Making a change over a reasonable timeframe will give future generations of New Zealanders more choice as to how they allocate their government spending,” Mr Joyce says.

“While others have called for an earlier transition, the Government’s view is that giving 20 years’ notice balances timeliness with being fair to current generations of working New Zealanders.”

Average life expectancy in New Zealand has increased by 12 years over the past 60 years, including by four years since 2001, when the age for NZ Super was increased to 65.

“When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super. That has since increased to around a quarter,” Mr Joyce says. “Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average.”

Mr Joyce says the Government’s previous position of not changing the age of eligibility was appropriate in the aftermath of the Global Financial Crisis, when New Zealanders were looking for certainty at a time when the Government’s finances were under pressure.

The Government is also proposing to double the residency requirements for NZ Super so that applicants must have lived in New Zealand for 20 years, with five of those after the age of 50. People who are already citizens or residents will remain eligible under the existing rules.

The Government intends to introduce legislation to make these changes early in 2018. The residency changes will cover people who arrive in New Zealand after the legislation is passed.

“These changes are important and need to be politically durable,” Mr Joyce says. “Scheduling the legislation in this way gives all political parties the opportunity to discuss their position with the public before it comes before Parliament.”

The proposed changes to the age of eligibility and the residency requirements are estimated to save the Government in excess of 0.6 per cent of GDP or $4.0 billion annually once the changes are fully in place.

Included in the legislation will be provision for parliamentary consideration of any need for any temporary transition requirements in 2030.

“It is not possible yet to determine what, if any, temporary support will be needed for people who are unable to continue working beyond the age of 65,” Mr Joyce says.

“Considering any requirements in 2030 will give a future parliament the opportunity to consider current information on health and labour market trends of different groups as the age change approaches.”

 

Leave a comment

22 Comments

  1. duperez

     /  March 6, 2017

    How wasn’t it the “responsible and fair” thing to do six months ago? How come the maths now means it has to be done when a short time ago there was no problem with the maths?

    Of course Steven Joyce and Bill English are all full of common sense and don’t want knee jerk reactions but what circumstances have changed so dramatically? The answer can’t be “John Key has gone” because if it is wrong to not change now it was wrong just back a bit.

    Reply
    • PDB

       /  March 6, 2017

      You could equally spin this around and ask Labour why they have gone the opposite direction?

      2014 Herald: “Labour finance spokesman David Parker said National refusal to budge was risking a sudden increase in the age in the future.
      “National’s pretence that the age for eligibility does not need to increase looks increasingly dishonest,” he said.
      “The truth that National knows but won’t admit is that without a comprehensive long term plan in place there will be a fiscal blow-out, and a sudden rise in the age would be inevitable in the future.”

      Reply
    • High Flying Duck

       /  March 6, 2017

      I think the fact this change is being phased in after 20 years answers your question.
      The retirement commissioner seemed pleased with this policy and quite comfortable with the timing.
      We have a younger population than other counties that have moved faster.
      The scheme itself is kept intact without means testing and with the rate still pegged to average wages.
      What’s not to like about it?

      Reply
  2. Blazer

     /  March 6, 2017

    after 8 years of bungling,kick the can down the road and complete mismanagement …..here we go …again.Worst govt since Muldoon…NFI.

    Reply
    • I’d have preferred to see it come into effect sooner – perhaps in half the time – but it is widely accepted that any age of eligibility change should be signalled well in advance.

      Reply
    • Corky

       /  March 6, 2017

      Really? English has cut the legs from under Andy again. All Andy could do was whine on TV tonight. It was most unedifying, especially without his glasses. Goodness knows how Andy will react when Billy dishes out jelly beans in the budget. Good PM, Bad PM, I think people are underestimating this world class shearer.

      Reply
  3. Chris trotter is calling this game changer #37:

    The scale of English’s political folly is astonishing. His refusal to honour Key’s pledge has front-footed the very political combination that National should be doing all it can to destabilise: Labour, NZ First and the Greens.

    The proud defenders of NZ Superannuation.

    http://www.stuff.co.nz/the-press/opinion/90092989/Chris-Trotter-Abandoning-Keys-pledge-on-superannuation-an-act-of-astonishing-political-folly

    Reply
    • MaureenW

       /  March 6, 2017

      I’ll be surprised if NZ has the current form of governance in 2040 that it does now. I would have preferred to see changes to KiwiSaver to a fully funded Retirement Scheme. What has been announced today is nothing. I won’t be voting in Naional’s favour based on this.

      Reply
      • PDB

         /  March 6, 2017

        If it is ‘nothing’ then if you were voting National this morning there is ‘nothing’ to then make you not vote National this evening……..

        Reply
        • MaureenW

           /  March 6, 2017

          I’m undecided as to how I’ll vote. I’m seeing a lack of vision and a hoping that someone else will make the big decisions. It won’t be Labour either. I don’t believe that “steady as she goes” will get Bill English over the line in a not “steady as she goes” world.

          Reply
          • PDB

             /  March 6, 2017

            I think a large portion of New Zealander’s prefer ‘steady as she goes’ than a Labour/Greens/NZL First disaster in-waiting – that is the reality of the alternative.
            I would never vote Winston not knowing which way he will jump post-election, smaller parties are always a risk of being a wasted vote.

            If English wins I believe he wont be the person vying to be PM on behalf of National come the 2020 election. He is but a stop-gap/caretaker between a major change of personal for the party.

            Reply
            • Blazer

               /  March 6, 2017

              ‘steady as she goes’…..hilarious….no vision,no talent,expedient,self serving pretenders .Votes aren’t wasted in MMP.Lets help English get the Natz back to…22%.

            • PDB

               /  March 6, 2017

              Blazer: “Votes aren’t wasted in MMP”

              They are in terms of smaller parties not making the 5% or an electorate seat as your vote doesn’t then go to the party you want it to.

            • PDB

               /  March 6, 2017

              You are right Blazer – “hilarious….no vision,no talent,expedient,self serving pretenders” describes the Labour party perfectly!

          • MaureenW

             /  March 6, 2017

            Again, Blazer, you’re correct

            Reply
    • PDB

       /  March 6, 2017

      I think Trotter has finally totally lost the plot & all reason…….

      “All of which makes English’s decision to advance the age of eligibility by two years electorally incomprehensible. All he had to do to keep National’s elderly supporters on side was to re-confirm Key’s pledge. ‘No change to NZ Super’ was the simple and straightforward formula for removing the issue from the 2017 election agenda.”

      This policy change DOESN’T affect the current ‘elderly supporters’ so what is he on about??

      Reply
  4. Ray

     /  March 6, 2017

    I think Chris is trying to go one better than Bomber in the “fail to pick an election” Club.

    Reply
  5. patupaiarehe

     /  March 6, 2017

    Call me cynical, but I suspect that the idea behind raising the age in 20 years time, is motivated by not losing ‘baby boomer’ votes. I’m less than impressed, being one of the oldest affected by it 😦 .
    Increasing the length of residency required to get super, seems entirely reasonable to me. I wasn’t aware that it was currently only 10 years. It seems fair, that if one is going to collect welfare for 1/4 of their life, one should have contributed to it for longer.

    Reply
    • PDB

       /  March 6, 2017

      20 years is too long, Labour’s previous policy of raising the age to 67 too short.

      Little (Herald) – “He said if National really believed change should happen then it should act now, not after the September election.” – Even Labour’s previous policy of raising the age to 67 had a period of no-change before it was to be brought in so Little clutching for straws there.

      Winston (Herald) – “New Zealand First leader Winston Peters dismissed the government’s plan for superannuation as being too far in the future to matter.” – True. A bit hard for the opposition to get worked up about something so far in the future that can be over-turned by any new government before it kicks in.

      “The government’s proposed changes would also require new residents to be here for 20 years, up from the current 10-year requirement, before getting superannuation. Mr Peters said he would be pushing for that to be raised further, to 25 years.” – Good move, previous threshold was way too low.

      So Peter’s hasn’t any particular beef with this announcement – that’s the important thing for National who will surely need Winston to govern post-2017.

      Reply
      • patupaiarehe

         /  March 6, 2017

        The reality is Pants, that one needs to plan ahead. Once upon a time, your average Kiwi could expect to have a freehold house by 60, & therefore be able to live on 60% of the average wage. Those days are over, unfortunately…

        Reply
  6. Auto_Immune

     /  March 7, 2017

    I didn’t realise access to KiwiSaver is planning to be kept at 65. This is great, if this part of the policy is kept.

    Those who still want to retire at 65 can, provided they have a KiwiSaver (or private super/savings) scheme.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s