Key open to Dunne's flexible super plan

PM John Key says open to discussion about Peter Dunne's proposal for 'flexible' super allowing pension to start between 60 and 70

Investing

PM John Key says open to discussion about Peter Dunne's proposal for 'flexible' super allowing pension to start between 60 and 70

26th Aug 13, 4:59pm by Bernard Hickey

Prime Minister John Key has said he is open to a discussion about United Future leader Peter Dunne's proposal for a 'flexible' New Zealand Superannuation scheme.

Finance Minister Bill English released a discussion document on the proposal on Monday. United Future and National agreed to issue the discussion document as part of their 2011 confidence and supply agreement.

The proposal is for New Zealand Superannuitants to choose whether to retire earlier on a slightly lower pension, or choose to retire later than the current regular retirement age of 65 on a slightly higher pension up until the age of 70.

Key told a post-cabinet news conference the proposal was fiscally neutral and did not conflict with his 2008 promise to resign if he ever changed the age of entitlement from 65 or changed the entitlement rate for couples of 66% of the average ordinary time wage.

He said the proposal was voluntary and therefore did not conflict with his promise and would not necessarily be something that would have to be put to the electorate in an election campaign before being adopted.

English said the discussion paper was designed to "test the public appetite" for providing more flexibility around when New Zealanders can opt to first receive New Zealand Superannuation.

“The discussion document is deliberately set at a high level and more detailed policy work would be required should the proposal be progressed," English said.

Public submissions on the proposal close on 11 October and English said he would report to Cabinet on the results of the consultation in November.

Dunne said a Fairfax Ipsos Mori poll earlier this year showed almost 50% supported the idea, which he said was almost more than twice the level of support for shifting the age of entitlement for superannuation to 67, or keeping it at 65.

“Flexi Super lets people choose for themselves when they want to take up superannuation – without being told by the government when they should or should not retire,” Dunne said.

Māori, Pasifika and other demographic groups with shorter life spans would benefit most from Flexi Super, he said.

(Updated with comments from English, Dunne and with link to full discussion document)

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10 Comments

by waymad | 26th Aug 13, 5:56pm 1377496562

Well, a leetle Ray of Light seems to be seeping under a hitherto closed door...t'will be Interesting to see what vox pop comes up with.

I do foresee the need for some limits, or else we could end up with an effective continuance of the dole, but with no ability to terminaterate the darn thing.

Still, there's always Soylent Green - a Gaia-friendly solution.

by John B | 26th Aug 13, 6:42pm 1377499350

There has to be some consideration given to those who start work at 17, contribute for 45 years and then get whacked with a deduction if they retire at 62.

Work out the current (historic) contribution pattern to retirement at 65 and define that as a minimum after which you can retire earlier on a full pension, with the option of worker (and contributing) longer to achieve a higher pension level.

And let's not fool ourselves - the standard pension age will need to rise to 67 to balance the demographic development.

by JB | 26th Aug 13, 7:22pm 1377501763

US Social Security has had this option for years and makes good sense for say those who have had a hard physical job and simply can't physically work to 67 to elect an earlier pension start date that is actuarially NPV neutral.

by John B | 27th Aug 13, 3:30am 1377531010

In Germany, you can retire earlier than the standard pension age of 65-ish (currently a moving target as it creeps up towrds 67) with a deduction of 0.3% per month. Mind you, it's a contribution-based system which can still put some people out to pasture with a pension below poverty levels, in whch case it's topped up by transfer payments.

by Chris-M | 26th Aug 13, 8:40pm 1377506435

Makes sense to me. I cant see the sense of young folk struggling to find meaningfull work and paying them the dole while older folk who are well past it are forced to work, particularly in manual tasks, till 67.

Now we know what one of the concessions that Dunne extracted for his GSB support. I suspect that a rapid return to cabinette will be another.

by steven | 26th Aug 13, 9:03pm 1377507833

I might be missing something here. My understanding is the OAP is the minimum an OAPer gets. If they cant survive on this they can go and claim assistance off WINZ?

So if someone retires at say 62 and has no other income or savings they can go to WINZ if they are hungy? cant pay rent? and get some $s? Since the OAP is a bare minimum at 65, how will getting it at a reduced rate at say 62 help?

by KH | 26th Aug 13, 11:28pm 1377516538

Classic stupld Dunne idea. Think deeper.This is just irrelevant fiddling.

by steven | 27th Aug 13, 5:16am 1377537360

Of course it is...

regards

by maurice24 | 27th Aug 13, 1:12pm 1377565923

System already exists in Canada. It is backed up by the Canada Pension Plan which can also be taken early. No flexibility here however. There is always someone who can think of a reason not to do it.

No matter what happens here, we need to reward those who do not take their pension at 65 with a higher rate dependant on their chosen retirement age.

by Ms de Meanour | 28th Aug 13, 12:21pm 1377649284

Why should people who delay collecting their NZS be rewarded at public expense? If they are still in paid employment, they are already being rewarded for that - they are getting paid for their work by their employer. They're not saving the public any money unless they eventually get less NZS over their lifetime than if they had taken it at 65, in which case there's no reward.