Peters flags major Super and KiwiSaver changes that Ardern won't 'speculate' on

Investing

The PM is dismissive of the Deputy PM telling Grey Power Cabinet is working on making it harder for migrants to get Super and considering requiring employers of over-65s to match their employees' KiwiSaver contributions

20th May 19, 7:17pm by Jenée Tibshraeny

Prime Minister Jacinda Ardern and Deputy Prime Minister Winston Peters are giving mixed messages around potentially significant changes to KiwiSaver and New Zealand Superannuation.

Peters, at a Grey Power meeting on Monday morning, said the Government was looking at making it harder for migrants to receive Super by requiring people to have lived in New Zealand for longer to qualify.

Currently New Zealand residents over 65, who have lived here for at least 10 years since age 20 (including five years since age 50) are eligible.

Peters said the Government was doing a “serious piece of work” to extend this timeframe and would make an announcement before the 2020 election.

He also said Cabinet was considering requiring employers to make contributions to their employees’ KiwiSaver accounts if they’re over 65 and contributing themselves.

The Government in March passed the Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill, which enabled over-65s to join KiwiSaver. But it didn’t go so far as to requiring their employers to make contributions. Employers can do so voluntarily.

Asked in a post-Cabinet press conference on Monday afternoon whether Cabinet was in fact considering these KiwiSaver and Super changes, Ardern was blunt.

“I’ll make statements around potential changes to policy when they’ve been made and decided upon in Cabinet. I won’t speculate beforehand,” she said.

Ardern dismissed Peters’ Super eligibility comments, treating them as if he made them while wearing his New Zealand First Leader hat, rather than his Deputy Prime Minister hat.

She pointed out: “New Zealand First has long-held a policy in this area and it’s absolutely within any party leader’s rights to reiterate that.”

Asked what Labour’s position was, Ardern repeated the line she used when asked about her party’s position on tax reform while the Government was considering the Tax Working Group’s final report – that her focus was on building “consensus”.

Peters earlier in the day told media there was growing consensus in government to extend the Super residence requirement beyond 10 years.

He noted New Zealand First campaigned before the last election to extend the threshold to 25 years, but had been happy to settle at 20 years to reach a compromise with National.

He said it was unfortunate that National was in opposition, when it came to progressing this issue, but he was pleased Labour was prepared to look at it.

The Commission for Financial Capability said it hadn’t been asked by the Government to contribute to a discussion around Super residence requirements beyond what it’s looking at as a part of its three-yearly review of retirement income policies, to be tabled in Parliament in December.

In its last review, concluded in 2016, it recommended an increase in the length of residence required for Super from 10 to 25 years.

It didn’t recommend employers of over-65s be made to make KiwiSaver contributions, as it didn’t consider this a priority.

The only superannuitant-related clauses in Labour and New Zealand First’s Coalition Agreement are to keep the age of entitlement for Super at 65 and to introduce a “new generation” SuperGold card.

Minister for Seniors Tracey Martin on Monday announced $7.7 million would be allocated in the next budget (to be announced on May 30) towards building a new SuperGold digital platform, including a mobile app, that cardholders can use to stay updated on where they can receive discounts.

There are more than 750,000 cardholders and 14,000 outlets around New Zealand where cardholders can access savings.

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51 Comments

by Wrong John | 20th May 19, 7:30pm 1558337457

I agree. Make it tougher to qualify. It is a privilege not a right.

by Foxglove. | 20th May 19, 7:54pm 1558338863

The tightening up of qualification for super by migrants is justified and it will be popular too. These areas around pensioners, gold card etc are traditional happy hunting grounds for WP & NZF. Timing though is unusual, premature perhaps? Still 18mths or so until the next election.

by Lapun | 21st May 19, 10:12am 1558390372

This issue is always expressed as a 'migrant' issue so the pro high immigration supporters are against it and the 'it is time we reduced the rate of immigration' rationalists (along with the xenophobes) are for it. But it is not applicable just to migrants. There are skilled Kiwis working all over the world paying income taxes to their place of domicile having been born and educated in NZ and then leaving after university and returning in their fifties for retirement just in time to qualify for superannuation.
And if they miss out by a week they get nothing.

by kiwimm | 21st May 19, 11:55am 1558396529

If I remember rightly, NZF proposed earning your Super based on years of residence - so a % per year. so 10 years might get you 50% and 20 years 100%.

by dtcarter | 21st May 19, 1:27pm 1558402051

gosh, sounds vaguely sensible of NZF for once.

by Chris-M | 21st May 19, 12:20pm 1558398041

I agree both with you and WP. The most even handed approach would be to pay a proportion of the full entitlement according to length of time the person has been an active worker and tax payer in NZ. If we chose 35 years as the time base this would allow a NZ'er 12 years for education and overseas travel. If a person has worked for a significant period in an overseas country, then that country should make up the balance. If it doesn't do this, then the person should carefully consider the wisdom of working there. NZ should also be looking for some way of charging our expats for our underwriting their families while they are overseas. Tertiary NZ education for their children and social welfare should things go bad for them requiring them to return to NZ.

by dtcarter | 21st May 19, 1:26pm 1558402001

Oh that poor person, sponging off the government for free education and healthcare in their youth, then spending all their prime taxpaying years paying tax elsewhere, that they might miss out the NZ taxpayer giving them yet more freebies for life, if in trying to spend the least amount of time possible paying tax in NZ they make a mistake in their residency calculations, it's outrageous. Lets reduce the residency requirement then, make it ten years plus or minus five.

by GV 27 | 21st May 19, 1:32pm 1558402339

Don't worry, when that person comes back with wages that they haven't paid any tax locally on and tries to buy a house in our supply-constrained market, they'll *checks notes* push the price up for Kiwis actually living here, paying tax and earning artificially low wages enabled by WFFTC and other government programmes?

Wait, that doesn't sound good at all! How many NZers live overseas and have a right-to-return again? All of them, you say? Oh.

by avatar99 | 7th Jul 19, 2:31pm 1562466679

If they've been living anywhere in the developed world they will have been actively contributing to a retirement plan they can use when they move back. Let's put the responsibility for retirement planning back where it belongs - personal responsibility. Sure we can have National Super as a safety net for all, but if you haven't been working or saving while overseas then you should pay attention to NZ's rules on eligibility for Super when planning to move home.

by waymad | 20th May 19, 7:55pm 1558338953

Heck, in the age of Identity Management, an IRD number, and Big Data, it would be possible to do something like:

Case when sum(tax paid to date) > (X * expected National Super payouts) then 'Maybe let zhe in' else 'Nope' end

Both X and 'expected NS payouts) could be actuarial factors, changeable by regulation, as circumstances (financial, economic, political, state of digestion after the last Bellamy's long lunch) dictate......

by Davo36 | 20th May 19, 8:09pm 1558339779

Where are the votes in that. Far too complicated. He just does that smile and rails at the media a bit and the old dears vote for him.

by Davo36 | 20th May 19, 8:08pm 1558339696

Does anyone believe a word this man says?

What about immigration levels Winston?

by Boatman | 21st May 19, 11:48am 1558396092

Peters is being his normal parochial self , and I am angry I was conned into voting for him . I should never have trusted the bugger.

If you remove the rights of skilled working migrants who have become citizens from receiving a pension at 65 , then the TAX LAWS would need to change to allow these migrants a tax deduction or a tax break to allow them to prepare for their own -funded retirement ( as is the case in Australia, or South Africa and elsewhere where there is no state pension )

by JohnfromtheTron | 20th May 19, 8:31pm 1558341076

If the Government wants to save money on Super stop paying it to people over 65 that are still working.You are retired or working so only one income. No, I am not a Millennial.

by jimmyH | 20th May 19, 9:13pm 1558343619

Maybe my recall is fuzzy and i am sure more diligent comentators can check it, but the claw back on earned income from the super pay out, is 70 cents in the dollar after the first $100?
And one supposes that as the income is obviously taxed, the total tax and claw back may well be 100% beyond that first $100 which again also is taxed. If that is the case then for average wage earners over65 years there is practically nil net super being received. Maybe a comentator here who is in this situation can clarify it further please.

by jimmyH | 20th May 19, 9:27pm 1558344475

Ok.checked that..it is likely that there is an effective marginal tax rate of 86% for moderately paid $65 year old full time worker on their nz super income...so of a dortu hour week they may be actually losing an additional 15 hours of equivalence of work value from the super side. As far more will be in this situation soon with mortgage or rent to pay? It could be examined a bit more closely.

by rastus1 | 21st May 19, 8:24am 1558383873

Not sure if I understand you correctly, however NZ super is not income tested. So your 65 year co-worker is getting full super and whatever the boss pays.

by KH | 21st May 19, 8:50am 1558385448

Please explain to me how you get to an 86% marginal tax rate. Looks wrong.

by printer8 | 21st May 19, 12:48pm 1558399695

Jimmy; please, in their interest, don’t offer tax advice to anyone.
Bottom line is that the marginal tax rate will depend on their income. Their main come (i.e. the larger) will be taxed at the normal M rate; the secondary income - the lesser income(s) - will be taxed at a secondary amount depending on the secondary code supplied to MSD or their employer. Total income from all sources up to $48k the marginal rate is 17.5%; $48 to $70k 30%; and over $70k is 33%. The maximum effective marginal tax rate one will be taxed will be 33%.
Very different to your 86%. I am at a loss how you arrived at this figure.

by rastus1 | 21st May 19, 1:37pm 1558402676

..he works for a bank silly.

by jimmyH | 21st May 19, 2:31pm 1558405884

Printer 8...fyi
If your spouse or partner is included in your payments, you can earn up to $100 (before tax) a week between you, before your New Zealand Superannuation is affected. If you earn more than $100 (before tax) a week your payments are reduced by 70 cents for every dollar of income over $100 (before tax).
Getting other income - Work and ...
https://www.workandincome.govt.nz › ot

by refactornz | 21st May 19, 2:44pm 1558406677

That's a special condition that only applies when you include "a spouse or partner who doesn't qualify for their own New Zealand Superannuation" on your own Superannuation. So relevant for some people yes, but not for the majority of super annuitants.

by printer8 | 21st May 19, 4:59pm 1558414767

Hi Jimmy
Clearly you are talking about a specific person who has included their partner (probably in the order of about or less than 10% of superannuniants) and they are a special case within that group where they currently earn more than $100 per week but less than the abated amount threshold - you do the maths - which is probably less than 10% of those within that category. Also as the partner is most likely to be close to being eligible by reaching 65 this circumstance for most is usually for only a very short temporary period.
So on this very rare instance, your initial generalised comment which implies it holds to be widespread is not really valid.
Cheers

by DiDi | 20th May 19, 9:18pm 1558343888

I believe this Bill as an amendment to the Prinicipal Act has already been filed in Parliament by Mark Patterson (NZF) in 2018. Shows at First Reading on the Government site - whatever that means. From social media comments today, this will be hugely popular with those who have been working most of their lives in NZ. Not so confident Labour and the Greens will agree given their Migrant population intentions. I will be voting for it.

by KH | 21st May 19, 8:47am 1558385246

Make Kiwisaver universal. Low income people find it challenging to save which is the exact reason they need it.
Also, no government subsidy is needed for my Kiwisaver, and equally there is no reason for it to be taxed.

by GV 27 | 21st May 19, 10:08am 1558390094

Low income earners definitely have the luxury of money that can forcibly locked away for decades. Can't see anything wrong with this at all.

by kiwimm | 21st May 19, 11:57am 1558396642

I'd happily swap the incentive for removal of tax. Unlikely to happen as it helps those who can put in more whereas the current setup helps low earners more.

by Hamish | 21st May 19, 12:13pm 1558397587

How about make it universal from the employer side? For low wage earners who can't afford the cash out of their pay, they are then doubly impacted where the employer doesn't need to contribute. (and triply so when they miss out on the 'free' cash every year) Whereas those on higher wages can afford to pay in themselves and then get matched by the employer.
Unintended consequence, low wage earners will live with suppressed wage increases for longer. But at least their kiwisaver is growing slowly.

by GV 27 | 21st May 19, 1:33pm 1558402432

I'll let you guess what this will do to new salaries and wages if you're going to lump companies with mandatory Kiwisaver as a payroll tax.

by Hamish | 21st May 19, 2:48pm 1558406900

That would be the unintended consequence I noted?
What was the aim of kiwisaver anyway?

by GV 27 | 21st May 19, 3:32pm 1558409534

A forced savings scheme; in the context of 2008 costs of living and 2008 incomes, is a very different proposition based on those things at today's levels.

by Hamish | 21st May 19, 3:54pm 1558410896

It seemed to start out as a coerced savings scheme.
Maybe the politicians thought we'd all be earning so much more that they could cut the starter bonus, membership fee and halve the member tax credit along the way?
Or was it always just a house deposit saving scheme and a nice little cash out for those who were nearing retirement when it first started and had a bit of cash to put into it to get all the freebies?

by scarfie | 21st May 19, 9:46am 1558388789

Damned if they do, damned if they don't. A sly way for Winnie to tackle immigration from behind. I think most of his constituents are not smart enough to realise that without immigrants it will cause capital loss by crashing the housing market. This act will help. Or perhaps you could say what is given in one hand is taken away from the other, good luck if you are retiring to the regions and you want good medial care. My information is that Whangarei hospital is creaking under the strain, and you have to book a month in advance in the far North if you are lucky enough to be on the GP's client list already.

https://www.msn.com/en-nz/news/national/regional-population-surge-puts-…

by powerdownkiwi | 21st May 19, 10:06am 1558389967

You'll also be graded on a 'points system' - just measuring your remaining economic value, of course, not your resemblance to the Aryan ideal. So demonstrably superior a classification system.....

by KH | 21st May 19, 3:42pm 1558410178

"Crashing the housing market" sounds so terrible. But if you phrased it as "making house ownership possible for young and low income people" then it sounds much better. I vote for the second description.

by Lapun | 21st May 19, 10:20am 1558390828

Tightening up is self-evident. I arrived in NZ aged 55 did not earn as much as I had hoped (self-employed) and now I've received Super for 5 years. I'd be a fool to return it to the govt but it didn't make sense then and it doesn't now - a rational immigation policy would have had me pay a lump sum towards the future benefit.

A change cannot impact people already resident by depriving them of a right they currently have so it will be a long time before it has any effect on actual payments.

by Sluggy | 21st May 19, 10:46am 1558392386

Super should be means tested, plain and simple. It is ridiculous that everyone over the age of 65 receives it.

by imhenry | 21st May 19, 11:03am 1558393431

No you don't. Why should it be means tested. If a person has worked all their lives and saved as well why means test. So you can pay less tax than you are liable for. Cheap skate

by Advisor | 21st May 19, 11:26am 1558394790

True. Means testing would also reduce super payments to those still active in our workforce at 65 and above. This change might force hundreds of them to rethink their productive choices. Such a move will be detrimental to our economy in many ways, especially when we already struggling to attract skilled migrants to NZ; real skills, not the art of burger flipping and bringing your order to your table.
According to an OECD report, we have the third-largest proportion (42.6%) of our population between ages 65 and 69 still in the workforce among the group of nations. There's a reason employers aren't letting go of them. And yes, I am a millennial.

by GV 27 | 21st May 19, 11:57am 1558396663

Yea, I've got some bad news about which generation profited from the dismantling of the state so they could have lower taxes bud, and it's not the generation who are currently paying higher housing and living costs and will be working until they die just to make ends meet. But sure, keep sending us the bill and at the same time making wages grow slower than living costs, let's see who sticks around to see that play out.

by rastus1 | 21st May 19, 11:06am 1558393601

I suspect you don't realise how difficult that is. NZ has one of the highest (if not highest) number of trust per head of population - many a legacy from means tested super. Not to mention the 1 million recent arrivals, many of which have assets parked overseas - how do we get to these??

The answer lies with a radical review of the tax system and the welfare system (inc National Super). This is what the COl shroud have done instead of the silly Cullen working group. It requires cross part support as it would require a long term approach. But so far this govt has just can kicked with a little tinkering. Much bolder stuff is required.

by Boatman | 21st May 19, 11:41am 1558395704

Winston Peters is behaving like a parochial right wing Nationalist , with this anti-migrant nonsense.

It would be patently unfair to arbitrarily extend the Super qualifying 10 year period to 20 years without phasing it in or making it proportional .

Take a migrant arriving on the skills Visa at age 45 , he/ she would be at the peak of their field or career, likely be in a high -paying job ( such as an Engineer, doctor or medical specialist , professor / academic , CA , CEO of Fonterra , or architect for example ) .

He / she would contribute a significant sum in taxes over 10 or 20 years , but would not received even a proportion of the Super, even though they may not need it .

Quite simply , most people over 70 are not able to work and so would likely be receiving welfare benefits if they did not get the Super .

Peters is being disingenuous, and well as parochial , by attacking a disparate group of migrants who are not able to mount any reasonable group-based counter -argument .

And he is appealing to his core support base ................ Trumpesque if you like .

by andyb | 21st May 19, 1:02pm 1558400564

Not opposed to them changing it... but why not count the time you have worked in NZ before you left and then returned.

I worked in NZ for 20 years and have now moved overseas.... is it fair I would have to live in NZ for say 20 years to receive NZ super when I return home?

Why not make it simple.....if you have worked (or perhaps just lived) in NZ for more than 25 years you are entitled to super.

by GV 27 | 22nd May 19, 9:15am 1558473321

Cool, so you can live here, work four years post-uni, sod off for 40 years, pay no tax here and not contribute to the maintenance of the state in your absence and then cruise on back whenver you like? Yea, people can't make ends meet here already, I'm not sure taxing them even more to prop up a retirement village for tax exiles is the way forward for our country.

by andyb | 18th Jun 19, 8:14pm 1560845685

Mate... take a moment and reread my post. I worked in NZ for 20 years paying other peoples retirement before heading overseas. All I am asking is that is taken into consideration.

All I am asking for is that the rule is written in a way that recognises the number of years a person has paid tax in NZ and not make some mandatory stand down period upon return.

I actually agree with you.... no one should be able to leave at 20.. come back at 65 and put their hand out.

by BuyLowSellHigh | 21st May 19, 3:28pm 1558409321

I'm more concerned about aspirations to means-test superannuation in the future. I'm paying tax towards the superannuation of current retirees as well paying into the super fund through tax. I'll be seriously annoyed if/when I get shafted out of this contribution at 65 (or whatever the retirement age is by then).

by Hamish | 21st May 19, 3:57pm 1558411050

It sure would be gutting if you got there and realised you should have been spending more when you were younger. Unfortunately (or fortunately for others) you can't choose which demographic age band you were born into.....

by GV 27 | 21st May 19, 4:44pm 1558413878

"Shouldn't have been spending" is a damned sight different to "paid taxes towards everyone else's super and then was expected to entirely fund your own". Call me cynical, but enriching yourself at the expense of the next generation is as Kiwi as leaky homes, pav or disputes about the lineage of equine athletes.

by The_4th_estate | 21st May 19, 5:16pm 1558415783

Super being paid to wealthy, tax avoiding, family trust using for tax avoidance, property flipping, pulling the ladder up baby boomers is morally corrupt. Super should be means tested so those who need it get it, those who have assets should support themselves. Us Gen X'ers have no support through uni, got student loans, huge property debt and low incomes. How is that fair?

by BuyLowSellHigh | 21st May 19, 6:14pm 1558419286

Only fair way to introduce means testing would be to make Kiwisaver compulsory and do away with the taxes that we pay towards current retirees's pensions and the Super Fund. Would need to be staged of course. If people can't save enough through compulsory Kiwisaver to fund their retirement, it could be topped up with a benefit when they retire. I don't support this, but better than what you've suggested.

by solardb | 5th Jun 19, 4:50pm 1559710204

Why not tie the 2 together, compulsory Kiwisaver for migrants , returning Kiwis that want to claim Super. Their Super is then based on how many years they paid Kiwisaver contributions , plus they get the Kiwisaver funds when they retire too.