Diane Maxwell on making NZ Super sustainable by increasing the age of eligibility, means testing, hiking minimum KiwiSaver contributions & making it harder for migrants to qualify

The Retirement Commissioner warns New Zealand Superannuation isn’t sustainable in its current form, so we need to prepare for change.

Diane Maxwell says it’s inevitable the period of time you need to have lived in New Zealand to receive Super, as well as the age of eligibility, will need to be pushed out.

She says means testing is on the horizon - as difficult as it is to implement.

And the amount individuals and their employers are made to contribute towards schemes like KiwiSaver will need to be hiked.

It takes 12 people who earn $60k a year to fund a super-annuitant

Speaking in a Double Shot Interview, Maxwell says, “We have to prepare the ground for policy change.”

Under the existing system, you may be eligible for Super if you’re a 65-year-old legal New Zealand resident, who’s lived here for at least 10 years since you were 20, with at least five of these years being since you were 50.

You may qualify for Super with less than 10 years’ residence if you have migrated to New Zealand from a country we have a social security agreement with. 

Super is universal, you will receive it even if you continue to work, and it’s indexed to wages, so went up 2.7% this year.

Maxwell explains the Government used around $11 billion (net) of taxpayer money to pay for Super in the past year. 

A person with an annual salary of $60,000 pays around $1,800 towards a super-annuitant, which means it takes around 12 of these people to fund a super-annuitant for a year.

Maxwell points out the NZ Super Fund, which is worth around $30 billion at present, isn’t going to start paying out until around 2030. When it does, it will fund around 9% of our annual super needs.

“We know that in 20 years, the number of people over 65 will have doubled. In 20 years, the cost will have tripled. So it will be up to almost $40 billion (net) to pay out in Super in its current form.”

“That’s not going to work… It’s just simply not going to be possible.”

Maxwell says you have to think about the costs of health and residential care in additional to Super, when considering the cost of our ageing population.

For example, over 65s already account for 42% of the $11 billion New Zealand’s district health boards spend in a year.

Maxwell admits that at around $380 a week after tax for an individual, the amount super-annuitants receive is already lean.

“Nobody’s going to the Bahamas on it.”

Yet she concludes: “It [Super] won’t be sustainable in its current form.”

So what do we change?

Where to draw the line with means testing?

Maxwell says means testing is a tough option, yet inevitable.

The question is, where do you draw the line?

For example, should a couple, in a good financial position at retirement after being frugal most of their lives and selling their home, be excluded from receiving Super, while someone who’s lived up large, bought a BMW, drank Veuve and reached retirement with nothing, qualifies?

“The critical thing with means testing is, where do you draw your line so you don’t capture the people who’ve just worked hard and done it well and saved?

“If you draw the line too high, you don’t really capture that many people. And I know we’ve all got stories about billionaires and millionaires on Super, and people banking millions. In reality, in numbers terms, those numbers aren’t very many people.”

Maxwell says taking Super away from this top echelon won’t make much of a difference in terms of making Super sustainable, because there simply aren’t many people in this category. The bulk of New Zealanders have no, very little or moderate amounts of money.

Maxwell adds: “If you include the family home in assets testing for means testing, then things get very very messy. There’s a lot of arbitrage; people sell homes and do all sorts of things.”

She’s received feedback means testing isn’t working that well in Australia.

Asked whether a move away from universal Super would be political suicide in New Zealand, she says: “I think we’ll get to a point when it becomes inevitable.”

Making it harder for migrants to qualify for Super

Maxwell agrees that as migration sees our population burgeon, the 10-year time period you need to have lived in New Zealand as a resident, will need to be expanded.

“I suspect where we’ll get to is that 10 years is not long enough.

“We are a very diverse nation. We have great immigration - that’s because this is a great place to be. Over time, that will not be sustainable and I believe that will have to go up.”

NZ First Leader, Winston Peters, has campaigned it’s unfair that New Zealanders who have paid taxes here for most their lives, are subsidising the retirement of people new to the country, who may never have contributed at all.

He claims around 80,000 immigrants have arrived in New Zealand since 2000, who were over the age of 50 and came under the parent reunion category.

Maxwell says, “I don’t think people come to New Zealand with a view that in 10 years they’ll be on Super.”

Yet she admits: “The pinch will be when people bring parents to New Zealand and within 10 years they’ll be on Super if they’re a resident or citizen.”

Getting individuals and/or their employers to hike their contributions

“The role of private provision… will have to increase. We’re all going to have to work out how we do that,” Maxwell says.

She recognises hiking minimum contributions to KiwiSaver is an obvious way of doing this, as it’s a joint effort between individuals and their employers. Yet high KiwiSaver fees need to be dealt with first.

“If we can get fees down on KiwiSaver, because it eats into your sum, then fantastic. It’s a good vehicle.”

Maxwell says she will also be talking to the Government about taxation on KiwiSaver returns.

Furthermore, she will be recommending people over 65 are able to join KiwiSaver.

“As people continue to work longer, someone may get themselves in a position where for whatever reason they haven’t joined. I’d like [them] to be able to join.”

Maxwell does however recognise: “KiwiSaver is a great savings vehicle. It’s not for everybody. For some people who are self-employed, starting a new business, low income or no income, it may not be the vehicle.”

Getting voters on board the concept of raising the age of entitlement for Super  

Maxwell is all for raising the age of entitlement for Super, but hopes this won’t happen for at least another 10 years.

“Nobody’s grabbing it today. But I think our view of 65 is a historical one. We see 65-year-olds as old - they’re not. In another 20 years, it will seem a no brainer. Getting Super at 65 in 20 years’ time will just seem a little bit odd.

“If the age was 67 today, we’d save $1.6 billion [a year].”

Yet as she’s mentioned to Interest.co.nz before, she says it’s vital the Government gives people enough warning before implementing any changes.

She says until people like herself communicate the pressures our ageing population is putting us under, changing the age of entitlement is “going to be a vote loser”.

“Until the voting public are given, rightfully, more information that they can make their judgement calls on, then we won’t get a change. We have to prepare the ground for policy change.”

Maxwell says this is happening already.

“We are going to have to change, but we’ve got time.”

Eighteen OECD countries have raised the age of entitlement for super to 67, 69 and 70.

Maxwell says New Zealand is watching what is being done in this space overseas.

She maintains New Zealand is doing well gearing up to deal with an ageing population compared to Australia, the UK and US. As for Asia, a number of countries don’t even have schemes like Super in place.

“Our population’s not ageing nearly as fast as many Asian populations - certainly Japan... They think their population will fall below 100 million in the next 30 years, just because of their ageing population.

“They have 1.3 million people die every year and it’s going to go up to 1.7 million people.”

 Maxwell concludes: “We are going to have to change, but we’ve got time.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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124 Comments

You have a big problem with the migrants issue, which will need a law change

They come in on a work permit , then get residence after say 6 months, then after 60 months they can apply to be citizens .

There is no way you can deny the Super to someone who is a New Zealand citizen

Quite simply the Government is going to have to put more away for the NZ Super and push the eligibility age out to 67

The other thing to do is allow those after the age of 55 to contribute more to their retirement through Kiwisaver and make to contributions tax deductible

A larger tax credit, or however it would be implemented, would help take some of the pressure off combined with means testing. At the moment there's only a tax credit for paying about $87/month into kiwisaver. Who knew an effective $130/month wouldn't be enough to retire on?

"There is no way you can deny the Super to someone who is a New Zealand citizen"

Mmmmmmmmmmmmmm? But you can certainly make it unavailable due to residency criteria. Have a read through the eligibility rules.

The only fair way to deal with immigrants is a pro rata entitlement for the number of years that they have resided, worked and paid tax in NZ on a base of say 40 years.

What about those who have resided, not worked and not paid tax? They get it currently.

Don't fiddle with my Kiwisaver. It's already locked away for fund managers to peck away at I don't want to put more money into this liability. And no it's not "free" money (besides the small number of tax credits) it comes out of my total pay package which could be renegotiated without strings.

I agree that family stream migrants who've paid no tax shouldn't be able to get super - they're nothing more than parasites. Means testing just encourages reckless spending and hiding ones assets but as superannuation will be long gone by the time I'm old I couldn't care less.

On The Hard Stuff with Nigel Latta, the head of Immigration NZ claimed that the reason we allow the parents of migrants to get super is because "those skilled migrants really pay us back".

Lots of neo-liberalism in this article. I might need to take a shower. Tell me Diane, with all the changes that you propose, cui bono?

I should have thought it was pretty obvious who will get the benefit of the changes she proposes - future taxpayers.

people don't get that the push to an ethnicless society where "nobody [group] thinks they're the cats pyjamis" trumps boring economic reality.

spot on Boatman. The government needs to raise the eligibity age and to do it now. so after ,say, 2020 it will be 67 years and 2025 it will be 69 years. i am 57 now and am happy to wait til I am 69
Please do not make it means tested. too hard to control and it punishes the people who save for their retirement.

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what about those people who have only been able to work in low paid jobs and been unable to save? Some of those jobs are laborious and hard on the body. Is it fair to say nah, you have to work four more years to retire! That becomes a form of slavery!

If people actually saved there would be no problem. And doing it for a long time pays off as the exponential equation really really pays off. Forty years saving works even for low income people on a small small dripfeed. There is more than enough at retirement.
Magical thinking does not work. You have to plow in something and lots of jiggery pokery with tax and stuff won't cut it. As individuals and as a nation we need to make net savings. No way past it.
So. Get Kiwisaver back on track as it was meant to be. Rising to 15% total contribution. And most importantly cut out all the holidays and make sure people start at 18.
And to the masters of the financial universe here who will be outraged. Yes, we know.

Yeah, save, put it on term deposit, get 2-3%if you're lucky, then get taxed on that meagre return. Why would you?
Or you cold put it in some managed fund, pay exhorbitant fees, and arrive at retirement during a financial crisis when your fund is worth about half what you contributed. No wonder so many people live for the day.

I invested a sum with ultra conservative, churchgoing, miserly, economic genius Allan Hubbard. I reinvested my false gains each year and paid out $2000/year in fees. Bonus Bonds would have been better.

A saying. "don't put your money with righteous religious businessmen. When the time comes that they need to steal your money, they still know they are doing the right thing."

Anybody in a finance or business context boasts about their religiosity, RUN LIKE THE WIND.

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Retirement saving is fantastic, but I cannot abide handing over cash to suits who can ( and have) returned less than you gave them without any redress.
What ever my circumstances I will be presenting as close to destitute as possible having made sure my assets are not discoverable. Just like the rich people do.

Australia has a compulsary contributions super scheme at a very high level (12% of earnings?) but means tested government super payout. Absolute mana from heaven for the finace spivs who are more than happy to clip the ticket on your savings - till its gone.
I am aware in our area (Bay of Islands) a real trend of ex Kiwis at or near retirement age and often with Aussie partners coming to live here so they can go on our scheme with no means testing.

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Aussies who come here to retire should not get our Super. Do unto Aussies as they are doing to the Kiwis going there..

This is a no-brainer. Unfortunately no one is going to win an election advocating it..

You are dead right. No more changes to superannuation plans until the Politicians agree to keep their hands OFF. Look at Kiwi Saver. How many changes since it was introduced .Let people organises a proper Superannuation scheme. Make it Tax free until people draw down on it.Even with Kiwi saver contributions is three steps forward and two back. Another case of Politicians doing things for their own voting purposes.

Reduce direct income tax rate so people have enough to save for their retirement. He. HE. but Poltiticians know what's best for us and our own money

KiwiSaver is NOT retirement savings anymore. It is simply slush fund top up money for property vendors.

It is a fund manager's dream, money on the platter, year after year.

The only people to receive a pension should be people who have worked in NZ since their 20's. They shouldn't raise the eligibility age as most jobs are desk bound computer-based so after a lifetime of tapping away at keyboards many people will be well on their way to having RSI by 65, if not earlier.

What about those who have RSI writing out cheques etc for Auckland houses,( but not for the IRD on their capital gains) lets have a little love here for these poor folks

Winston's NZ First lot have a good policy on this. Basically you get 1/40th of super for every year spent in NZ between 20 and 65. And any income you derive from overseas super/saving/pension is your business.

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That's the way to go......keep the age as it is and reward those who have stayed to keep this ship afloat over the years. Too many freeloaders.
My husband only collected three months worth of pension before dying, and many men (Maori in particular) have the odds further stacked against them by their occupational circumstances - health, stress and hazards - physical and chemical.
To ask them to work beyond 65 is unnecessary and cruel.
I saw the results in the 90s with the age increase then. That was done too quickly in my opinion.

Agree but earning the 1/40 should be able to continue past 65 (up to a max of 1 of course) for people who moved here late in life - so if you move here late you should be aware you'll have to retire later to get full super. Seems fair to me.

And just how is Mr Populist going to look after them when they have no money???

Same way we Kiwis get looked after in Aussie or China etc. - you come here and look after yourself or go home.
How could our system possibly cope otherwise, especially with John Key & Co's open door immigration policy we currently "enjoy'.

Means testing...good luck. The run on trusts will fire up again - as if it's not a problem already (NZ has the highest no. per capita in the world already - estimates are around 400,000 +) , not to mention the bucket loads of immigrants who have cash and assets stashed back in their home country - countries of which we have no information exchnge. And even if we did, dont have efficient records back in their own country that could provide such data.

If Key is not going to fiddle with the Super, why is every one else wasting time like this ?

Will the existing Super receivers be also means tested ?
As regards migrants, the original PR holders who came here with proper vetting should get it, when they become eligible. Not other relatives who follow on family visas, okay ?

Thank heaven some fresh ideas from the retirement commisioner apart from simply raising the eligibilty age. Here's another few, how about campaigning for higher interest rates so people can get a decent return on retirement savings, how about tax free returns on kiwisaver or retirement savings and how talking about house prices which account for 80% of NZers assets and which could crash wiping out peoples' assets.

And taxing Kiwisaver pay outs is not a bright idea. It is a very long term investment strategy, subject to all kinds of risks, including the next GFC. On top of that it is to be taxed ? Then everyone will go on payment holiday, won't they ?

exactly. tax is the biggest cost, drag on returns, for kiwisaver investors

One of the problems is that we are a low wage low productivity economy. Ie too many people earning only $60k and not enough earning $120k.

$60k? The median is just over $30K; $60K and you are getting bloody good money. A rich prick as Michael Cullen would say.

Median wage was about 60k back in 2014, according to stat.govt.nz

the average wage is about 75k, i think, in Auckland, at least.

NZ stats says $45,864 median NZ wide in 2015:-

http://www.stats.govt.nz/browse_for_stats/income-and-work/Income/NZIncom...

NZ stats says $51,636 average NZ wide in 2014:-

http://www.stats.govt.nz/browse_for_stats/income-and-work/Income/nzis-po...

This website says $41,860 median in Auckland 2014:-

http://www.enz.org/nz-cities-compared.html

Median household income (2 people) was $68,600 in 2013:-

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11164406

Thanks for the links Guido. Nice to see a positive contribution to the debate rather than the many uninformed opinions.

Surely an easy way to implement some savings would be to not make super available if you're still working. You choose, want to still work - no pension. Retire at 65, get the pension and make your position available to a new job seeker. Got to be a win win.

Here's another good one - everybody whose birthday is between January 1 and March 31 should be forced to go on the dole, and then their jobs will be available to other people. Got to be a win win.

Seriously, why would you want to punish and discourage people who want to work?

I'd prefer for them to make it older 67 or 69 and have the provision of paying it early from 60 for people that have ill health or jobs they can no longer do such as heavy manual work. United future's flexi super would also work well in this scenario for those who choose to retire earlier but the standard age should be older than 65.

A person who is unable to work due to ill health can already stop working and be supported by the State.

The flexi super scheme may work out all right for people who rightly judge that they won't live very long past the official entitlement age. If they are wrong about that, and live longer than they expected, the scheme will condemn them to a long retirement on an income well below the poverty line.

It isn't as easy as it should be. You don't really want Winz offices clogged up with 68 year old people on a benefit getting tested whether they can return to work every 3 months or whatever. The biggest issue I have with increasing the super age is the impact on people that have physically demanding jobs. Allowing those people to retire at 65 eliminates that and saves the admin costs of putting them through the painful process of reapplying periodically etc. The flexible bit isn't supposed to address this, it just gives them a cost neutral choice. It enables people to work a bit longer and be better off or work a little less and get less. Could help people retire at the same time as their partner etc. The key is people have the choice. That choice doesn't cost the tax payer. To me that is a win win

If you dont need it...you shouldn't get it. I don't give a toss how much tax you have paid! Means test it, particularly in relation to any investment property ownership history. Why? cause they were most probably living off the backs of people that actually work in the productive sector.

And don't forget also, send them to the countryside for re-education!

How do you means test? Are the assets in trust fair game? What about the $$ you gave the kids to buy a house? What say you gave a loan instead? How far back do you go? Who is going to unwind your financials going back over the last xx years? How do you 'find' the foreign assets hidden overseas? How about the family home...is that an asset? If not, what about a renter...can they have a level of exemption cause they don't own a home! What about a home in raetihi verse one in ponsonby? What about the family car...what say it's a Porsche? What about he lifestyle property..is that a home or a farm? All these issues arise...plus the need to manually examine each application. That's why asset and income testing don't work so easy.

Of course it would be a hell of a mess and, no doubt, an entire industry of finance spivs would evolve to evade the laws intent.
In Aussie, where they have these means tests, financial assets are deemed to provide a minimum return (currently about 3.5%) that is considered income for the purposes of limiting your government super. Looks like (surprise surprise) there is a bit of a loophole over there with regard to individually held rental property. Don't know how it works with trusts.

Yes lets just all save more, which will drive down interest rates and require us to save even more again.

I'm glad that my gran benefited and my mum will benefit from Super. However im resigned to the fact that my generation is totally fu*?$d. We'll pay increased compulsory contributions for you boomers, which in the face of financial repression will be wealth confiscation for us. means testing, and asset testing will mean that we'll get very little. Worse still is the fact that historically speaking for most people, the only way they've been able to accumulating wealth has been real estate. That's been taken away from us too, and handed to... ahem certain foreigners via the wealthy migrant policy (nz residency if you buy 10mil of real estate). The only small consolation is that life might become so bad for generation rent that they'll voluntarily pop their clogs and alleviate the burden. There's a lot to be annoyed about here.

We are at the cusp of something special. The great boomer die off. As the voting power swings back I hope justice starts being served.

They’re going to live for awhile yet. The first of the boomers started collecting the pension just 6 years ago. They will probably go on collecting for an average of 20 years. NZ biggest benefits drain is going to ramp up for another decade or 2. I wouldn’t wait, the damage is done.

Most of these boomers have paid their taxes for 45 years so really you are just now giving their money back to them

You've oversimplified it.

Did you read the article? It takes 12 people on $60k to pay for one person on super - so no, the boomers have not covered their own retirement (their taxes went towards a much smaller pool of retirees who lived shorter lives).

You could also say if a boomer made the net present value of $60k for 48 years of working life (working from 17 to 65) they have contributed enough tax to pay for four years of their retirement.

Of course the way I look at it is that the super is coming out of my taxes because that is what is really happening.

This is why the only sustainable solution is to make super self funded. Act had a 40 year plan to do this. The issue is someone has to pay twice. They pay for the current pensions and then they have to fund their own. The 40 year approach managed the transition. Changes like this need to be phased in over a long time and not meddled with. Effectively the plan from memory was the gradual phasing out of super and diverting it into kiwisaver funds. Someone in 40 years time would have a much higher kiwisaver and no super. The bonus was everyone could see how it was going to effect them. This isn't unlike ACC moving from paying claims out of current levies to paying claims out of reserves. It takes a long time to make the transition.

Yes Dave and it was a very good 40 year transition. Bill English has messed it about for the last 8 years by not progressing Kiwisaver as he should have. But the guts of it are still there and easy to activate.
There is a Kiwi attitude problem which means people are seeking a solution where all this money will appear to pay retirement, but without anybody having to pay anything. Cargo cult thinking actually. Not going to happen.
Retirement funded by yourself over 40 years is a very good solution. Thus compulsory Kiwisaver.

We (boomers) have received the benefits of taxes we've paid in many, many forms, education, healthcare, roads, etc etc. The taxes we've paid haven't been put away in an account to give back to us as a pension. Governments spend pretty much all the taxes they receive every year. Pensions paid this year are paid for by taxes received from others this year. If I was currently receiving a pension from the government my 2 children's taxes along with 10 other children of pension recipients would be paying it.

It's rather an odd headline and even odder sort of calculation "A person with an annual salary of $60,000 pays around $1,800 towards a super-annuitant, which means it takes around 12 of these people to fund a super-annuitant for a year." I actually don't get it.
Maybe the equivalent statement would be "It takes about 2 percent of a single company paying $one million dollars tax to fund a whole super-annuitant."
Lets hear more about how these statements came about.

Interesting bit of preparation for a backpedal on Super. You have to ask what the job market is like for those older workers who don't have hi-demand skills? IS DM doing anything to encourage more job opportunities for 65+ workers? If NZ Super entitlements decrease, employers need to demonstrate a commitment to having more age friendly workplaces.

New Zealand already has one of the world's highest rates of employment among over-65s, so the job market for them can't be that bad. And it's likely to get better as younger workers get scarcer and employers are forced to look more widely

There won't be any super within 10 years, probably 5.

For those who think Super is going to be around, this is a very good article

https://surplusenergyeconomics.wordpress.com/2016/08/13/76-the-point-of-...

Somewhat perversely, a world with zero rates of return across the board means having a 'pay as you go' pension system actually makes more sense rather than less.

Don't expect the drips in the nats to do anything to sort it out, their philosophy is never do anything that needs to be done, and just spend your time in government earning millions in taxer payer funded salary for doing nothing but spinning propaganda

Dianne's comments are only telling a half truth, yes its true that at gross it would take 12 people to fund 1 super annuitant, what she omits is that we have a super fund that already contributes about 50% to the pay outs so you don't need 12 but more like 6 and then if you take into account all the other taxes outside of income tax then this number / ratio would go down further....if this is the lob sided 1 eyed way she makes an argument perhaps we should use her redundant salary to fund 12 super annuitants right now!

Some reading issues? Super fund won't start paying out until 2030. It's all coming out of worker's pockets

Same diff...tax contributions went in and super payments will go out...

No tax payments are not going in. Stop digging

Conceded...but my premise still holds true...

It also forgets to mention that there are other sources of tax revenue that can be used also like GST and Corporate tax. Personal income tax only makes about 40% of the total tax take.

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Our oldies built this country and paid their taxes being told they had a subsistence retirement income as backup when they got old. The hydro dams, bridges, roads, hospitals, sewerage schemes, storm water etc etc aren't the natural landscape. They were built and paid for by our oldies.
If we had a stable population that infrastructure would only need maintenance and servicing.
People immigrating to NZ are getting that infrastructure for free and then getting on the retirement super for free or after minimum tax input.
Once again Winston Peters NZ first party are the only politicians willing to call a spade a spade. Wake up NZ, insist our media step up!
Most NZ'ers believe or trust our media. Somehow we have to get them, the media, to take responsibility for the propaganda drivel they feed us and step up.

right on

Media is already in the pocket of politicians and the One Percent. No point in calling for fairness from them. They just want sensationalism and ad revenues. Look at the headlines, most of them about what is the latest trending on Twitter and Facebook and other social media. All the Four Estates have ceased to be fair long back. It is a tragedy in NZ because the old values are all gone by now.

It's important for the public to hear from people like Diane Maxwell, as she advises the Government. Open to suggestions as to who else you would like us to interview on this topic. 

Most infrastructure you're boasting about wasn't built by you, nor paid for by you.
A lot of it was built earlier, and paid for at the time. Building largely stopped during the interbellum because the country had run out of money.
After the war, everybody started borrowing, governments, mostly.
Anything the boomers built (on the back of receiving a free education, and mostly free healthcare) was built with borrowed money.
And then when you started earning money and realised all that money had to be paid back, you introduced university fees, and stripping the welfare state off its funding.
Sold off a few assets, here and there, and now the kitty is empty.
.
You did not manage your money well. If you did, you'd have money saved, not borrowed to the hilt and then stuck the ext generation with it....

Is it really too hard to ask for personal tax contributions to be itemized and placed into the areas they are meant for, like health, education, retirement, welfare, public services and administration.

Whilst 90% may go to the last three it would be better than it ALL disappearing into a "black hole" for numpty politicians to squander.

But then you would know what is going on. The Politicians wont wear that one .

DP

Not often that you get me agreeing with Key, but is this really such a problem. Remember that we are entering a phase when there will be a large increase in demand for NZ super because previously the lower birth rate during WW1 meant we have had less retired, but now we are overshooting because the baby boomers are retiring. It is too late to do anything about these people but as they die off the pattern should normalise. We are continually told that technology will displace jobs and it seems to me that the best place that this should be absorbed is in the retirement age. In other words as the baby boomers die out technology may well be pushing a lot of people out of work, so leaving the retirement age at 65 may not be such a problem.

Uncertainty upsets people considerably so waiting until 2020 or later and then raise entitlement age to 67 or more will create angst. Simple solution raise age by 3 months a year starting 2017 - saves $400Billion which can be invested in the Super Fund and provide certainty of retirement age allowing time to plan.

How about raising the eligibility criteria for the working for families benefit? That should save some dosh and alleviate a little welfare pressure.

I'm not sure the current generation heading into retirement can claim to have built this country and paid their taxes, unless they also own up to running up a huge debt and interest bill for future generations. Sure, they debt funded some assets that future generations will benefit from, but they also hocked off most of the good ones for some shiny beads and goodtime gin.

The boomers are starting to fret that the country can't afford their retirement, but their previously suggested solution of delaying the retirement of everyone born after 1965 (after they have all retired) is disingenuous at best.

Whatever the solution, I doubt it will come from the boomers and I doubt the boomers will feel any pain. The pain and backlash will hit the immediate post boomer generation, as the boomers and their voting bulge fade.

There seems to be a conflict between the people who believe Super is a right and those who think it is a safety net for those who have no other means of income for what ever reason. To come to a solution we need to sort out what Super is.

If it is not a right, then my taxes and GST I pay need to come down massively. It is a social contract for which we pay upfront in taxes and get something back when we are old. Any other interpretation would be a travesty of justice..Let us be humane and not peg Super to inflation, current state of economy, future inability, etc.
That is plain cheating...

Its just another form of tax, and should be included in income tax. The fact that its a separate (appearing) contribution is where the confusion lies. The money you pay into super has nothing to do with what gets paid out, to you or anybody else. Showing the tax as a 'contribution' makes it easier to swallow even if it doesn't add up (and never did).

As long as today's tax dollars are used to fund today's retirees then it is not a right - it is welfare plain and simple. Now we choose to make it universal because that's efficient and feels good, but its definitely not a right. Any of your own money you put into a retirement scheme (e.g., kiwisaver) is by right yours, but any taxes you paid were spent long ago. Paying them was part of you being a member of this society.

Actually they were made a promise that they would get a state funded pension. So it may not be a right but it is a promise.

Eh? I think you are confusing KiwiSaver contribution or private super contributions there is no "contribution" to NZ super in my taxes

I think you've hit the nail on the head Zeebeck

Winston Peters:
"Treasury bombastically claims NZ Super is becoming too expensive for the country. They, and others, do so without a fact to back them up.
The fact is, at 4.3 percent of GDP, the cost of New Zealand superannuation is relatively low by international standards.
This compares very well with an OECD average of around 7 %.
Because NZ Superannuation is taxable, its cost net of tax is around 3.7% of GDP.
So do not be taken in by the propaganda, which flows from the Beehive and from wet behind the ears bean counters, that New Zealand Superannuation is unaffordable".

How come many New Zealanders don't see the weight/right of Peter's common sense arguments on many of the ills afflicting NZ society ?

Because they watch TV and RNZ and are told that we are headed in the right direction? Eg Nigel Latta saying immigration is making us better off.

Because it is so tempting for some politicians and so-called “journalists” seeking limelight and popularity to write and say controversial, inter-generational animosity provoking garbage to agitate the population and get published in various media that are only worried about their ratings, readily sacrificing facts and common sense.

Good figures. Thanks. It confirms my gut feel of the situation. You have to ask who would benefit the most from a reduction of superannuation costs. Answer; the rich who have cleverly set superannuatants up against the young. We need to focus on the real enemies of the average hard working New Zealanders.

I love WP, but... Just because ours doesn't cost as much as other countries costs them, does not make it affordable, and using current data is not the problem, she wasn't talking about putting the age up tomorrow, she's talking about it BECOMING incredibly unaffordable, unbelievably so when you add in the health costs.

If it is truly of no concern to anyone, then lets put it in law for eternity that it can somehow NEVER be changed no matter what happens and how expensive it gets, somehow I don't think people would go for that, indicating that deep down inside they truly know it's not sustainable in it's current form going into the future.

My question to you,is why on earth would you believe Peters ahead of the Treasury? He has a clear vested interest in not upsetting his constituents,nearly all of whom are Gold Card holders
Other countries are moving to increase the retirement age for pension eligibility and I think it is inevitable that NZ will have to go down that path. What we need NOW,is an informed debate on this rather important subject and make decisions based,as far as possible,not on political prejudices,but on evidence based information. If there were to be a change, it would have to be signalled well in advance,say 20 years ahead.

When people talk about how the baby boomers have done so well for themselves the implication being that they are undeserving etc, there is a corollary which states that if many baby boomers can't cope now, what does the future hold for the poorly off?

Babyboomers have done well for themselves because they have worked and or had businesses for 45 years.
The younger generations haven't stacked up those years of productivity.
As the baby boomers kick off they aren't taking their land and houses with them so in theory the next generation become the wealthiest.
A stable population would allow for that transfer of wealth. Raising the population and foreign investment has upset that wealth transfer as the upcoming younger generation, on NZ wages, aren't competing on an even playing field as they are now competing on the World market to buy NZ realestate.

The trouble is the worlds population has doubled since the 70's ... population overshoot is where the really big issue lies with less energy available per person. The boomers have done well off extracting a lot of one off resources and the creation of massive amounts of debt during this phase. Soon, its pick up the tab time.
The wealth being passed on comes with debt, pollution and buggered resources, not to mention an infrastructure that is aging & high maintenance...

The baby boomers did well because
they didn't leave school with an enormous amount of debt,
had plenty of jobs ready for them,
state help to get them to own a house, and
a beautiful welfare state paid for by high tax brackets which kept wealth quite evenly distributed, ensuring a much more level playing field then today.
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And we didn't have Hi-Viz, clipboard toting folk giving us the wisdom of their 6wk degree in B.S. Society as a whole seemed to move along nicely.

Since when did being educated become a reason to look down on someone?
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Probably since attending university became a ploy to avoid actually doing some real work.

Inflation gave them houses which they then used to buy more houses. There are still plenty of jobs out there. They are just different types of jobs. Student debt is now an issue because so many people go to university now compared to previous generations. The whole university system needs to be looked at as for many degrees, it shouldn't cost anywhere near that much. Many people also go when they aren't suited to it because it is what you are supposed to do. If your solution for distributing wealth is taxation then you have a problem. Taxation is supposed to be to fund public services and infrastructure not wealth distribution.

A high school degree or vocational degree could land you a job with a wage which could support a family.
That's no longer the case (maybe trades people still get a decent hourly pay, but there are a few more downsides to those type of jobs than office jobs. they are more dangerous, for a start)

A tertiary degree is now all but a requirement for getting a decently paying job - it's how employers cull the CVs which land on their desks, mostly.
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Taxation funds public services and as such is a wealth transfer. Percentage wise, the lower earning workers spend more of their pay on transport, health, education. Having these subsidised by means of taxation is in effect a wealth distribution.

One thing generation on generation we need a consistent message, but people also need to feel they belong ("celebrating diversity" suggests anyone and everyone belongs).

It is quite amazing to me how everybody believes what our Diane says. The neoliberal order want to get rid of anything the Government provides its people. That includes health, education and superannuation. First of all lower taxes - the top tax rate used to be 66% and we had import duty and all other sorts of excise taxes including an inheritance tax. Then you say we can't afford the above and then lower taxes further. Rinse and repeat. And the sheeple believe them. It is a lie that Superannuation comes out of taxes. It is a book entry. Nothing more nothing less. It is just like the when the Banks give you a loan. They do not give it from the people's savings they create money by making the loan. Around 97% of all money in circulation is created by the Banks and other 3% by Government. If you don't believe me read the 2014 Bank of England article on that very subject. Incidentally that creation of money by the Banks is one of the reason we have a housing bubble.

The tax rate is not the issue. If you tax people more you will have to give out more via hand outs. If you tax less people are more inclined to work hard and invest to better themselves and as a result others by creating jobs etc. Take 66% of my pay and see how much incentive I have to work. Raising tax rates doesn't always raise more revenue. How many people would go to work if tax rates were 100%?

You miss the point DaveB1978. Super is a book entry. The tax argument that we couldn't afford it was used as an argument as to why we can't have the health, education etc systems we we once had as the Governments reduced the tax rates even further. Funnily enough a high tax rate does not stop people trying to achieve. People did much better under the old system of high tax rates than now under the so called low rates. The Scandanavian countries have higher tax rates than most of the world. Their aim is to have an economic system that is designed for the betterment of the country as a whole not specific groups as ours is.

The Scandinavian countries like Norway get a huge percentage of their wealth from natural resources like oil. Higher taxes is not the answer when you are telling people they need to save for their retirement.

Not quite as simple as that. Norway does not have its oil extracted for a few measly royalty dollars, they set about doing themselves with Statoil. They also have a sovereign wealth system. Their pensions etc are also tied into how much tax you pay there, my brother, who could have continued to live in Norway, because of his family, did not work or pay taxes there, so did not accumulate any credit to provide a pension. Norwegian people seem to appreciate the vast amount of benefit they actually gain via higher taxes, such as a first class education and health system and social welfare. The trick seems to be that there are not vast inequalities in such a society as there are here, that see those with more hanging on for dear life, lest anyone who should earn less from them should benefit from any taxation paid.

You are incorrect.
High taxation has been proven to make for a better society.
During the 40s, 50's, 60s and even most of the 70s, the top tax rate in the us was 65% (or thereabouts). It was the golden era for American economic activity and overall prosperity.
Things started going haywire when Reagan ushered in low taxation and neoliberal policies. Low taxation always benefits the rich more than it does the poor.
The ta rate is definitely the issue.
and tax loopholes, minimisation, and avoidance.
If it weren't, why are big corporates like Google and Apple and Microsoft refusing to pay their fair share, and using the 3 means above to do so?

A Retirement Commissioner wants to do away with the Pension..Only in NZ.

well she was appointed by this government, and one of her first statements was people should take there money out of kiwisaver and buy a house.
They should have continued funding the super fund instead of suspending the payments, hindsight is wonderful and they missed a period of high asset growth and low interest rate
lucky many of us don't follow any financial advice in fact if JK or BE say something is a good idea do the reverse you will make more

Not once has Diane Maxwell said she wants to do away with the pension. She thinks the system needs to change as the make up of New Zealand changes, so we can keep supporting people in their retirement in the future. 

And it takes one wealthy person to pay their taxes to fund 1,000 NZ Super
Or for Google to pay their taxes to fund 20,000 NZ super
Get the picture
There are two sides to every story, you take the ant-people side

Why can’t we all go on the parliamentary super scheme? Doesn’t seem to be any problems funding that.

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As a forty something this concerns me. Firstly I was in the year when student loans were first introduced, I paid that off, worked hard and bought houses, invested money and started paying into kiwisaver.

The fact immigrants can be fully entitled disturbs me especially as we are encouraging more of these (Which is not necessarily a bad thing). There needs to be a mechanism/s like a pro-rata to the time they have been in NZ including health or at least the requirement to pay into some form of private insurance to cover them until they have been in NZ a certain period of time. If they are wealthy a requirement of entry should be users pays for health, education and no super as they do not need it. If they do not like this then do not come....it's tough but this would at least ween out those who have an issue with this. Remember, plenty of other countries would not give Kiwis anything if we went there or if we could go there. Can someone remind me what the reciprocal agreement is with China or our neighbours in Australia???

If this is not managed carefully, especially means testing there will be an age group (probably around mine) that have time to save differently, restructure savings and assets and will do all they can to find ways to be poor on their personal balance sheet. Like most things, you incentivise it enough these incentive's drive behaviours (Good and bad)....look at UK/US/Oz investments bankers

I understand that we have an aging population but taking from the next generation will only cause resentment against the aging and the immigrants. Look at UK, USA and plenty of other countries for examples of resentment of foreigners. It is already here but will work its way into middle hard working NZ and circumstances will drive behaviours and the social divides in NZ will only get greater.