Super changes won't include means testing or payment change, PM English says after revealing govt work stream to alter settings; Labour says won't raise super age

Super changes won't include means testing or payment change, PM English says after revealing govt work stream to alter settings; Labour says won't raise super age

Government considerations for altering national superannuation settings will not see a change in the level of entitlements, and do not include proposals for means testing, Prime Minister Bill English says.

Speaking on Radio NZ’s Morning Report programme, English added to comments made over the weekend that the government was considering changes to national super. A full announcement would be made public “quite shortly,” once the proposals had been finalised by the government, he said.

English refused to be drawn on whether the work stream included looking at a proposal from United Future leader Peter Dunne in 2011 on flexible super settings, where people could opt for an earlier age with lower payments, or a higher age with higher payments.

“If we were going to consider it then we would be talking to him first about it,” English said of including Dunne in any discussions. United Future has been a National Party coalition partner over the last eight years. As Finance Minister, English in 2013 released a discussion document on Dunne's proposals.

English said the government was not considering a Maori Party proposal to lower the super age for Maori and Pasifika workers.

Asked whether the government would change super from being universal, and whether it could alter payments from being indexed to the average wage, English replied that “no one should be expecting a change in the entitlements.”

“We’re not contemplating and haven’t contemplated any change to the way national super is paid,” he said.

On means testing: “We have not considered means testing. You have a scheme there now…where there’s been extensive debate about means testing for some time. That issue has been settled many years ago,” English said. “New Zealand had 30 years of debate over means testing and came to the conclusion not to do it.”

Meanwhile, Retirement Commissioner Diane Maxwell welcomed English’s stance, saying on Morning Report that she had not had any inkling this was in the wings. Maxwell and her predecessor Diana Crossan have repeatedly made proposals for ways to alter the settings.

The Retirement Commissioner’s proposal includes no changes for the next 10 years, then raising the eligibility age by three months per year over eight years, setting it at 67 by about 2035.

There should also be a change to migrant eligibility from the current 10-year threshold, Maxwell said. Migrants to New Zealand should have to have been here cumulatively for 25 years before being eligible, she said.

Maxwell also called for government re-training and upskilling initiatives that would help people in their early 50s now to handle a rising age.

New Zealand First leader Winston Peters said there was no evidence to support a need to raise the age, and said the government should instead be focussing on the migrant angle raised by Maxwell.

Government coalition partner ACT said changes to super were unavoidable due to the rising population of people over 65.

Labour Party leader Andrew Little reiterated a Labour-led government after the 23 September election would not raise the super age.

“This Government has not put a cent into the New Zealand Superannuation Fund and that negligence is catching up with them. The fund now has a $20 billion gap because of National’s decision to stop contributions,” Little said during the weekend.

“At least John Key was unequivocal on this. Bill English has made it clear today he’s not bound by that promise. He’s signalling that there is now a case for change in the age of entitlement and I’m saying the argument doesn’t stack up,” he said.

“A Labour Government I lead will not raise the entitlement age for Superannuation and we will re-start contributions to the New Zealand Superannuation Fund. That’s a prudent and sensible approach unlike Bill English.”

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What isn't mentioned here is that in the RNZ interview English also commented that the number of people continuing to work and collect their GRI is higher than expected. He stated this as though it is a justification to move the RA out.

However there is not one apparent consideration of the affordability of retirement on the GRI, and that at least some of those continuing to work are doing so because they cannot afford to retire.

It is alright for people on six figure salaries with many thousands in savings and Kiwi Saver to suggest this, but ordinary Kiwis have struggle to be able to save for decades. Government ministers also have a retirement package that no other ordinary working Kiwi is entitled to. So their call is from a position of "I'm all right Jack" as the prove they just don't really care!

It worries me then, this being the case, that policies that influence house prices have been stacked for so long in favour of investor-voters who tend to have been born earlier (thus getting access to cheaper properties before the boom). Ageism is already a problem, and as they youth start to feel more and more shafted by the older generation voters on home ownership, I can't imagine ageism reducing over time...if anything, it's likely to get worse.

English has opened a can of worms. And he's having to backtrack already. He's leading National down a very dangerous path here.
Unless the proposal will be to increase the number of years that foreigners have to be here before they can get National super. 10 yrs is unnecessarily generous. 25 would be much better. I don't think many would disagree with that proposal.

I think is is very intentional, as it takes the heat away from the housing crisis which is NZs real problem.

The retirement age thing is somewhat irrelevant because even if they do move the age up from 65, up to 67, it will take at least a decade as it has to be done slowly to give people time to plan. But imo there is no reason reason to change things, especially has national has said for nearly a decade that it is affordable. NZers do seem to getting railroaded into raising the age, when our spending is lower than other counties on this.

Andrew Little desperate for votes but will not get mine sorry.

Labour tried to do something about this last election, they got caned. As a democratic country, I suggest parties have to listen to what people say, they have and changed their position. I fully expect National to receive the same caning over this, unless the country is full of hypocrites

Now that is not a clever post.

Other than Little's mention of the super fund shortfall the real issues aren't being discussed.

Raising the retirement age to 67 by 2034 is just a punishment for anyone 50 or under. That's not even going to deal with the massive shortfall of money to pay retirees as the superannuation scheme is little more than a ponzi scheme.

Where are the additional Government savings? Where are the changes to kiwisaver? Why is such a large slice of my tax payments going to paying super for current retirees but nothing for myself or those younger than me?

I strongly suggest that younger people fight tooth and nail to retain the pension system, it will be a crappy society without it.

My angle is to fix all the broken aspects. A pension scheme set up as a ponzi scheme is financially irresponsible. At the same time kiwisaver needs to be fixed with too many people just starting work and having their money sitting in a default scheme. There should also be an ability to opt-out of kiwisaver, a lot of people do not have the minimum knowledge required to make good choices for their investments.

So many problems but politicians fear dealing with them because of the pensioner vote. The taboo on responsible retirement systems needs to be stamped out.

I agree. I think the nz society is starting to get selfish and there are divides occurring between generations. This is mainly due to the housing crisis, as young people see all these older people with multiple properties worth millions and the younger generations can't afford to buy without borrowing far too much. Raising the retirement age isn't really going to do much. People also aren't really living any long, it is just that we have a bubble of people who on avaerage will live longer due to increased standards of living. But that will eventually pass. Plus the government gets much of the money they payout back when people go into rest homes

I don't think its going to be very long before people start dying earlier again.....obesity......

The answer really is quite simple. Scrap the pension, make kiwisaver compulsory for everyone and we all save for our own retirements as we go. All governments contributions portion get paid out weekly starting from the age of 65 and the "Pensioner" can do what they like with their portion of the kiwi saver. That way government will be able to increase their contributions to the fund because they will not be paying the Pension anymore. That way we wont need means testing and you literally get out what you put in over the years. Ofcourse there would need to be a transitional period. I am pretty sure there will be no pension when I am 65 and am planning for that.

Bill English has just walked into a minefield as big as the Korean DMZ.

What was he thinking ?

This is just tinkering when NZ super needs a fundamental programme change and a 30 year roadmap of change. Compulsory Kiwisaver being the replacement and NZ super being phased out entirely. It will take 30 years to make that progressive changeover
As for those who will say people can't afford Kiwisaver, I would ask what makes them think the government can afford it, if they can't.

Some under 65 are on the pension but it is called the benefit.

Yes a small minority compared to super. 50.5% of the welfare budget goes on paying super.

Did you include accommodation supplement in that 49.5%?

Yes.

so Bill was it wrong to stop contributions to the superfund in a period of the lowest interest rates on records and highest gains in asset prices YES
that's what happens when you put politicians in charge of NZ'rs future with no foresight past 3 years.
it is not the first time national have stuffed up NZ super and wont be the last.
some of us are lucky in that it will only be a bonus and not something we need to live off

Along the same lines the next logical move from National will be to reverse their immigration policy as the housing bubble bursts (next 12 months). Amplify the downside.

Good for Bill English on recognizing that NZ Super in is current form is unsustainable and for deciding that something should be done about it. This is in stark contrast with popularist PM Key's ostrich-head-in-sand, do-nothing-except-smile-and-wave policies: at least Bill English is making an effort and trying to be honest about the future of NZ Super.

A word of advice though, Bill: think it through first and have the proposals finalized, before opening your mouth and mumbling vagaries about what the government might or might not do. It is one of the most important and sensitive topics in politics. Therefore, it is not wise to roll out empty wagons for the likes of Winston Peters (don't give the pension to recent immigrants) and Andrew Little (we'll restart the Cullen fund but won't change eligibility) to jump on. It's not the budget, Bill, where you can tease the public and buy votes by drip-feeding vague hints about announcements of tax cuts and other goodies to get everyone excited about. It's NZ Super, where somehow, at some point, some people are going to end up getting less. Best to state your position asap and start selling it. The longer that time goes on, the higher the expectations will become and the noisier the likes of Winston Peters and the conspiracy theories will be. And, do your best to not underwhelm, once the proposals are finally worked out. Make sure it is a substantial, sustainable, transparent, fair and palatable policy. I'm waiting.

'Best to state your position asap and start selling it'

Wise counsel but regrettably a recipe for political suicide if English was to become any more specific than flagging the issue in general and implementing only the edible fringes - e.g. migrant qualifying period extension.

English has announced that the super age will be raised to 67 from 2037 gradually till 2040.
As per NZ Herald.

"Must not impact my property portfolio owning, pension-desiring investor-voters. We can run the credit card up for the young'uns to pay." - probably Bill

Yep, fringe stuff - won't apply till 2040. A lifetime away.