National's Super policy gets solid attention in Parliament; Peters details betrayals, Greens say Gen-X will foot the bill; Labour touts Cullen fund returns higher than govt debt costs

National's Super policy gets solid attention in Parliament; Peters details betrayals, Greens say Gen-X will foot the bill; Labour touts Cullen fund returns higher than govt debt costs

National’s proposal to raise the Super age from 65 to 67 between 2037 and 2040 received a strong airing in Parliament on Tuesday, with Prime Minister Bill English and Finance Minister Steven Joyce receiving questions from all corners during Question Time.

New Zealand First leader Winston Peters asked how National could be trusted, claiming it had gone back on its word over superannuation eight times in recent memory.

ACT’s David Seymour asked why the government would not start raising the eligibility age now, in gradual steps. He pointed out that countries referenced by the government in a supporting document to its policy proposal would all start raising their eligibility ages during the 2020s.

The Maori Party’s Marama Fox sought guidance on how the government would treat workers who could not work through to 67 (the response was this would be reviewed in 2030). Green Party co-leader Metiria Turei asked Prime Minister Bill English why ‘generation X’ would bear the cost of the super policy.

And Labour’s Grant Robertson attacked Finance Minister Steven Joyce for not making contributions to the ‘Cullen’ superannuation fund during the past eight years, when the fund’s returns had exceeded the government’s cost of debt since 2009.

Unfair to raise age now

Joyce was first to respond. The age was not being raised now because it would be unfair to do so, he said. People affected would not have had long enough to plan for such a change, he said.

Meanwhile, he and English revealed that the proposal would mean that someone aged 67 once the changes took effect in over 20 years’ time, would actually spend a longer proportion of their life receiving super than someone at 65 now.

The government also did not need to rush into the age rise, Joyce said. New Zealand super costs were significantly lower as a percentage of GDP than other developed nations he said – 4.5% versus an OECD average of 9%.

Labour Party leader Andrew Little accused English of “kicking the can down the road for the next 20 years” on the issue. Little and Labour are against raising the age.

English invited Little to reconsider his stance – even pointing out previous comments made by the Labour leader a few years back on how superannuation cost increases were “scaring the bejesus” out of him.

Another reference from English was of new Labour Party co-leader Jacinda Ardern saying how soon superannuation costs would surpass the government’s education budget due to the setting of the universal age.

Gen-X to foot the bill?

It was up to English to defend the government against claims from the Green Party that Generation X would foot the bill for raising the age, having also had student loan debt and high house prices imposed on them.

English agreed that today’s 30-35 year olds did face pressures that required support. However, the government’s policies meant they faced a future with supportive lower taxes, economic growth and incomes that were rising moderately but consistently. He disagreed that the policy would fuel an inter-generational struggle.

Olive branch to NZ First

Winston Peters raised various policy “betrayals” by the National Party since the 1990s on super, including it replacing a 20-year timeframe for raising the age from 60 to 65 with an eight year timeframe in 1990, and cutting super payments from 65% of the average wage to 60% in 1996.

“How can New Zealanders trust National when they promised not to change superannuation settings in 2008, then stopped government contributions into the Cullen Fund, and then started taxing it?” he said.

English responded that Peters was probably better placed to remember policies of the 1990s than he was, to which he received the retort that “it’s a trust factor, son,” and a reminder that English too had been a cabinet minister during the decade.

However, English also sought to hold out an olive branch to Peters, perhaps with one eye on post-election coalition negotiations. He asked Peters to reconsider his stance, saying he believed the policy was one Peters could potentially support, partially if not fully.

Super fund returns vs govt debt costs

Labour Party finance spokesman Grant Robertson took on Joyce on a different aspect of the debate – the resumption of contributions to the Cullen Fund. The government has proposed only resuming payments into the fund when its net debt to GDP hits 20% - still a few years away.

Would the fund not be up $20bn if the government had not stopped contributions in 2009, Robertson asked, pointing out that its average return of 8% over that time was higher than the cost of government borrowing.

Joyce accepted the fund’s returns have been higher than the rates paid on government debt. However, he warned against making the comparison as global equity markets could have performed worse, and that the government would have had to borrow an extra $13bn to make the contributions (and add an extra $0.5bn in interest costs). Either that or raise taxes or cut spending.

The response didn’t sit well with Labour: “Where did the tax cut money come from,” they shouted back.

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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I have no problem with the policy. We are living longer and therefore need to work longer. Stop the whinging!

Yeah stop whinging about having to work into your 80s even though your health may be failing. Go live under a bridge and stop being a bludger when you live into your 90s.

We should just raise the retirement age to 115 then by your logic no one will have anything to complain about.

Don't be daft. It's obvious that anyone who is genuinely physically unable to work, will have to receive a benefit. It'll be 2030 before this issue even needs to be considered.

I don't think leaving retirement planning to the last minute is likely to be a successful strategy. With retirement savings investing over 25-35 years is more likely to work out better than trying to save for your retirement over 5 years or less. If short term retirement planning for individuals is bad, then why would it be acceptable for a Government to do that?

You are conflating pension planning and investment with social welfare. Welfare is paid from current income, pensions from money accumulated during past periods.

Wrong, if you think Super is paid from accumulated money. Super is paid from current tax. There is no money accumulated from past periods other than the Cullen Fund, which is currently not being tapped into.

Yes. You are right in terms of funding. I was thinking conceptually about the distinction between welfare and super, with reference to the cullen fund.

In that case we're on the same page but with differing opinions.

That's because Piggy Muldoon pillaged it when he screwed the economy. Another National Government running roughshod over ordinary working Kiwis.

Note though that while doing this to Kiwis, all Government ministers are very well looked after in their retirement packages after they have served for only nine years. Something no other Kiwi has.

I dont think its just Govn ministers but all MPs. I'd bet if we looked the number of MPs who only served those 3 terms would be quite high.

It's not just the physical side. We already have an issue with older people being looked over for work.

Heck I am mid 30s and starting to notice it. Why pay for 20 years experience? when a graduate will work for 1/2 the amount.

Same here.....not only that the typical employer is far more likely to get comfortably over 40 hours a week for the money...

It is pretty simple; it is about affordability. The Retirement Commissioner has been very clear that with increasing life expectancy to retain universal superannuation there is need to raise the age of eligibility. She has also made it clear that the length of time one on average will receive superannuation is increasing.
Increasing the age of eligibility seems fair and reasonable.
The alternative is to means test and that is both highly inequitable and fraught with risk of it being open to abuse.
I recall that when the qualifying age was raised from 60 to 65 for exactly the same reasons - and baby-boomers such as myself were affected - it was accepted and there wasn't the whinging about our parents generation having received it at 60.

Universality and absence of means testing are what makes NZ super so elegantly simple. And who would have anticipated the unintended consequence of the significant rise in over 65's remaining in the workforce at the very time they are needed?

You don't want to make make sudden dramatic changes to super. Gradualism is a virtue.

I agree with you there. More money needs to be set aside than kiwisaver and the puny Cullen Fund. I don't recall anyone complaining about the change from 60-65 (well limited complaints). A lot of people I knew either didn't make it to 60 or died not long after 60. Lifespans have changed a lot since then.

Yes, I look forward to the day when cullen fund contributions will resume. But Labours insistence we should borrow to play volatile world sharemarkets that are almost certainly due for a major correction, is just mad.

Short-term volatility has little impact on long-term returns. If I could borrow at government rates and get a return at equities rates, I would never have to work again.

In theory yes, but your simple example doesn't factor in the knock on effect of increasing the mortgage to an extent that has your bankers looking at you funny.

By that logic we should offer all under 65s the dole even if they are loaded and/or have a job... after all it would be "elegantly simple".

That's called universal basic income. Simple and we could fire most of MSD and pay them only UBI. A lot less administration and overhead. It would also take away the punishment system for people that work or start businesses.

Why should those over 65 be the only ones to get UBI? A lot of them are unwilling or unable to work. Most would not bother starting a business.

I think you've convinced me HeavyG. Let's put the working age population on Super and the over 65s can go on the dole.


What possible long-term electoral consequences could there be to repeatedly telling the under-35s to go eff themselves have? It's not like they're real people who have jobs and lives and needs and ambitions. Affordable housing? Nick Smith says go eff yourselves. Would like to have kids? Go eff yourselves. Jobs? Go eff yourselves. Living wage? Go eff yourselves. Future water quality? Go eff yourselves. Just generally go eff yourselves and get out of the way of the only people who matter, our donors, the boomer investors we see in the Koru Club. And on your way to go eff yourselves, empty out your pockets and leave it with us. No, it's not going into the Cullen Fund. We're going to spend it on somebody else.

National have told everyone 45 and under to get f'd. Those that are 55 and under will receive a pension up until the time that NZ runs out of money and the IMF has to bail us out. Those 65 and under will probably get kicked out of their retirement home and have to live in the streets.

I'm a swing voter but after this fiscally irresponsible bullshit from National they're not getting another vote from me ever as they are the enemy of my generation and everyone younger.

National is protecting their vote bank by not targeting them (many young do not vote so who cares- hope the young attitude changes in this election and then national realises it's mistake of ignoring them) and national is also tryin to divert the debate from immigration and housing in the election year as world over polticans who have not listen to the voice and concern of the people have lost.

It's an attempt at a distraction but retirement issues, housing, and so on are just adding to reasons to get rid of the current Government. I'm putting time into getting people to spread the word that they must vote to protect their interests. Of course what BIll English has done is calculated to win proportion of votes but he's doing it at the expense of future votes.

I think it is best to use the label inter-generational theft to explain what National's retirement policy is. Even though it was David Seymour that said it. The same that the issues with housing must be called a crisis.

It's clever timing. Will be yesterdays issue in a few weeks and English will go down as the guy who had the balls to finally do something, even if it's just tokenism. Everyone agrees there has to be changes, even most of the mythically selfish boomers depicted in some of the postings here this morning. This is a toe in the water stuff. English will be quietly pleased with the way reaction is already muting.

Being asked to spend only the same proportion of your life on Super as people do now, is hardly being told to go eff themselves. If they're under 35 they will also eventually see the benefit of this policy, in terms of the reduced tax cost of NZS.

Why don't you go on telling people under 35 what they think.

The only benefits the under 35's would see is if they changed the super to 67 tomorrow. Otherwise they will only see the benefit to others of the policy.

I agree that the change needs to be made, but I disagree with National's cynical approach to it, foisting it solely on the young who already bear the brunt of student loans and investor-favouring housing policy, while being careful not to affect boomer investor-voters at all.

National should not doing it in such a cynical fashion.

On the other hand, if they were to address housing affordability, that would show a less cynical approach. But they've said in a rare moment of honesty, "We don't want to see house prices come down", and they'll do nothing to implement law that will have this effect.

I agree with labour on the super fund.
point one all monies paid by the government for all services comes out of the consolidated fund, so to specify they could not borrow for one item while ignoring the rubbish they did borrow for, flags, Saudi farm, Hillary Clinton. is missed by most
second point it has been the lowest interest rates, highest asset prices increase in history over a short period an opportunity lost
third point the government taxes the superfund and since this government has been in power they have collected 3 billion, why not enact law to exempt it instead of contributions
so in conclusion when it comes to saving or long term thinking it has and is not in this government DNA.
all they know how to do is borrow, spend on roads and other silly things while cutting services,
national parties through the years have always been terrible economic custodians of the books.
everytime they leave the benches of power we have more debt and less assets


Abandoning the Cullen fund out of - what, pure spite because it was a good idea from the other team? - is something that should be more widely acknowledged as right up there on the list of National financial dumbarsery. Look at the returns that fund could have been making if they'd had a clue and kept it up.

No, it wasn't out of pure spite, it was because at the time there were better uses for the money - like earthquake recovery and seeing the country through the GFC.

If you think money should have gone on being put into the Cullen fund, you need to specify exactly where you think that money would have come from, and what impact you think that would have had on the future prospects of today's young people.

If National did continue contributions they would have had to borrow the money. With hindsight that would have been a good decision to make given the compounding returns on the fund greatly exceeding interest costs. In fact it would be not different to getting a mortgage on a house for capital gains.

I thought the given the number of property investors here people would get behind Government borrowing to invest in the superfund.

Their logic at the time was that the markets were down so they did not want to invest. This is the opposite of truth as the returns are always better after a fall (see Cullen Fund performance from 2008-207 for proof). The gains on borrowed money (borrowed at record low rates) would be have left the country in a much better position.

With respect to that politicians are no different to the general public with investing strategy. Buy when the market is up and sell when it's down.

Spite. Tax cuts. Spite. Other stuff. Spite.....

We got thru the GFC by borrowing to the hilt and selling the family silver. Those tax cuts look a bit stupid now.

Looked stupid at the time as well, but got votes for sure.

The Nats just hate that its called the Cullen Fund. If they changed it to the Brighter Future Fund they would start payments into it tomorrow and claim it as their own!

Hindsight a wonderful thing. How quickly the dark memories fade, of the GFC and the massively high risk period for investing that followed it. I personally went contrarian during hat period and had a ride that I've never before experienced in a lifetime of investing. But I also remember the white knuckle sweating as well.

National debt had to come down. Borrowing more to punt on volatile markets would have been folly.

National debt had to come down. Borrowing more to punt on volatile markets would have been folly
please explain, we now have 100 billion MORE debt on the books since the GFC.
also we sold 20 billion of income producing assets

like you in 2009 I jumped onboard with every cent I could find, now mortgage free and income producing assets that give me freedom to live a nice life.

I guess only some of us could see what was happening and took advantage

Crown debt (vs private debt) as a percentage of GDP is in good shape and trending down due to the govt having exercised sound fiscal management. Even rabid lefties have to concede that.

As an investor you'll be aware that looking back with the benefit of hindsight and making negative judgments about the outcome of decisions that were made back then for sound and prudent reasons, borders on dishonesty.

The same as trading based on historic data is flawed. Risk needs to be assessed including looking at the potential downside.

Indeed. I fear that lesson is not appreciated by people piling into some markets just now.

I'm not so sure that we will live longer than our parents after during our lives we were fed chemicals with our milk and meat and we swam in polluted rivers. We grew up breathing fumes from increasing traffic and in 20 years time our antibiotics will have lost their efficiency.

Yes that excuse for a rise should be challenged - it is such a weak and silly argument. And if used it then opens the gates to expected lifespans of different races (and jobs).

If we follow the logic of English and Joyce ...we might need to bring forward retirement age!!

"Unless effective population-level interventions to reduce obesity are developed, the steady rise in life expectancy observed in the modern era may soon come to an end and the youth of today may, on average, live less healthy and possibly even shorter lives than their parents. The health and life expectancy of minority populations may be hit hardest by obesity, because within these subgroups, access to health care is limited and childhood and adult obesity has increased the fastest "

'may' live shorter lives. 'possibly' even shorter.

Vague possibilities are an excellent way to actuarially plan further life expectancy. Why not also factor in Kim Jong Un using a nuclear bomb.

The truth is working over 60 gets harder. People are going to need to save more, invest more effectively and borrow less to get through a much longer old age as it is. The average 60 year old will live another 30 plus years, and many 40 plus. Whether govt comes to the party at 65 or 67, many people will slow in earnings by 60 and they'll need more than a nest egg of $100-200k. The savings and investment rate needs to step up massively. Generation rent needs to turn into generation invest. Property in much of NZ is now a lottery and diversified invest is as about sure as you can get.

Even if people exit generation rent and buy people are buying houses later in life, or upgrading to the next house. Still paying a mortgage into your retirement can deplete a retirement fund much earlier.

Buying a house at 38 or later with a 30 year mortgage is likely to be troublesome. We need to encourage people to start looking at 15-25 year repayment of mortgages and at the same time have them invest enough to retire. That doesn't leave a whole lot of money for lifestyle or having children.

15-25 year mortgage terms? You really do want to stick it to the Ponzi scheme.
There is no way banks are going to head in that direction without a huge kick up the jacksey from some where.
I thought National were going to sleepwalk to another term, now I think they're just looking for the next issue to lose on.

Yes, the gargantuan mortgages XY & millennials are now having to carry, are a major worry for superannuation planning. Personally I think it it the most valid complaint they have in the super debate.

In reality the age has no effect. If your still stuck with larger bills at 67 you will not be able to retire anyway. Fact is I have seen people from the age of 60 on the unemployment benefit instead of super because they KNOW that no one will employ them at that age so they just cruise through to getting the super. If you cannot live on $225 a week then you probably have no hope of living on $330 a week either. If you don't have the mortgage paid off or your renting then be prepared to work till you die.

Well, that's the crux of it. National is stacking the higher pension age on top of the higher housing costs on top of student loan costs, all on the back of the younger generations while being careful not to reduce the laws that benefit his core boomer voting bloc in any way. How will they expect to live on the dole at age 60? They'll probably need to resort to burglary or cooking meth - maybe Tony Alexander can recommend a place in which to cook it.

That's why the young should call them out.

Yes, all is as it should be. National is also developing a life extending drug in a secret lab so the boomers iron grip on the wealth of this country can be extended indefinitely. And you silly millennials thought that one day you'd inherit the earth when we carked it !

With food security set to become a critical issue later this century, don't hold any illusions that these life-extending drugs are for your benefit. Millennials will need long pig to supplement whatever they can fish out of Nick Smith's treacle-like waterways.

I would have liked a student loan but I had to leave school and start work at aged 15. Of approx 150 pupils in my school age group only 4 went to to a university. We all had to do 2 years National Service, virtually without payment. We accepted our lot and rolled our sleeves up. Ownership of a the most modest house involved working long hours and going without dozens of things that people today regard as essentials. We knew we had much better lives than our parents and we are happy that our descendants' lives are far far better than ours. Unfortunately, each generation seems to be more selfish than the previous generation and arguably less happy. It is not difficult to work out why: materialism (for want of a better word) breeds jealousy and discontent.

So, a company paid to train you for a job rather than you having to take out a student loan? And for those who did degrees, they were free and most received allowances to boot. Most people can't get a job at all without a degree these days.

Things factually are much worse today:

You're confusing the fact that some things that were expensive when you were young are now cheap, and vice versa. But the young generations today are in fact less profligate.

It's quite bad all the materialism. Younger generations are struggling with human rights such as food, clothing and shelter while older generations marginalise their objections to the trickle up effect. Greed is driving up homeless population and has significantly increased child poverty. It's rather pathetic to see.

Bill English certainly walked into a minefield

We all know its necessary to do a whole host of things to keep the Super going , but all the parties are just being opportunistic .

The fact is someone has to pay for it and our surplus ( which is the taxes we have paid ) should be going into the Cullen Fund

Think I might be tempted to vote National now, for the first time ever. Doing a 'right' thing, and having it exploited by party politics and the rants of the idealogically obsessed is pretty sickening.

But I voted labour last time, because Cunliffe was brave enough to address other unpopular areas that needed addressing (capital gains) .... and that didn't work out very well. Maybe this is a warning bell that English is doomed ......

This is exactly what national want to divert the debate from Immigration and housing as they too know if debated will not stand a chance.

Good politics. Also protected their vote bank.

The more right thing would to raise the age of super gradually, say by one month per year over the same timeframe.

That National would rather dump it all on the young speaks volumes.

Yeah, nah, can't do that. That's going to affect boomer investor-voters and is therefore off the table for a government of the boomers, by the boomers, and for the boomers.

Who the hell was silly enough to trust them in the first place. Very often John Keys utterances were not straight and often out right lies. Bill English has served his apprenticeship under him, so I guess that some of this will have rubbed off.

So NZ needs a) shut the tap of immigration, b) stop overseas property ownership, c) make property speculating uneconomic with DTI, d) put retirement age back to 65, and e) stop our biggest export money generator draining our rivers and filling what is left with cow poop.

Pretty much rules out every option then. You probably have to pick two and be happy with that.

Who trusts politicians?

The opposition have swarmed all over this like flies on an Outback turd .

There is more to this Super argument than meets the eye ............. National are simply saying what every Kiwi knows , the Super is a problem in the future and has to be addressed .

As a result there is no cohesive idea from the intended coalition partners with everyone buzzing around excitedly saying the first thing that comes into their minds about what they think should be done .

It is likely to be their undoing , not National's

This shows how Kiwisaver is the lastest scam and new form of extra tax to fund the pension system. Those under 45 in Kiwisaver will never get their money back. Unless of course they want to use some of their "savings" to buy their first home which contributes to the raising property market.

Can we trust Winston Peter that though we will vote for change of government and he will not go and support National. So basically a vote for Winston may be a vote for national by default.

John key had the personality to get this through parliament, English lost the election once and now he will lose it again as he has zero charisma

The only reason Labour is suddenly against raising the age of super entitlement is to curry favour with Winston. It's so obvious.

It is because they took it to the people in an election and the people rejected it, they are doing what they were told by the voters, which is more than National is doing.

And Labour were punished for suggesting a Capital Gains tax to "make houses more affordable " ............


Where has anyone ever heard of a new ax that makes the price of something cheaper ?

Its called an oxymoron