NZ Super - Sustainable?

[Perry]

Moderator Note

Posts moved to this new thread, from here.

[WGN ex-property manager]

NZ Super - Sustainable?

The current state sponsored super is not sustainable, regardless of which side of the ethical / social debate you stand.

The Prime Minister either needs to:
A) Raise taxes and put more into the Cullen fund (National won't do this)
B) Raise the age of retirement steadily up to 75 over the next 40 years (losing the old age vote for a political generation... that enough of a swing to lose every election... so neither side have the bottle to do that).
C) Lower taxes and immigration barriers to increase the young tax paying working population significantly (neither seems up for this).
D) Do nothing, hide head in sand, and hope its the other lot in power when the masses finally realise that the last chance to act was 20 years ago (in other words much like the current approach to Global Warming)

Conclusion: It is a train wreck in slow motion. Assume the State super will be zero, plan a future for your self, take action for yourself.

[Wayne]

Quite true.
A) valid debate on sensibility of borrowing now (current A/C deficit) to 'save' for the future
B) big step over the 67 that has been touted, either way Key has painted himself into a bit of a corner
D) preferred option it seems - they won't be in power when it finally hits the fan so won't be held accountable

[Winston001]

The current state sponsored super is not sustainable, regardless of which side of the ethical / social debate you stand.

The Prime Minister either needs to:
A) Raise taxes and put more into the Cullen fund (National won't do this)
B) Raise the age of retirement steadily up to 75 over the next 40 years (losing the old age vote for a political generation... that enough of a swing to lose every election... so neither side have the bottle to do that).
C) Lower taxes and immigration barriers to increase the young tax paying working population significantly (neither seems up for this).
D) Do nothing, hide head in sand, and hope its the other lot in power when the masses finally realise that the last chance to act was 20 years ago (in other words much like the current approach to Global Warming)

Conclusion: It is a train wreck in slow motion. Assume the State super will be zero, plan a future for your self, take action for yourself.

Agreed in full.

[ChrisD]

It won't happen udner this government which has foolishly and irresponsibly shut down discussion on the matter.

[Wayne]

Yes - it is a shame these things can't be debated in an adult manner.

[CJ]

Ruling out discussions completely while he is PM was a mistake for Key and I think it is a signal that he doesn't have long term asperations.

He should have said we will discuss but not this term, much like he did with SOE's.

[Tan]

Muldoon took it and put it into the consolidated account didn't he?

This is the reason people aren't in Kiwisaver, which is at least a part solution to the problem. I can't count the number of times I have been told "There is no way I'm going into Kiwisaver, the government will just take it one day"

Which of course is not the case - the worst they can do is stop the flow of free money into kiwisaver accounts.

It does annoy me that when I get to retirement, it is very likely the fact I have kiwisaver (and other income streams) will be taken into account and those who have spent everything they earned or lived on benefits will be the only ones getting govt super .

I am not prepared to live on $327 pw in any case, even not paying rent I would be budgeting hard to make it stretch, but it would be a nice top-up .

[Wayne]

I can't see how the Govt can take KS away from you - it is in your name. To that extent they could take away any investment you had (nationalise private savings).

The other argument of saving to be means tested while others spend and get the state to pay has been around forever (my mother-in-law used it many times). I would rather save and have a better life in the future than wait for the state and live a subsistance life.

And, yes, if I am not means tested then the extra would be a nice bonus and I could justify every penny

[Perry]

It does annoy me that when I get to retirement, it is very likely the fact I have kiwisaver (and other income streams) will be taken into account and those who have spent everything they earned or lived on benefits will be the only ones getting govt super .

As Wayne observes, it's just a socio-economic
injustice, driven by the government-of-the-day
ideology. Same goes for things like the 'Mayor's
Relief Fund,' after times of civil emergency.

A door-knocker comes, after the flood waters
have abated and the conversation should/could/
might go something like this:

1) Did you sacrifice or go without something so
you could pay for an insurance premium, to
cover yourself against disasters like this?

2) Or did you spend every available cent on
boozin', baccy and partying?

If (2) applies, then I can help you via the fund.

If (1) applies, then the fund can't help you, as
it's reserved for the 'poor' people.

Happened to a friend of mine!

Well, not those exact words were spoken,
but that's what my friend said was the gist
of it. She was one unhappy chappess.

[drelly]

Perhaps the conversation should be more along the lines of... should we move to Australia now or later... because they've provided for this and we haven't.

[Wayne]

Perhaps the conversation should be more along the lines of... should we move to Australia now or later... because they've provided for this and we haven't.

Lost me - how have Aus provided for what?

[Shalodge]

Here is a solution..

Commence date variable .. say 1/4/2011..

Everyone on Nat super or entitled to it on that day gets it ...

Then curve the entitlement from then so that anyone born on 1/4/2011 doesnt get nat super in the form we know it..and anyone turning 65 on 2/4/11 waits one extra day.

I doubt that it would be that hard to work out a curve that progessively steepens and effectivly provides an individual entitlement date for everyone based on their DOB..

[flyernzl]

As well as the affordability issue, there are a number of other related factors that need to be considered.

Sociological aspects:
- within New Zealand society we cannot have Grandma starving to death in the gutters of Queen Street. Therefore any New Zealand Government is, in the final analysis, committed to paying a pension to at least the poorest elderly in the country no matter what the Economists and right-wing Politicians may say.

Means testing:
- high income earners pay tax on the government pension at their highest rate. Thus the net cost to the government of paying the pension to these people is substantially less than the usually quoted gross amount.
- the cost of the Means Test, in salaries, offices, cars, stamps and forms, would be a substantial cost in itself and may well outweigh the savings in paying the pension to those who 'don't need it'. The very clever will of course adjust their affairs to ensure they still qualify under a means test as is currently the case with Trusts and the Rest Home Subsidy.

Setting the rate:
- at this time, the goverment pension is set at an amount that assumes that the recipient has all their consumer durables bought and paid for and only needs sufficent income to buy their day-to-day groceries and pay the power bill. Current recipients usually left school and started earning in their late teens, bought a house worth three to four times their income in the twenties and had the mortgage paid off by their late 50s. In the future, we will have pensioners who extended their education to their mid to late 20s, paid off a student loan by the time they were 35, and then saved a deposit to by a home which cost them eight to ten times their income at say age 40. These people will still have substantial mortgage payments to make when they reach what we now see as retirement age. How will this sea change be accommodated?

Youth unemployment:
- when someone in an organization retires, others within the structure move up a notch creating a vacancy near the bottom of the hierarchy. We now have a society in which a statutory 'retirement age' cannot be enforced. If the elderly keep working will there be enough job vacancies for the young (even if we have reduced numbers of young people)?

These are all factors the will complicate any simplistic solution to the problem.

[Shalodge]

As well as the affordability issue, there are a number of other related factors that need to be considered.

Sociological aspects:
- within New Zealand society we cannot have Grandma starving to death in the gutters of Queen Street. Therefore any New Zealand Government is, in the final analysis, committed to paying a pension to at least the poorest elderly in the country no matter what the Economists and right-wing Politicians may say..

Not related .... Staving in the gutter is something no one wants to see regardless of age.

Means testing:
- high income earners pay tax on the government pension at their highest rate. Thus the net cost to the government of paying the pension to these people is substantially less than the usually quoted gross amount.
- the cost of the Means Test, in salaries, offices, cars, stamps and forms, would be a substantial cost in itself and may well outweigh the savings in paying the pension to those who 'don't need it'. The very clever will of course adjust their affairs to ensure they still qualify under a means test as is currently the case with Trusts and the Rest Home Subsidy..

Right .. Almost all "pensioners" with significant assets are hiding them so they can continue to claim their super and other benefits. Tax is avoided by most as well..

.

Setting the rate:
- at this time, the goverment pension is set at an amount that assumes that the recipient has all their consumer durables bought and paid for and only needs sufficent income to buy their day-to-day groceries and pay the power bill. Current recipients usually left school and started earning in their late teens, bought a house worth three to four times their income in the twenties and had the mortgage paid off by their late 50s. In the future, we will have pensioners who extended their education to their mid to late 20s, paid off a student loan by the time they were 35, and then saved a deposit to by a home which cost them eight to ten times their income at say age 40. These people will still have substantial mortgage payments to make when they reach what we now see as retirement age. How will this sea change be accommodated?.

Govt super is set as a % of average wage as far as I am aware? People will know when/what their entitlement is and will have time to adjust their plans.. It dosnt need to be complicated ...

Youth unemployment:
- when someone in an organization retires, others within the structure move up a notch creating a vacancy near the bottom of the hierarchy. We now have a society in which a statutory 'retirement age' cannot be enforced. If the elderly keep working will there be enough job vacancies for the young (even if we have reduced numbers of young people)?
.

Whats that got to do with national Super? The question is will their be enough employment full stop ..

.

These are all factors the will complicate any simplistic solution to the problem.

Not they wont.. The problem is not complex ..why make it so? People need to make provision for their retirement.. They wont do so while nat super is there ... The belief that the State will provide died a while ago but we dont seem to have learned it yet..

Sacrifice some standard of living now so you can eat when your old!

It is that simple..