Super is a Ponzi scheme, ctd

A while back I linked to an article about social security acting and behaving as a giant Ponzi scheme. It was a US article but the same goes for our super scheme which is based on a Pay as you Go model. Farrar has picked up on David Chaston’s article on the same topic.

Basically, someone who finished high school with the School Certificate qualification in 1962 will be aged 65 in 2011, and eligible for NZ Super.

Statistics NZ has relevant data of earnings and taxes from 1962 and we can use that data to track the earnings in that working life – and from that data determine the taxes paid over that period.

Essentially, our statistically average person will have earned about NZ$1.4 million and paid about NZ$342,000 in tax, taking home a pay packet of a little over NZ$1 million over those 50 years.

Converting these raw earnings and taxes to 2011 dollars, they earned NZ$2.7 million, paid NZ$620,000 in taxes, and had take-home pay of a bit more than NZ$2 million.

However, for the next 20 years of retirement, they will claim in 2011 dollars NZ Super to the value of NZ$544,000 – or almost 88% of all the taxes they have ever paid.

If they live for 30 years in retirement, they will claim almost a third more than they paid in a lifetime of taxes. They ‘break-even’ after 22+ years.

Both David’s. Chaston and Farrar also miss the point that though the oldies have sucked up all the taxes they ever paid in super payments to themselves, they also used that taxation to pay for schools, road, hospitals, middle class welfare and a host of other unnecessary electoral bribes along the way. This means that their superannuation was never funded, never will be funded and relies on an ever increasing pool of workers being fed in at the bottom to prop up the takers at the top. This is classi Ponzi scheme characteristics that eventually collapses in on itself.

When we talk about welfare reform we really need to look at the single biggest group of beneficiaries, pensioners. They claim they have paid their taxes and now should live their remaining lives at the expense of the taxpayer when the reality is they had the best this country had to offer, paid bugger all for it, and are expecting the rest of us to pay for their ever increasing length of retirement.

The pity is that there are venal and corrupt politicians who periodically come along and promise the greedy old people even more “entitlements” in order to secure electoral sinecure.


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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