Labour seeking wriggle room on pension entitlement age

The Labour party has sledged the government for 3 years straight on the age at which you can receive the pension, now it seems that they are cracking under pressure.

Labour set to water down its pledge to lift the state pension age to 67, opting for more “wriggle room” around the controversial 2011 policy.

At the last election it campaigned on a rise of two months a year in the pension eligibility age, starting in 2020, that would see it rise to 67 by 2033.

The first draft of the party’s new policy platform, which will be binding on the party and the caucus, included a commitment that “Labour will transition to an age of eligibility of 67 years”.

But the revised draft, recommended by the policy council for approval at Labour’s annual conference in Christchurch this weekend, has changed that to read: “Labour will raise the eligibility age to ensure the future sustainability of the system.”  

Senior MPs stress the platform covers high-level values, vision and priorities. Detailed policy will be released as part of the 2014 manifesto. They also argue the change will keep the platform relevant for longer, because the wording is more flexible than a set age.

Although Labour was praised by economic commentators in 2011 for taking a brave stand on raising the pension age, it struggled to explain the policy to voters.

National attacked strongly on the issue, with Prime Minister John Key pledging to resign rather than change the current entitlements.

I think the easiest way to solve the issue is remove universality.

It is ridiculous in many instances that people are receiving their pension when their personal circumstances mean it is actually chump change to them.

The whole idea of a welfare state is not universality, it is for those most in need of assistance, those least among us.

Revisit universal superannuation…people will understand that.

 


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  • Dick Brown

    ‘wriggle room’

    At last, a policy they have experience in.

  • In Vino Veritas

    Sounds a lot like the “policies” under David Shearer. High on airy fairyness and low on detail. So we can therefore assume safely, that Labour will make all sorts of promises in the next 6 months or so to try and improve their (Cunliffes) poll ratings, before they put some reality around their policies.

  • Pete

    I hope they are going to ensure that lesbian, gay, transgender and minorities are represented fairly in any new policy !

  • James

    Getting rid of universality is the best option. Make superannuation entirely something that you save yourself – either through work or through an automatic payment out of your welfare payment for those unable to work.

    Then change the tax laws to encourage pension savings by making pension payments of up to 15% of income tax deductible (and removing ESCT on portions paid by employers of that 15%); and returns earned by the superannuation fund tax exempt. Make tax payable only at the time of withdrawal from the fund.

    • mike

      Completely get rid of Super and put that money towards Kiwisaver maybe, and make that compulsory? Maybe a 3% employee, 3% employer and 4% Government?

      Is that a viable alternative?

  • Jimmie

    I dont have a problem with means testing – just set the threshold for rebating high enough so that only the truly well off don’t get it. (Perhaps a net income of +70K a year or something similar?)

    Not so sure whether you would also need asset testing at the same time – as a lot of oldies might put their capital into assets that give a low net return to stay under the rebate threshold.

    • Jman

      I would hardly call a net income of 70k a year truly well off. Especially if you live in Auckland. That would barely pay the mortgage on an average priced home.

      • Rimutaka

        If you retired and have a mortgage in Auckland surely the smart thing to do is sell up and move elsewhere. I find the idea that one set of beneficiaries are worthy of preferential treatment just because they’re oldies over another set of beneficiaries as ridiculous bias. $70k income is more than plenty for retirees to live on comfortably, they don’t need a hand out from me.

        • Jman

          I would be only too happy to provide for my own retirement if I got corresponding tax relief. But I don’t see why I should pay pension contributions in the form of taxation for 45 years only to get nothing out of it in the end, just because I was earning enough to live a very modest life, while bludgers who have done bugger all get a guarenteed pension.

          Means testing is a bad idea as it will just be used as a political football by the left, to promise the bludgers more and take more from the “rick pricks”. It has to be either everyone or no-one.

          • Rimutaka

            Well you haven’t been paying pension contributions for 45 years, Muldoon put a stop to that. Thanks piggy.

          • Jman

            By the time I get to 65 I will have been

  • GregM

    Hmmm. Dunno about removing universality. I know quite a few older people still working, one is 82. I look at it as a “tax return” to them after a lifetime of contributing.
    I would rather raise the age of eligibilty.

    • In Vino Veritas

      How about just rebating contributions against tax paid? If you are paying for your own retirement, you get back the tax contributions that you are currently making for it, and the government doesnt then have to provide it.

  • JeffDaRef

    Dare I say it, I like the concept of Peter Dunne’s proposal – where the individual can take ownership and choose when they go onto the pension – at a lower rate if taken early, or a higher rate if taken later – completely removes the politics of envy and me-too-ism, and solves the impossible task of trying to legislate for every personal situation.
    Of course the likes of Collins would hate it because it would halve the amount of sob-story material he had left to work with.

    • GregM

      Yep, definitely worth looking at Jeff.

  • Dick Brown

    Will there be a quota on wriggles?

    “Oh, you are gay so you may only wriggle for 6% of the debate”

  • rouppe

    I don’t agree with removing universality just because someone determines you’re a “rich prick” and decides you don’t need it.

    Part of the tax burden has been paid on the assumption that when you retire, what’s gone around comes around.

    It would be like saying “even though you’ve made regular contributions to an index tracking fund, you seem to have done quite well for yourself so you’re not going to get the money from the fund anymore”.

    • GazzW

      I totally agree rouppe albeit to justify my own situation. I figure that over the course of my working life that I have paid around $1.5 million earnings related taxes. At 69 I still work around 30 hours per week and plan on doing so for just as long as I enjoy it. The only direct expense that I have ever laid at the state’s door was a week in hospital. By most standards I could be classified as a rich prick – I have a nice freehold home, cash in the bank, a share portfolio and my investment income plus my annual salary comes to about $95k on which I pay tax. Am I any less entitled to my super than the bloke who’s been on a benefit for most of his working life, lives in a state house and is in and out of hospital with self-inflicted illnesses? Yes, I am ‘entitled’ to it – Muldoon filched my previous super package and in exchange guaranteed me and every other taxpayer a universal pension. I am now collecting.

  • Rimutaka

    I like your suggestion, I’d suggest part of the problem is many can’t abide the
    simple truth that Superannuation is a benefit. There’s no magic pot of
    gold that they have contributed to and that’s been put away for them,
    you and I pay for their benefit from our taxes.Like any other benefit it shouldn’t be exempt from limitations.

  • Dick Brown

    Removing universality sets a dangerous precedent unless you can re-activate it if circumstances change, ie; lose money through whatever means.

  • BJ

    I see a retirement pension being many things to different people based on how they have functioned in society throughout their working life and therefore it should be universal.
    Someone that has worked physically hard for their family, provided employment for others and continues to do so past 65yrs – deserves to have a pension irrespective of continued income – like a reward they can consider their very own money for once, to spend as they see fit. For many others who go into retirement having to live off just the pension, that is the culmination of their life choices and many still working 65+yr olds are helping pay for that.

  • johnbronkhorst

    I still say that we shouldn’t look at retirement from the standpoint of how much it costs us now. But how much each retiree has inputted to the economy/society.
    Look out your window…..everything you see, was built by a previous generation, everything you take for granted, and before them was a previous generation that built the foundation that they used.
    40-45 years of WORK is enough, now is the time to build our society on their foundations and time for them to enjoy the fruits of their labours.
    Notice I said WORK, not sit around and wait for someone else to do it for you!

  • Hazards001

    Given that most of Labours core constituency retired at age 16 raising the age isn’t going to upset many of them.
    The days when labour voters were manual workers whose bodies were past it by 60 are long gone.
    Now they have either never worked a day in their lives or are a govt. employee/academic that couldn’t tie their own laces without an instruction manual.

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