The good, the bad and the ugly on superannuation

Bill English made a stuff up on The Nation over the weekend and answered a question about superannuation it appears he was ill-prepared for.

That then triggered yesterday’s announcement from him:

The Government will progressively lift the age of eligibility for NZ Superannuation from 65 to 67, starting in 20 years’ time, Prime Minister Bill English announced today.

“New Zealanders are healthier and living longer so adjusting the long-term settings of NZ Super while there is time for people to adapt is the right thing to do,” Mr English says.

The changes will be phased in from 1 July 2037 and will not affect anyone born on or before 30 June 1972.

Even after the change, someone who retires at age 67 in 2040 is likely to receive NZ Super for longer than someone who retires at age 65 today. That is because average life expectancy is increasing by about 1.3 years each decade.

The change will be legislated for next year.  

“This Government has a strong track record of supporting older New Zealanders. Since 2008 weekly payments to superannuitants have increased by 35 per cent after tax while inflation has increased by 14 per cent.

“Gradually increasing the retirement age from 2037 will more fairly spread the costs and benefits of NZ Super between generations, ensure the scheme remains affordable into the future and give people time to adjust,” Mr English says.

“It will also bring New Zealand into line with other countries like Australia, the United Kingdom, Denmark, Germany and the United States which are all moving to a retirement age of 67.”

There will be no change to the universality or indexation of NZ Super.

Mr English says the Government is announcing the change now so that political parties can debate superannuation transparently in the lead-up to the election.

First the good. National has finally done something responsible in moving the age of eligibility. It was Labour’s policy at the last two elections, so it will be interesting to see how they play this one. The other bit of good news is that it appears Bill English has listened to Winston Peters and changed the residency eligibility rules for NZ Superannuation which will increase from 10 years to 20 years. This will stop those who have never contributed to NZ from claiming superannuation. I would have gone a bit further and tied it to reciprocal welfare agreements as well.

The other bit of good news is that this will save $4 billion per annum in costs once implemented.

Now for the bad. All this discussion is moot really.

Why?

Because it is slated for the legislation to be passed only if National is re-elected, and on top of that it is dependent on coalition arrangements. If National needs to rely on Winston Peters then all the promises are worthless as Winston will not budge on superannuation. On top of that the changes are slated for 20 years time. There will be seven governments in that time who are likely to tinker with superannuation as well.

And the ugly?

This whole episode shows what a complete twat Bill English has been. He didn’t need to say what he said on The Nation. It was obvious he was blindsided by the question. Consequently, he has had to get people working hard over the weekend to make it appear that this has been some work that has been in progress for quite some time.

It has all the hallmarks of a rush job. Bill English will get away with it though because Labour are stuck between a rock and a hard place with their previous policy positions on superannuation. Any questions they raise on this will have their own words thrown back at them in the house.

It is high time that superannuation was addressed. I fear however that all Bill English has done with his injudicious utterances on the weekend is gift Winston Peters another few percentage points.

 

– NZ Government

 


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