Pension

They’ve already got a party

A band of the bewildered have decided to form a new party…for greedy old people.

A new political party has formed to represent older New Zealanders, saying the Government is showing no interest in senior issues.

The New Zealand Seniors Party plans to register as an official party and will run candidates in the 2017 election.

It was formed by a group of “disgruntled pensioners” in Wellington but its executive is also made up of people from Auckland, Christchurch and the provinces.

The party said seniors needed more meaningful representation in Parliament. ? Read more »

Forsyth Barr doesn’t think much of Labour and their new ‘big tool’

Here?are some flippant comments from broker Forsyth Barr on Labour?s policy announcement re compulsory savings and legislating savings rates.

Kiwisaver:?as per yesterday?s commentary,?the brains trust at the Labour Party met in a very small phone booth and decided to propose some changes to the way monetary policy works?if we were to be placed in the frightening situation of having it lead a coalition government.

The?key one is giving the RBNZ the ability to change the rate?(they call it a Variable Savings Rate tool)?at which workers would have to contribute to a Kiwisaver scheme?that would become compulsory, instead of simply having the OCR? rate to play with.

The wording would appear to still give the government a veto over an increase in contribution rate so?you do have to wonder how reserve bank independence looks under this, also on our maths the changes need to be fairly solid, e.g.?we reckon a +1.5% lift in the Kiwisaver contribution rate would be? equivalent to a 50bp increase in the OCR.

The attached note gives you a good overview of the situation,?personally I?d back Richie McCaw switching to league as a higher probability than this coming in to play.

Read more »

Labour’s ‘big tool’ policy turns out to be a big dog

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Aside from a half hearted attempt from the Labour Party spokesman for Fairfax, Vernon Small, and Brian Fallow who has taken time off looking around the globe for catastrophic global warming and a carbon trading system that works it’s not been a particularly welcomed policy release. The exporters love it though with a free lunch on the backs of the working poor.

We wait for the endorsement and backing of Labour from the Property Council, first of all Labour are going to drop their tax rate from 28% to 15% by introducing a CGT and now they are going to give them the gift of lower interest rates which is generally the biggest cost by taking money out of the lowest paid who will now be earning more in retirement than when they are working.

 

Labour’s proposals to allow the Reserve Bank to adjust KiwiSaver contributions rather than interest rates to control inflation could hurt savers and see debt repayment delayed until retirement, KiwiSaver experts warn.

The Labour Party this morning announce proposals to change New Zealand’s monetary policy tools by introducing a variable savings rate for KiwiSaver.

The policy would require the Reserve Bank to use changes to the rate of people’s KiwiSaver contributions rather than interest rates to control inflation while taking pressure off the over-valued kiwi dollar.

Labour would also make KiwiSaver compulsory and increase contributions from the current 6 per cent combined employee and employer contribution to 9 per cent over time.

According to sorted.org.nz ?if you earn?$600pw and you save at Labour’s compulsory rate you will enjoy a retirement income of $496pw and when added to the super payment of $366 you will be earning $262 a week more in retirement than when you were working and struggling to get ahead. ? Read more »

Is Labour looking after their rich mates in Finance?

Labour likes to talk about National looking after their rich mates and the top end of town. David Cunliffe even used the term in his stand up on Tuesday after his rather testy and some say shouty caucus meeting.

But could it be that Labour are the ones looking after their rich mates in the finance industry…I mean if the accusation is good enough for Labour to use it should be good enough for anyone else to use. The Herald reports:

Labour would raise the age of eligibility for New Zealand Superannuation to 67, make KiwiSaver compulsory for employees and increase the KiwiSaver contribution rate if voted into power.

Deputy Labour leader David Parker told members of the superannuation industry his party was not afraid to tackle the age of eligibility issue despite it being politically challenging.

“I am willing to deal with the age of eligibility for superannuation. This is not populist politics.”? Read more »

Cry Baby of the Week

Cry-Baby: George, 66

The incident:?George is a pensioner who took out a student loan of $4,000 in 1999, he hasn’t paid a cent back since he got the loan as he hasn’t earned enough to cross the threshold for repayments. Good luck or good management? Who knows? However he is now on the pension and it pays him enough to cross the threshold for repayments on his long outstanding student loan.

The appropriate response:?Behave like a responsible citizen and pay what is owed, when it is required.

The actual response:?George, 66 runs off to the media complaining that the government is hacking into his pension and stealing his money.? Read more »

Benefits supporting ?dysfunctional behaviour?

Iain Duncan Smith discusses welfare in the UK with terms and tones that should be used here:

Iain Duncan Smith will say that the current payment of benefits is supporting ?dysfunctional behaviour? and that for some families ?the notion of taking a job is a mug?s game?.

In his first major speech since publicly agreeing to draw up another ?10 billion of benefits savings, the Work and Pensions Secretary will insist that the system must return to the principles of William Beveridge, the founder of the modern welfare state.

Mr Duncan Smith will say: ?All too often, government?s response to social breakdown has been a classic case of ‘patching? ? a case of handing money out, containing problems and limiting the damage but, in doing so, supporting ? even reinforcing ? dysfunctional behaviour.

?You have to ask which bits of the system are most important in changing lives. And you have to look at which parts of the system promote positive behaviours and which are actually promoting destructive ones.?

He will highlight warnings from Beveridge, made almost 60 years ago, that those relying on benefits cannot hope to receive assistance ?from a bottomless pit?.

?Especially so, when the economy isn?t growing as we had hoped, the public finances remain under pressure and the social outcomes have been so poor,? Mr Duncan Smith will add.

If welfare was the answer then we should have solved the problem it was designed to help. Instead welfare has caused an bottomless pit of despair where people are led to believe and indeed do believe that the answer to all of societies ills is ever increasing handouts from the state.

The Government is planning to overhaul the benefits system with the imminent introduction of universal credit, which is designed to remove financial barriers for unemployed people wishing to return to work. He will describe the current system as one of ?Byzantine complexity?.

?An exemption here, an addition there, all designed around the needs of the most dysfunctional and disadvantaged few,? the Work and Pensions Secretary will say. ?Instead of supporting people in difficulty, the system all too often compounds that difficulty ? doing nothing for those already facing the greatest problems, and dragging the rest down with it.?

Mr Duncan Smith will say that the poor use of government money in recent times has led to people being ?written off?.

?Our failure to make each pound count has cost us again and again over the years, Not only in terms of a financial cost ? higher taxes, inflated welfare bills and lower productivity, as people sit on benefits long term. But also the social cost of a fundamentally divided Britain ? one in which a section of society has been left behind. We must no longer allow ourselves to accept that some people are written off.?

The Conservatives believe reforming the welfare system and cutting tens of billions from the annual cost will be a popular policy at the next election.

They are right, because in tougher times the working stiff, paying the taxes that get poured into bludgers have had enough. They work their guts out and watch as people live on the large having a lend at their expense.

Um of the Day and more

David Shearer had a ‘mare this morning.

In 14 short seconds on Breakfast he managed to secure the Um of the Day, and then cast doubt on Labour’s intentions for Super.

By suggesting that KiwiSaver makes the pension “more affordable” and offers the Government “choices”, he appears to be suggesting some kind of means testing, or maybe just a straight reduction in entitlements.

Either way, it adds to the confusion surrounding what his policy actually is. ?He can’t tell us who qualifies to get the pension at 60 under his plan either.

Can we have some sensible discourse on super please?

There is a great deal of talk about raising the age of eligibility for National Superannuation. Every single person pushing this agenda misses the point. All that is going to do is push the bubble out a few years but the bubble still exists,

Instead of talking about eligibility around age we need to talk about eligibility full stop.

On talk back a couple of days back Leighton Smith talked about the old pension scheme when 1s and 6d was supposed to be put aside for retirement. Muldoon of course changed all that, but you constatly hear about a social contract to provide for all in their?retirement?going back to that 1 and 6 arrangement.

If you ask those same people moaning about how that was a contract and it was what was promised to them whether or not they believe the promises of any politician they will answer emphatically no…and yet they cling to the belief that this one single promise about reitrement is the one that politicians will somehow honour.

That is why I call the retired, the bewildered.

They say that they paid their taxes…and so they did, but they forget that they also had brand new schools, brand new hospitals, brand new infrastructure, welfare spending along the way, free education, free university?tuition…basically a free ride that we are all now paying for…along with their retirement, which they want free as well…plus of course Winston Peters chucked even more money at the greedy oldies with the Gold Card.

They are bewildered and perplexed that the gravy train has to end.

We as a nation need to have a proper discussion about eligibility for superannuation rather than just tinker at the edges. If Labour really was trying to show how they were fiscally responsible with regard to retirement then they would be?proposing?and having a discussion about means testing, removing universality and scaling back entitlements. they don’t have the courage to do that, instead they grandstand on raising the age, and then bizarrely suggesting that we can afford to lower the age for “manual workers” to 60 at a cost of half a billion dollars we don’t have.

So while everyone castigates National for doing nothing, the one squawking the loudest are really only tinkering.

Where is the party with the mettle to?grasp?the nettle and sort out superannuation so that it is sustainable and only for those in need. Universality must go, means testing must be re-introduced and some serious honest discussions need to be had.

A good change

? NZ Herald

The left wing parties are upset over changes to rest home?subsidy?qualifications.

Labour has accused the Government of trying to sneak through a change which will mean fewer elderly people qualify for rest home subsidies which are asset-tested.

The Bill to make the change was introduced as part of the Budget. It will mean the asset threshold below which the elderly qualify for Government subsidies towards their care will increase by the rate of inflation every year, rather than the annual increase of $10,000 which previously applied.

It is likely to mean the asset threshold raises at a lower rate in the future, so fewer people will qualify.

Under the change, the threshold from July 2012 will increase to $213,297 rather than $220,000 for a single person or a married couple both of whom are in care. It will increase to $116,806 – rather than $125,000 – for married couples where one of them is in care.

The Health Ministry has estimated it will mean 260 people next year are no longer eligible for the subsidy, rising to 1040 people in 2015/16.

This is a good change. It basically requires people to pay for their own care instead of the government providing subsidies. All the subsidies are doing currently is getting taxpayers to subsidise the inheritance of the off spring of people in aged care.

The reality of aged care now is that few people enter a rest home from choice, particularly in Auckland. If you are in a rest home you are never coming out except in a box and so any money spent by the taxpayer and not the aged is simply a subsidy for the inheritence for their offspring.

It is not the?responsibility?of?government?to ensure legacies are preserved for children.

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Hide on the Cullen Fund

??NBR.co.nz

Rodney Hide has a great column in the NBR. These are his comments about the Cullen Fund:

The previous administration invented the pretend policy of having a giant government piggy bank to pre-fund future payments. Journalists understand the concept if not the practice of a piggy bank and bought the policy without hesitation and without a thought.

Political success

They wrote the policy up as though it made a difference. Finally, they wrote, someone has done something to fix the problem: future pension payments are to be pre-funded.

The policy has proved a great political success even though it serves no useful public purpose. The $20 billion fund doesn?t change the cost of pension payments one bit. It just ever so slightly shuffles a very small part of the cost forward.

Besides, if the government knew how to invest money to make a buck there would be no need for tax. The government could earn its own money. That we are still taxed suggests the government?s investment skills are no better than the rest of us.

But here?s the thing: Both National and Labour now agree that borrowing money to sink into the Cullen Fund is dumb. But why are we even borrowing money when we have the fund?

There?s $20 billion in the Cullen Fund. That?s twice what the government hopes to make selling off half a stake in power companies and Air New Zealand.

The same logic that sees payments to the Cullen Fund suspended should see the entire fund on the block. Getting rid of the pretend policy would also focus minds on the need for the real policy.

The trouble is politicians have been pretending for so long that the Cullen Fund serves a useful purpose that they now can?t sell it.

But at least it?s easy to see what New Zealand will look like in 20 years: just look at Greece now.