And economist Cameron Bagrie is saying that we can’t ignore either of them - particularly in relation to the long-term outlook and what it means for superannuation and retirement planning.
He says, with Government debt forecast to blow-out long-term, we need to accept the fact that the universal pension scheme is unsustainable.
Government debt is forecast to increase to 180 percent of GDP in 30 to 40 years because of the ageing population and Cameron Bagrie says if we think tinkering around the edges with KiwiSaver is the solution, then we’re dreaming.
And I couldn’t agree more.
He says a conversation about the sustainability of superannuation can’t be avoided forever. I would disagree with him slightly on that one. I think that conversation about the sustainability of our NZ Super scheme needs to happen now.
My view on NZ Super is that it’s crazy people who work beyond 65 get the pension. Even though it’s taxed at a higher rate - I get that. But I still think it’s wrong.
I've also been a fan of some form of means testing.
But, if I’m honest, do I really think the scale of the problem we’ve got - especially long-term - would be sorted out by not paying the pension to people who continue to work beyond 65 and means testing people before they get the pension?
Probably not.
So, if we’re really going to think long-term, I reckon we need to make the call that people of a certain age are told that the NZ Super pension won’t be available to them by the time they reach retirement age.
This would have to be long-term. So, for arguments sake, let’s say we told people who are 35 and younger that they will have to provide for themselves completely when they retire.
That would give them at least 30 years to get themselves sorted. In fact, I would say that people in this age group probably assume now anyway that they won’t be getting a government pension by the time they reach retirement age.
So what I’m talking about is a very gradual phase-out of the government pension.
I’m in no doubt that something like this is needed. Because we are dreaming if we think we can keep doing what we’re doing.
John MacDonald is the Canterbury Mornings host on Newstalk ZB Christchurch. This article was first published HERE
Government debt is forecast to increase to 180 percent of GDP in 30 to 40 years because of the ageing population and Cameron Bagrie says if we think tinkering around the edges with KiwiSaver is the solution, then we’re dreaming.
And I couldn’t agree more.
He says a conversation about the sustainability of superannuation can’t be avoided forever. I would disagree with him slightly on that one. I think that conversation about the sustainability of our NZ Super scheme needs to happen now.
My view on NZ Super is that it’s crazy people who work beyond 65 get the pension. Even though it’s taxed at a higher rate - I get that. But I still think it’s wrong.
I've also been a fan of some form of means testing.
But, if I’m honest, do I really think the scale of the problem we’ve got - especially long-term - would be sorted out by not paying the pension to people who continue to work beyond 65 and means testing people before they get the pension?
Probably not.
So, if we’re really going to think long-term, I reckon we need to make the call that people of a certain age are told that the NZ Super pension won’t be available to them by the time they reach retirement age.
This would have to be long-term. So, for arguments sake, let’s say we told people who are 35 and younger that they will have to provide for themselves completely when they retire.
That would give them at least 30 years to get themselves sorted. In fact, I would say that people in this age group probably assume now anyway that they won’t be getting a government pension by the time they reach retirement age.
So what I’m talking about is a very gradual phase-out of the government pension.
I’m in no doubt that something like this is needed. Because we are dreaming if we think we can keep doing what we’re doing.
John MacDonald is the Canterbury Mornings host on Newstalk ZB Christchurch. This article was first published HERE
7 comments:
Super: as in most OECD countries, the model requires drastic revision to continue. And, unless democracy prevails over cultural marxism, Super will disappear through inadequate funding. Excessive taxing to redistribute wealth, falling productivity and - in NZ's case - generous Iwi settlements in perpetuity - will lead to bankruptcy. Countries will simply run out of funds. D-Day is coming.
Why not axe working for families instead? The system that put nzs entire middle class on welfare communism style economics.
I would also say that the government should not touch superannuation until they can prove they have cut all the waste out of government. Headmasters who have wasted millions on team building; getting rid of government departments who do nothing; close down the Waitangi Tribunal; stop Maori co-governance; stop false treaty claims with tribes that never signed the ToW; stop giving scientific grants to very dubious applicants. Sort out ACC. Get people off the dole and contributing to society.There is a lot of money that could be saved and governments are not prepared to do it; as they don’t want to be unpopular and not get re-elected. So don’t penalise NZers who have worked all their life and contributed.
Superannuitants should not be targeted. If governments managed the finances sensibly we would be a "rock star economy". Heres some ideas: get rid of ideological heads of government departments earning over $500,000 a year who promote ideological, useless spending. Get able-bodied people working. Reduce the number of MPs. Scrap climate change contributions. Pull out of UNDRIP( which will no doubt cost us heaps over the years). Settle all Treaty claims next week. Introduce a comprehensive , compulsory saving scheme. Promote a self- responsibility philosophy in schools. 2030 would then start looking good.
I agree with the comment that the government should phase out super in 30 years time - thereby giving people time to save. However I believe that super savings should be compulsory at a minimum of 7% of wages / salary and also absolutely no withdrawals (including for house buying) until 65 years of age...
Another excellent contribution from Janine and I support Anon: 8.58. NZ thinking public has the courage and understanding budgets . Has the Government ?
Basil Walker
It isn't clear why you'd take aim at superannuation, yet ignore other parts of the welfare state. Here's a thing: all superannuitants will die, most of them sooner rather than later, having spent a relatively short time drawing it. This is certainly true of my family, and I'd guess that we're pretty typical.
The same cannot be said of other beneficiaries, many of whom will be on welfare of some sort for all of their lives.
I note the reference to means testing. Many younger people are unaware that this was tried in the 1990s, and abandoned, because of unfairness and injustices in the system.
Changes to the superannuation system were enacted very speedily in the 1990s. At that time I was in the workforce, and I vividly remember older colleagues being blindsided by the speed of those changes.
I've also recently become aware that many younger people have no idea what the payment rate is, and are shocked by how low it is, especially in today's expensive environment. We're pensioners, living in Wellington. WCC and GWRC rates, together with insurance, eat up the entire weekly payment for one of us. How are we supposed to live?
Bear in mind that many people will never be able to save enough for their retirement, such that investments would guarantee enough income on which to live. The notion of the wealthy Boomer is largely mythological: many super annuitants are obliged to work, if they are to survive. As it stands, the pension is barely enough to live on, even if one 's circumstances are favourable. The OAP was designed to prevent poverty among the aged. If it is to be effective in this endeavour, payment levels need to be raised significantly.
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