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Retirement age

Written By: - Date published: 7:18 am, July 23rd, 2010 - 20 comments
Categories: john key, superannuation - Tags: ,

Speaking of things that should retire, Don Brash has been in the news:

Let individuals choose when to retire

Former National leader Don Brash has waded back into the retirement debate, suggesting future governments let workers decide for themselves what age to retire.

His call coincides with a major retirement income policy seminar in Wellington this week where there are expected to be calls for compulsory superannuation to help prepare for a looming “silver tsunami”.

Dr Brash is also raising the alarm over New Zealand’s ageing population. In a speech to an Auckland business audience yesterday, he said workers should be able to decide what age to collect a pension, with the rate determined by the age at which they start.

Both National and Labour were quick to reject the proposal:

National and Labour spurn Brash’s suggestion of flexible pension

New Zealand’s two major parties have been quick to shoot down a novel proposal by former National Party leader Don Brash to raise the state pension age to 67, but with flexibility to retire earlier or later on different rates. …

But a spokesman for Finance Minister Bill English said there would be no changes to either the qualifying age or payment levels of NZ super. “This is built into the Government’s long-term spending path and fiscal forecasts.”

Labour deputy leader Annette King said Labour also supported keeping the qualifying age at 65 and saving money for it through the “Cullen fund”, with people also encouraged to save extra through KiwiSaver.

No Right Turn points out some of the problems with the proposal:

The only reason is to soften us up for an increase in the retirement age – an increase which would be unfair to Maori and unfair to the poor, who are more likely to die before retirement age. We know Brash doesn’t care about those groups – his willingness to use racially divisive politics and his advocacy for the abolition of the minimum wage shows that clearly enough – but the rest of us should. A retirement benefit that is paid only to the rich and lucky is no benefit at all.

I suspect that there are many in National who would love to raise the retirement age, but their hands are very much tied by Key’s highly publicised promise to resign if that takes place. But the ball is blatantly in National’s court here. The problem of funding future retirement is very real. Labour made a solid start in the previous government with the Cullen fund and Kiwisaver. The Nats – as ever unable to think further than the next election – have done nothing except weaken both of Labour’s initiatives. So having rejected Brash’s advice, what does National have to offer? Where is the brighter future for our retirees John?

20 comments on “Retirement age ”

  1. ghostwhowalksnz 1

    The well off will game the system, as their national super would mostly go in taxes ( the people over 65 allready pay 25-30% of the cost of the super scheme in income taxes alone).
    Thus they would forgo the money to collect more later when their tax payments would be lower.
    Brash himself would be a prime example , earning big money for a few years due to feeding at the public trough, but not likely to last .
    BTW what ever happened to his big career in high finance after he resigned as Opposition leader and left parliament- they didnt want him is the answer.
    We should say the same

  2. Irascible 2

    Any of Key’s promises are not worth the air they were spoken on. Resign if the age for superannuation was raised? Yes, but things have changed since I made the promise… eligibility is now 70 as the till is empty following our usual policy failures.

    • felix 2.1

      Resign as PM? Nah, I said “Re-Sign as PM”. I’ll sign anything you like as PM. Pretty relaxed about it too.

  3. tc 3

    Sad that after Brash was given the opportunity and proved to everyone that he’s got no relevant new ideas. only previously failed ones, he’s still trotted out by the MSM as someone who’s opinion is worth considering.

    But then this is a MSM that thinks such items as Beiber fever, apple’s new toy launch and Hosking/Hawkseby rate as news worthy.

    For balance they should randomly select people from all over and put their views up as worthy rather than persist with has-beens like Brash and obvious govt mouthpieces like Phil O’Reilly etc

  4. Gosman 4

    Instead or raising the retirement age for all perhaps the Government could timebox the pension to say 25 years. Then it would be up to the individual if they wanted to retire at 65 or not.

    The other option would be to reestablish the Super surcharge for wealthier retirerees from age 65 through to maybe 75.

  5. toad 5

    r0b, there was a conference I went to in Wellington over the last two days on this very issue, hosted by the Retirement Commissioner and Victoria University’s Institute of Policy Studies. The conference documents are here.

    The view that the funding of future retirement income is a real problem is not just that of the Treasury – even economists like Ganesh Nana and Susan St John, neither of whom espouse the sort of neo-liberal crap that comes from Brash and often from Treasury, agree there is a problem.

    Disturbingly, no MPs were there and of the political parties only the Greens bothered to send a staffer.

    I think one of the silliest things we ever did re retirement policy was abolish the surcharge that Gosman refers to at 9:49 above. Reinstating something like that (ie maintaining universal entitlement, but taxing other income of people who receive NZ Super at a higher rate) would address a large part of the problem. Brash’s “solution” won’t – it will just further redistribute from the poor to the wealthy (because the wealthy tend to live longer).

    Love your opening line BTW, r0b.

    • prism 5.1

      Have you figures to back that statement toad – that the wealthy tend to live longer. Is that in general, or just after the retirement age of 65 is reached. It is well known that the longest living people are women, and being wealthy may make a difference to that longevity. They could afford better access to medical intervention and that would affect the defining stat.

      A surgeon recently referred to 80 year olds having heart surgery and that would be affected by money. Would this be state funded I wonder or privately, through having insurance, as this would be most expensive? Perhaps there should be special health insurances set up and all those over 75 could draw on it when they wanted life-extending operations. The state would just assist mobility with joint surgery, vision with eye surgery and pain relief.

      (At present there is not enough money to treat child ailments and the continuing failure of early treatment for ear problems leading to disability resulting in a poorer grasp of education and loss of opportunities in future life.)

      • Bored 5.1.1

        There is actually plenty of money for retirement etc Prism, the issue is who holds it. Have a look at income and wealth distribution and the issue becomes clear. It is how do you prise the cash from those who have far too much and use it where it is needed? There are some well tested ways, depends how severe we need to be should those that have the cash not volunteer their assistance in redistributing their money holdings.

      • toad 5.1.2

        Try here, prism. There is debate about the mechanisms, but little debate about the correlation.

    • r0b 5.2

      Cheers toad. Depressing to hear the poor turnout for the conference.

  6. Lanthanide 6

    “have done nothing except weaken both of Labour’s initiatives.”

    Disagree.

    As of this October, you will be able to elect 2%, 4%, 6%, 8% or 10% of your income to go towards Kiwisaver, whereas Labour only allowed 4% and 8%. I think National’s numbers make a hell of a lot more sense, and make Kiwisaver a lot more feasible for many NZers. I myself am on the 2% rate, and if it weren’t for that I wouldn’t be saving at all (although my whole portfolio is down 3% thanks to the recession, but of the total money in my account I’ve only contributed about 30% of it myself).

    • r0b 6.1

      Fair call. I have heard the case that the 2% rate increases participation. Whether that balances the losses that occur from those that could (and probably should) do 4% but chose 2 instead, I don’t know of any numbers on this. Will look in to it some time.

  7. deemac 7

    I was pleased to see plenty of media comments about Brash’s own retirement being overdue!

  8. vto 8

    Mean-testing has to be an option. Paying out super to folk who don’t need it from the pockets of workers struggling to make ends meet seems brainless.

    Unfortunately voters vote generally with only themselves in mind and the grey block of voters is a hefty one to try and placate. I know I have never been able to have a rational debate over super with a superannuitant. “I’ve paid taxes all my life” blah blah, they say. Yes, I say, but what did your govts do with your taxes? Why did you vote in Muldoon? Why didn’t your generation do something about this problem before? etc and on it goes.

    Maybe Gareth Morgan has got it right and we just give every single person a basic living allowance …

    • felix 8.1

      There is a certain simple poetry to that idea, ain’t there?

    • prism 8.2

      vto the blah blah ‘all my life’ is what I have heard from olders too. Listening to that reinforces to me the need for active financial regulation. People with such poor understanding of money and distribution need protection from razor sharp minds.

      The study on health deterioration quoting Whitehall and going down the seniority ladder is good toad. Still reading it. Don’t know if it mentions status, the public school toff and same school fag would react differently to each stimulus. Also the stress on a middle or under-manager is apparently much higher than that on the head supervising. The other is a ‘gofer’ interacting above and below and responsible for the outcomes to the boss. That would be mostly men but both genders would have the same reaction I think. Would people in unsatisfying jobs at older ages die earlier than otherwise? It’s grim if you have to work in a hated job for a hated boss at survival wages and anti-social hours with no extra available for fun or pleasure, because of a late retirement age. (Women have less stress at some ages and social status and can manage better on small incomes, helping their longevity.)

  9. burt 9

    The age of retirement should be indexed to the oldest still working member of parliament. Perhaps averaged over a 5 year period to mitigate sudden and unavoidable peaks and troughs.

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