An email from Politik says Finance Minister Steven Joyce is expected to join Prime Minister Bill English at the post-cabinet media conference at 4pm to make an announcement on superannuation.
Labour is attacking National for not following Australia’s lead of raising the age of superannuation eligibility.
Australia will be raising the age to 70, Labour plans to raise it to 67.
What Labour is showing is that their plans will either mean less income and/or other priorities for spending.
. . . Finance Minister Bill English said New Zealand can afford to keep the retirement age at 65, despite Australia’s plan to raise it to 70 by 2035.
He said the Australian government, which is dealing with huge deficits, is in a different position to New Zealand, which will return to surplus in the Budget this month.
Mr English said the Government settling the question of the retirement age has allowed the Government to focus on reducing other costs, such as long-term welfare dependency.
Superannuation can be affordable at the current age of eligibility providing the economy keeps growing and money isn’t wasted elsewhere.
Most people would regard superannuitants as a higher priority than younger people who could work and support themselves but don’t.
Increasing the age isn’t Labour’s only policy which will negatively affect older people, their tax increases will too.
National’s tax cuts boosted superannuation rates because they’re based on after-tax income.
Tax rates will increase under Labour, reducing after-tax income and so reducing increases to superannuation.
People will not only have to wait longer to get a pension, they’ll get less when they reach that age than they would under a National-led government.
What will Winston Peters and his followers, who Labour is trying to woo, think of that?
Australia’s compulsory superannuation scheme is often held up as an example we should follow.
However, this exchange during Question Time yesterday threw up a little-known fact:
Hon David Parker: Does he accept that Australia’s successful universal workplace savings scheme, introduced a decade after National axed ours, is why Australia owns its banks and ours, and why Australians have higher wages?
Hon BILL ENGLISH: No, but I do know that two of the effects of it in Australia are that Australians have less money invested in businesses than New Zealanders—
Grant Robertson: Rubbish.
Hon BILL ENGLISH: —no, it is true—and its rise in household debt directly parallels its rise in nominal household savings. But if the member believes he wants the Australian system, he should be open with the New Zealand public that he is going to strictly means test national superannuation. There is nowhere in the world that has compulsory superannuation and universal national superannuation.
How many people who urge compulsory superannuation know that nowhere that has it also has a universal scheme?
If superannuation savings can be either compulsory or universal how popular would compulsion be?
Hon David Parker: Will the Minister now admit that National was wrong to vote against KiwiSaver, which it now supports, and to call the Cullen fund, which it now supports, a dog?
Hon BILL ENGLISH: No, but if the member is going to advocate what he calls universal but is actually compulsory superannuation, he needs to explain what impact that will have on New Zealand superannuation. I think those who have been in this Parliament for a while will recognise that we have spent—what—20 years in vigorous discussion over the nature of national superannuation. It ended up universal because that is what the public wanted, and Labour is now advocating the Australian scheme, which involves strict income testing of national superannuation. I invite the member to announce that at the next Grey Power meeting he goes to.
. . . Hon David Parker: Is the Minister able to table any document that he has received that proves the assertion he made in his last answer, which was that the Labour Party is moving to a meansbased superannuation when that, in fact, is not our policy?
Mr SPEAKER: Order! It is quite a different question, but carry on.
Hon BILL ENGLISH: If I could find a coherent, rational, sensible Labour Party document on this matter, I would table it. But I cannot, so I will table the results of the 1975 and 2008 elections, where these issues were litigated.
What we do know is that Labour plans to increase the age of eligibility for superannuation.
It also plans to tax more and spend more which will aggravate inflation which will erode the real value of wages making it more difficult to save and erode the real value of any savings, be they voluntary or compulsory.
Prime Minister John Key says the current superannuation scheme is affordable:
Mr Key, who said before the 2008 election he would quit parliament if the age was raised under his watch, says the government has carefully considered the scheme.
He says it’s running at 4.5 percent of GDP while in many other countries pension schemes cost well above seven per cent.
“Ours is likely, at the height of all the baby boomers getting super, to cost somewhere between seven and eight percent of GDP,” he said.
“We’ve modelled it, it’s affordable… we’ve made our choices about where we want to spend money and raise money.” . . .
Choice is the operative word – this government is choosing policies which promote economic growth which allows more choice on spending.
Money spent on one thing isn’t available for another. Labour’s choosing to offer welfare to families earning up t0 $150,000 when they have a baby and thereby restricting its ability to fund superannuation at the current rate.
It and its potential partners on the left are also choosing policies which will curtail growth which will further restrict choices for spending.
And he doesn’t see any merit in means testing for national super.
“Some countries means test but that would just discourage older New Zealanders from staying in employment,” he said.
“In New Zealand 20 percent of people over 65 continue to work, in Australia where it’s means tested it’s only 11 percent – it doesn’t make much sense for the economy to take those people out of the workforce.” . . .
Five of our staff are 65 or older – two of them are in their 80s.
They’re doing what they enjoy, staying active, earning money and paying tax on it.
Why disincentivise that by means testing their pensions?
Winston Peters has let his distrust of business and ignorance design a flawed superannuation investment policy:
A new superannuation fund to save billions of dollars for KiwiSaver contributors over the next thirty years will be a central plank for New Zealand First at the 2014 General Election. . . .
Mr Peters told delegates that private funds managers were sucking the lifeblood out of KiwiSaver, and in five short years had already taken $325 million in management and investment fees.
“Independent forecasts show that over the next thirty years these funds managers will take more than $22 billion from KiwiSavers and there is no government guarantee that the remaining funds will be safe.
“There is huge pressure from the finance industry to get their hands on more retirement funds. The figures show these companies will make spectacular profits at the expense of people saving for their retirement.
“Our plan is to change KiwiSaver so that it is a truly government-backed and managed retirement fund. Because of the economies of scale, and the elimination of hordes of ticket clipping fund managers, costs will be greatly reduced. People who pay into KiwiSaver will get their full return.”
Has he any idea of the cost of this? Can he guarantee the bureaucrats who will be managing the funds will be any less expensive and any better at investing than private fund managers?
Under the New Zealand First plan, KiwiFund will be government-guaranteed and it would invest substantially in New Zealand.
“People saving through KiwiFund will be buying back New Zealand. KiwiFund will invest in buying back farmland, state assets and critical infrastructure. Funding will also be provided to support smart local companies to develop new products and create jobs.
A government guarantee passes the risk to taxpayers.
Super funds invest overseas for very good reasons. Funds based only, or substantially, in New Zealand would be vulnerable to natural or financial disasters here, some overseas investments insulates funds from that.
Having financial eggs is several baskets is a sound and sensible investment strategy.
Landcorp, the state owned farm company, makes less than 1% return on assets. How will KiwiFund’s farms do better than that?
Who will pick these smart, local companies and what guarantees will there be that they will provide sustained returns necessary to make superannuation sustainable?
“We have to invest in our own future. Overseas pension funds and corporate investors can hardly believe their luck – and are buying up everything they can in New Zealand.
“New Zealand First says its time to stop this sell out. We are already well down the road to serfdom in our own country.” . . .
Other people risking their money in our businesses isn’t a sell-out. It’s welcome inward investment which boosts share prices.
How much does he think these assets would be worth without overseas investment?
Mr Peters warned there would be “howls of outrage” from the private funds managers who would “fight to the death” to retain their $22 billion gravy train.
“In the United States, private funds managers lost billions of dollars of pension funds during the 2008 financial crisis. We simply cannot afford to let that happen to the retirement savings of New Zealanders.
And how would he guarantee that public funds wouldn’t do the same in the next financial crisis?
“KiwiFund will enable us to build a high performance economy from which all New Zealanders will get the benefit,” said Mr Peters.
KiwiFund would nationalise private savings.
It would jeopardise superannuation and threaten its sustainability by increasing the risk and reducing returns.
Investment policy must be based on sound financial sense not xenophobia and populist bias against business.
Peters says KiwFund will be a bottom line in coalition negotiations.
Labour and the Green Party might be stupid enough to agree to it, National wouldn’t.
But history tells us what Winston says is a bottom line now and what actually is if he’s in a position to negotiate after next year’s election won’t be the same thing.
I’m not opposed to the idea of increasing the age of eligibility for superannuation.
When it was introduced it wasn’t universal and life expectancy was quite a bit lower than it is now.
Jacqui Dean: What does the report say about the costs of meeting superannuation, and how does this compare with the benefits of sound fiscal management?
Hon BILL ENGLISH: The report shows that increasing the age of eligibility from 65 to 67 for national superannuation makes a difference of around 0.7 percent of GDP by 2030. The report also shows that maintaining the Government’s fiscal strategy of returning to surplus with moderate increases in spending and investment and better public services through to 2020—just 7 years from now—will reduce net Government debt from around 50 percent of GDP to under 10 percent of GDP. So, clearly, managing Government expenditure well has a much bigger impact on our future debt loading than small adjustments to national superannuation.
This strategy isn’t without risks, however.
Jacqui Dean: What alternative strategies for fiscal management would put the Government’s progress in reducing debt at risk?
Hon BILL ENGLISH: Well, of course, we get to reduce debt once we get to surplus, and once we get to surplus we need to make sure that we do not spend those surpluses on ineffective public services but that we do spend them on reducing debt. Alternative strategies that would make it harder would be those that we inherited as a Government from when Government debt was forecast to reach 50 or 60 percent of GDP simply on the basis of loose and wasteful spending by the previous Government.
If we want first world services and support we need first world incomes and that requires policies and management that foster an environment for growth.
Those disenchanted with the government like to say there’s no difference between National and Labour.
But the National-led government is doing a far better job of managing public money, while maintaining services, in difficult financial times than Labour managed when the rest of the world was booming.
A surplus is in sight and once it’s achieved we have some choices over what to do with it.
LabourGreen want to spend more, National wants to reduce debt to ensure the economy is on a much stronger foundation to weather future storms than we were for this one.
Even if Labour can sort itself out, does anyone seriously think they’d want, let alone be able, to reduce the burden of government while maintaining services as National has?
Discussions on the affordability of superannuation focus on the aging population and likely costs.
That is only a small part of a complex issue.
Prime Minister John Key pointed out in Question Time :
Of course superannuation is an issue, but one thing that is worth noting is that increasing the age of eligibility has much less of an impact than commentators might imagine. For instance, moving the age to 67 makes a difference of about 0.7 percent of GDP, and that is not until 2030. So it is an issue, but growing the economy and fixing some of the other issues we inherited from Labour are more significant.
Pete George has started a BADASS (Bloggers Advancing Debate About Super Solutions) campaign.
I agree with him on the importance of having the debate but no solutions will be found if we concentrate on superannuation alone.
It is a major, and growing, part of government expenditure but discussion must look at all other expenditure and revenue.
The country can afford superannuation as it is if it spends less or makes more elsewhere.
One question to ask is, whether we want superannuation as it is.
Regardless of the answer to that discussion then must consider at what we need, what else we might want and whether the government is the best provider of it all.
It must also look at government income. Tax increases and more user-pays charges are the left’s usual answer to increasing that but more taxes and higher tax rates can and do reduce the tax take
The PM’s answer provided the only sustainable solution – that’s growing the economy.
Labour’s superannuation policy appears to be a wee bit confused.
They want the age at which it is first paid raised to 67, but they’re also suggesting that people who do tough manual work should be paid super at 60.
They don’t define “tough” but a lot of people who do manual work are fitter and better able to work than many people several years their junior.
We employ a couple of those.
One came to do three days work more than 20 years ago and is still with us. He’s 82.
The second crutches sheep for us every working day. When he runs out of stock in need of his skill he grubs thistles – and he’s 81. That’s more than two decades past Labour’s would-be retirement age for manual workers.
He doesn’t work a full week though – proving his mind is as fit as his body, he takes Wednesday afternoons off to play bridge.
United Future leader Peter Dunne is proposing allowing people to retire earlier and receive lower superannuation payments or later with higher payments.
“Kiwis would then be able to manage their retirement age and lifestyle – choices they currently do not have – and it would be cost neutral with the current scheme,” Mr Dunne said in launching the party’s superannuation policy.
“Each year below 65 that superannuation would be claimed down to 60, would see a small reduction, and each year over 65 up to 70, it would be enhanced.
He said the figures used would make it cost-neutral and he’s also proposing making Kiwisaver compulsory to address the long term sustainability of superannuation.
“The sustainability arguments around superannuation, and whether it should be 65 or 67, then become redundant,” he said.
“People can then do their own maths and work out what works best for them based on their lifestyle and aspirations,” Mr Dunne said.
It will be interesting to see Act’s reaction to this. The now defunct 2020 Taskforce, which was chaired by Don Brash who is now Act’s leader, also suggested that people be able choose to delay receiving a pension and then get higher payments than those who retired earlier.
If it’s not going to cost any more it is an idea worth considering.
Our longest serving staff member has been receiving superannuation for 16 years and is still working fulltime at 81. Another is 79 and one is 65. I think all would have chosen to postpone receiving superannuation in return for higher payments later had they been able to.
Conversely, people not enjoying their work and/or in poor health might welcome the option of retiring earlier, albeit at a lower rate of superannuation.
Opting to receive superannuation doesn’t necessarily retiring though so this policy would also enable older people who are still happy to work to top up their wages with superannuation from the age of 60.
Providing it’s affordable, this policy might also take pressure off the debate on the need to raise the age at which people are eligible for superannuation by allowing them some choice.
Labour’s proposed capital gains tax will exempt payouts from superannuation funds but it will apply to property which many of the funds invest in.
For the first time in decades, New Zealanders are acting on the message to save. But if Labour’s policy is enacted, some of the returns from those investments will be eroded by CGT.
The New Zealand Superannuation Fund and ACC have both invested in farmland and other property.
The negative impact Labour’s CGT will have on both of them will be among the boring details the party doesn’t want to trouble us with.
If we regarded tax as an insurance premium without complaining that a lack of catastrophe means we can’t make a claim, the debate on pensions in the future would be simpler.
Most people would accept that universal superannuation at 65 is not necessarily good policy and pensions would be means tested.
However, that is politically unpalatable for at least two reasons:
- people who’d done nothing to help themselves would get taxpayer assistance while those who’d made sacrifices and worked hard to save for their retirements would not.
- too many of us regard tax not like an insurance premium but more like an investment and superannuation is therefore one of the dividends.
Various attempts have been made to sort out an enduring and sustainable policy on superannuation. Don Brash is among those who think we haven’t got there yet.
In a speech entitled challenges for New Zealand’s future pension system he says:
. . . it’s estimated that the fiscal cost of New Zealand Super will increase from its present level of 4.4% of GDP to over 8%. Of course, that’s still lower than the current fiscal cost of the age pension in Greece (at 11.5%) and some other European countries, as noted, but that’s not a lot of consolation given the fiscal challenges those countries currently face!
Part of the reason for this prospect is the sharp fall-off in the birth rate, but the main driver of the increased cost is the arrival at age 65 of the baby boomer generation, and in particular the increased life expectancy which we all enjoy. Over the past half century, life expectancy at birth has increased by nearly two years every decade. While that increase is projected to slow, a person turning 65 in 2050 can expect to live an additional 24 years, more than four years longer than a 65 year-old in 2008, and of course considerably longer than when the age pension was first introduced for those reaching 65 in 1898.
When the increased fiscal cost of healthcare and long-term care for the elderly is added to the increased fiscal cost of New Zealand Superannuation if the present parameters remain, it’s clear that, if we’re to avoid a substantial increase in the tax burden on that portion of the population which is still employed, something needs to change.
His solution is to gradually raise the age at of eligibility for superannuation, giving people a choice between retiring sooner with a lower pension or delaying retirement and receiving a bit more.
We raised the age of eligibility from 60 to 65 in the nineties and there was widespread acceptance of the need for that change. Nobody seriously suggests lowering that age again. There is a widespread understanding that we are living much longer than we were in the past, and that that is a continuing trend. Most 65 year-olds no longer feel “elderly”, or ready for the scrap-heap.
Last year, Australia announced that the age of eligibility for their age pension will be progressively raised to 67. Germany and the US are also raising the age of eligibility to 67, and the UK is going for 68. Denmark is targeting 67, and then indexing the age of eligibility to future improvements in life expectancy.
In my own view, raising the age of eligibility could be made more politically acceptable if we were to allow a degree of flexibility regarding when the pension is actually taken. If the age of eligibility were 67, for example, under a policy allowing flexibility regarding the age at which it could be drawn somebody might choose to take the pension at, say, 65. At that younger age, the amount received would be actuarially adjusted downwards, and would remain at that lower level (with regular upward adjustments with wages of course) until death. Conversely, if somebody chose to defer drawing the pension until, say 69 or 70, the amount received would be actuarially adjusted upwards.
Such a system would allow people a greater degree of choice about when to retire. It would not directly reduce the fiscal cost of New Zealand Super of course – by definition, the amounts paid would be actuarially equivalent to drawing the pension at the age of eligibility. But by encouraging people to stay in the workforce for longer, it would have fiscal benefits in terms of higher tax revenue and, probably, lower health costs, given that there is evidence that people who remain employed are often healthier, physically and mentally, than those who have left the workforce.
One of our staff is 80 and still works fulltime, another is 76 but not quite as diligent – he takes Wednesday afternoons off to play bridge. Neither has plans to retire soon yet both have been receiving a pension since they turned 65.
Not everyone has the ability, or will, to work into their 70s and beyond, but I can see the appeal of giving those who might the choice to do so.
It won’t happen while J9ohn Key is Prime Minister.
During the last election campaign he was asked about future changes to superannuation.
His first answer was there would be no changes in the first term, that led to a question about future terms. It was one of those have-you-stopped-beating-your-wife questions for which he couldn’t give a right answer. Had he stuck to “not in the first term” or refused to answer, political opponents, and the media, would have turned no commitment to make no changes in a future term into accusations that there would be change.
That is unfortunate.
No matter how hard people have worked and how much tax they’ve paid, simply turning 65 isn’t a good reason to start giving them something back when there are so many more urgent calls on taxpayers’ funds.
Don’s suggestion of a gradual increase in the age of eligibility, with a choice of lower payments for earlier retirements and higher payments for later ones, has merit but that’s not a good enough reason to go back on a pre-election commitment.
The leader of Winston First has creaked into life again but his address to Grey Power shows he’s still confused.
Mr Peters told Grey Power’s annual meeting in Christchurch that superannuitants were not going to be better off under the tax changes the Government is going to announce in next month’s budget.
You’d think a former Treasurer would understand how superannuation works.
It’s based on the average after tax income. That means that if, as been mooted, tax rates decrease then superannuation increases.
Besides, the government has said that if GST increases then all beneficiaries will get a compensatory increase in their benefits.
He called his address Malice in Blunderland which gave Tariana Turia the opportunity to say:
Mrs Turia suggested he might be getting himself confused with the Mad Hatter, the Cheshire Cat, the March Hare or perhaps the Dodo.
Or maybe all of the above.
If I turned 65 tomorrow on a similar income to my present one I wouldn’t need superannuation.
But would I turn it down? No.
I wouldn’t say I was entitled to it but I would say I was eligible for it and I’d take it.
Unless you’re very different from most of us I suspect you would.
We don’t make the rules but most would play the game if they could and not just with superannuation.
How many people who get Working for Families really need it?
It depends on how you define need. I don’t think anyone who can already afford luxuries needs a benefit.
I can understand why those who qualify for it don’t turn it down. Many will be the people who’ve always been too rich to be poor and too poor to be rich – having too much to qualify for any other assistance but not having enough to be really well off.
Most will set aside any qualms they might have about taking taxpayers’ money they don’t really need, arguing they’ve worked hard and paid a lot of tax and now they’re getting something back.
I wonder how many people who criticise MPs’ pay and allowances could put their hands on their hearts and say they’ve never taken anything they’re eligible for whether or not they need it?
Anyone who can’t is casting stones from a glass house.
There are differences between benefits and the salaries and allowances MPs get, of course.
MPs’ salaries are paid for the job they do and most more than earn it. The allowances are for work related expenses.
However, they make the rules which leads to the perception – probably unfair – that the rules are more than generous.
Their pay is set by an independent body, maybe allowances should be too.
That way MPs would get fair recompense for out of pocket expenses and free them from any suspicion of making rules which give them more than they need.
It would also give them some protection from the stone throwers.
The news that the Australian and New Zealand governments are developing a scheme to enable trans Tasman portability of superannutaion is welcome.
Could personal superannuation accounts be the next step?
The ODT editorial makes a sensible contribution to discussions on superannuation.
Of the Superannuation Fund it says:
Its principal weakness was its potential impact on future Budgets and future superannuation payments in times of economic gloom, for the first decision in any future Budget for the next 25 years will be the call on superannuation funds, not less than $2 billion every time, and such a burden will inevitably have an impact on other spending plans.
It has not taken long for negative circumstances to arise or for a government to have to face the unpalatable.
. . . The Treasurer’s decision to suspend contributions is correct because it makes no sense to continue with borrowed money. The Cullen scheme was designed only to soak up surpluses – to keep the “savings” in the bank, so to speak.
Borrowing to invest isn’t sensible for individuals, it makes even less sense for governments.
The editorial goes on to say there has been an encouraging response towards saving more from young people with good incomes but older people with little earning time left before they retire and people with little disposable income to save don’t have this option.
The editorial then canvases the idea of increasing the age of eligibility.
But, as a correspondent to our letters column noted, not everyone makes their income sitting at a computer desk; many spend their lives in hard, physical work, and the prospect of still having to do that at 68 to even 70 before being eligible for superannuation is, at the very least, disheartening.
Two of our staff would be affronted by the suggestion they’d be too old for physical work at 68 or 70.
One came to do three days tractor work for us in 1989 and never left. He turned 79 a couple of months ago, still works fulltime and has no intention of retiring soon.
Another is 77 and dags thousands of sheep a week, though he doesn’t work fulltime – he takes Wednesday afternoon off to play bridge.
A prudent person, perhaps now in their 20s or 30s, should realise there is a high probability universal state superannuation is unsustainable in its present form; that it is a false mindset to assume because people have paid their taxes they will get state superannuation; that superannuation will inevitably be means tested and the retirement age extended. It is a sobering but realistic prospect.
Another option for making superannuation more secure is to follow the suggestion made by Gareth Morgan to wind up the Superfund and pay it in to individual KiwiSaver accounts.
That might not be easy to do, but it would take the politics out of the issue because no politician would suggest meddling with individuals’ retirement savings.
When I posted yesterday about the affordability of superannuation I pointed out that it can’t be assessed in isolation, other expenditure commitments must be taken into account too.
I estimate the relative importance of these factors like this:
Request to commentators: if you want to be taken seriously on the future affordability of superannuation could you stop looking at it in isolation?
Criticism of National’s decision to suspend contributions to the Government Superannuation Fund continues with the critics saying it means that universal payment of 66% of the after-tax average wage to people from age 65 is no longer affordable.
The Super Fund was established to use surpluses. We don’t have them any more.
Continuing contributions would be like a farmer doing a budget, realising the income wasn’t going to meet the expenditure and then increasing the mortgage to play on the share market.
Shares are usually a good longterm investment, but the advice given to individuals also applies to governments – you only buy shares with money you can afford to lose.
Shares might be cheap now but that will only be proved in hindsight. Share prices go up and down and no-one knows when they’ve reached the bottom or the top until they reverse direction again.
If the fund was buying overseas shares, the exchange rate also has to be taken into account because if the value of our dollar increases there would be a corresponding decrease in the value of returns in foreign currency.
On top of that the affordability of superannuation can’t be judged in isolation, all other expenditure has to be taken into account too.
If , for example, you could afford current superannuation payments or benefits for upper and middle income working families, which should be the priority?
The government is sending pretty clear signals that it will suspend payments to the Super Fundd.
Speaking at the launch of the DeloitteSouth Island Index last night, Bill English said:
When it was set up, the idea of the Super Fund was to invest Budget surpluses. The Government was then in surplus and expected to stay in surplus for the foreseeable future. . .
Those Budget surpluses have disappeared. The Government will run a deficit this year, and will do so for the foreseeable future. That changes the whole picture.
The Government will have to borrow quite a lot of money to makes its full Super Fund contributions. Next year we would have to borrow around $2 billion, or around $40 million a week to put into the Fund, to be invested in what are currently uncertain global financial markets.
That’s why we’re considering this issue, and that’s why the Fund’s rules allow the Government to vary its contributions to reflect changing fiscal conditions.
If the words don’t convince you suspending payments is a good idea, Garrick Tremain’s picture might:
The government has confirmed it will cut contributions to the superannuation fund.
They are doing the right thing. It makes absolutely no sense to borrow money to invest at a loss, especially when the dollar is low which makes overseas investments more expensive and risks reducing the return if/when the dollar rises.
John Key has emphasised this doesn’t signal a cut in pensions.
“I have made it quite clear that if superannuation was to be cut, and I make the same claim here in the house today, I will resign as Prime Minister and resign as an MP,” Mr Key said in Parliament.
No doubt the opposition will try to make political capital out of this but I’d have thought borrowing money to invest at a loss be more of a threat not just to pensions but everything else the government funds.
If your income dropped would you borrow to save for your retirement?
Not if you’ve got any sense.
Of course Phil Goff is going to take the opportunity to grab a headline by making a fuss about the government considering changes to the state super fund.
And John Armstrong is right about the importance of maintaining political concensus on the issue.
But the super fund was at best never going to cover more than a small proportion of projected super payments, so if it costs more to borrow than the fund returns then suspending payments in the short term would be sensible.
UPDATE: Kiwiblog thinks politics might get in the way of doing the sensible thing.