NZ Super Policy Needs Total Rethink
Press Release by Sir Roger Douglas
Wednesday, December 8 2010
The Retirement Commission’s recommendations for New Zealand retirement income policy – which included raising the retirement age to 67 by 2033 – merely tinker around the edges and will not solve the problem of our ‘pay-as-you-go’ system, ACT Finance Spokesman Sir Roger Douglas said today.
“The spiralling cost of superannuation is not going to be fixed with minor changes. If superannuation is to remain affordable there must be a complete overhaul of the state superannuation system,” Sir Roger said.
“The cost of superannuation is set to increase from 4.5 per cent of GDP to 6.5 per cent in its current form. On top of this, demographics show a decreasing number of workers to every superannuitant - from 4.5 today, to 2.2 in 2036.
“Put simply, it will cost the average worker twice as much to fund other people's retirement.
“This combined with the fact that a substantial and growing portion of health services are consumed by over 60s means we need an overall package of reform, not ad hoc changes to the status quo.
“Instead of dismissing all suggestions, National must look at all options for superannuation reform. For example, under ACT’s superannuation policy, taxes currently spent on superannuation would instead be saved by individual taxpayers – even at a modest interest rate of four per cent the average person would retire with over $1 million in the bank.
“The economic climate is vastly different now compared to two years ago, when National first announced their stance on superannuation, and I believe that all New Zealanders would understand the need for change.
“If we don’t want to become the next Ireland or Portugal, changes are needed now, not in two decades,” Sir Roger said.