Retirement Commissioner at Odds With Key and Shearer
 
The Retirement Commissioner is warning that the Prime Minister’s refusal to raise the eligibility age for national will mean he has to cut other spending to pay for it.

Speaking this week on TV3’s “The Nation” Diana Crossan said the Prime Minister could close some prisons, or do other things to find the money.

“We need to find a way of finding 3% of GDP,” she said.

“It's not just about the baby boomers, New Zealand's population is ageing anyway, and we're going to have a totally different structure in the future, and we don’t want young New Zealanders to have to pay twice.”

She had spoken not just to the Prime Minister but other Ministers about this. But the Prime Minister refused to budge from his commitment to resign rather than move the legibility age.

“It would be very nice if he was able to find a way of saying you know I made a statement in 2008 and things have moved on and I've seen the figures and I agree with the Retirement Commissioner. 

“But he's made that statement so I think that one of the things for me that’s quite important is that we are having this discussion.

“I don’t think there's probably anyone in the country who's between 30 and 40 who hasn’t heard that it might go up in the future. 

“I don’t want it to happen in a hurry.  I want New Zealanders to be aware of it, to plan for it, and I know that when a 30 year old gets to 67 they’ll wonder what all the fuss was about, because it'll feel like we do at 65.”

But though Labour is proposing to raise the retirement age she doesn’t support all the Opposition party’s retirement policies either. Labour is proposing compulsory Kiwisaver.

“I tend to be against compulsion,” she said.

“I’ve had a look at all the systems around the world, and I think New Zealand has one of the best. 

“Compulsion suits the finance sector and lawyers. 

“If you look across the nation there's a whole lot of bureaucracy and the finance sector of course supports that kind of change because they get a whole lot more work. 

“So I'm just slightly concerned about that we rush into it for sort of rather superficial reasons, and we should be looking at it in much more depth.”

'THE NATION'
DIANA CROSSAN MEETS THE PRESS
with ALEX TARRANT & JOHN HARTEVELT
Hosted by RACHEL SMALLEY

Rachel The silver tsunami is on its way. The baby boomers have started to retire. Will our super scheme hold up under the pressure? The Retirement Commissioner doesn’t think do, but the government has failed to take up many of her recommendations. Diana Crossan is about to leave her job. What are the challenges for the next Commissioner, and is a rise in the pension age simply a matter of time?

Diana Crossan is standing down, so has she left our retirement savings in better shape than what she found them. First let's welcome our journalists on the panel Alex Tarrant from interest.co.nz and John Hartevelt, Fairfax Media Political Journalist as well. Welcome too to the Retirement Commissioner Diana Crossan who's in our Wellington studio. Good morning Commissioner. So you’ve had ten years in the job Commissioner, what's been your greatest achievement do you think?

Diana Crossan - Retirement Commissioner
I think the whole area of our financial literacy, the movement I guess that we now have. New Zealand developed a national strategy and we did it in a different way, which meant that we were able to bring in the private sector, the community sector, and the government together, and developed something that showed this was about New Zealand Inc. It wasn't just about government, it's not just about the private sector, and it's been very successful I think.

Rachel On another note if you look at the issues surrounding the retirement age, how frustrated are you by John Key's stance on this, that you know historically he said he won’t move on the retirement age this term? Hasn’t that failed to give people I guess a sense of certainty about the future?

Diana Well I think yes there's two jobs that a Retirement Commissioner has. One of them is to help New Zealanders prepared financially for their retirement, and we've done that through financial literacy. I talked about the national strategy through the Sorted of website which of course is hugely successful. The other side of the job is talking to the government and others about is the nation ready. And that’s one of the issues we review every three years. In 2007 we put out a whole lot of options and the discussion didn’t take off. So in 2010 I made a recommendation, quite a strong one, and I did that because I think that New Zealanders have to have a close look at how to afford New Zealand Super in the future. New Zealand Super is a national treasure. We want to hold on to it. We want it to be available for 30 and 40 year olds in the future. Now the Prime Minister made a decision, he's the Prime Minister, he has different levers than I do. He has different ways, different things he can do. For me it was about making sure that 30 and 40 year olds now know that there will be a New Zealand Super but it may come later.

Alex Tarrant – interest.co.nz
Something else that seems to have frustrated you is on the financial literacy terms the roll out with financial literacy packages in schools. At the Retirement Commission you’ve got the packages already to go, yet the Ministry of Education isn't able to fund these. How frustrating is that, and should that be done?

Diana Yes we are frustrated about that, it's not just the Ministry of Education, it's the way we have our education system is one of the least prescribed school systems in the world, so it's up to the local principal and the board and the local community what they teach in their schools, and we also must remember we have one of the best school systems in the world. So it's actually more about resources, about promotion, about getting the resources and the information out there. We watch across the Tasman where they have been given ten million dollars for example over three years to put into teacher development, and we haven’t had any budget for that. So yes there is a frustration, but we are very excited about how many school have taken it on. Organisations have been working in schools for years, and we're very excited that we're almost there. And I was just so hopeful that in the ten years I've been in this job that we would get every school in New Zealand involved in financial education. I think it's essential, but it hasn’t happened.

John Hartevelt – Fairfax Media Political Journalist
Diana I'm interested in your view on one of the government's key arguments for its mixed ownership model, and that is giving the opportunity for Kiwi mums and dads to invest. What's the strength of that argument in your view? Do you think the burst of shares on to the market will have a real benefit for New Zealand?

Diana It's very hard to tell that one, but there are some words of caution. One is that I really think that if and when the government does put those shares into the market, they need to put an education programme around it. A lot of people don’t understand (a) what a share is and how it works, and I think that there's a whole education needed around that. Also people need to know that maybe they will have those shares in their Kiwi Saver product, and they may be better not to buy shares if they’ve got some already. There's a lot of issues.

John Diana just in terms of Kiwi Saver we've just ticked over to two million members yesterday I think. Is it time to look at the cost of that scheme? Is there room to perhaps get rid of the kick start for instance?

Diana Well I think there are maybe other ways to save money. The kick start was – we looked at it when I was on the Product Working Group, and it was one of those things that helped people over that procrastination. You know lots and lots of New Zealand said I was going to save but I haven’t got round to it, and the kick start certainly helped. So it probably is worth having a good look at Kiwi Saver. We don’t want to change it too much. New Zealand has been very successful in getting New Zealanders into it, so there will be a chance I think in 2014 when the government has a close look at many aspects of Kiwi Saver.

Rachel Diana should it be compulsory do you think?

Diana I tend to be against compulsion. I've had a look at all the systems around the world, and I think New Zealand has one of the best. There's a whole lot of reasons. One is, if you're on a really low income in New Zealand can you afford to go into Kiwi Saver, or should you be putting your money into your kids' school camp or breakfast, or even just getting to and from work? That’s the first thing. The second one is that if we've got two million people in it already, who are the people that aren’t in it? Let's have a close look at that and find out why they're not there, before we do this. The other thing that worries me is that compulsion suits the finance sector and lawyers. If you look across the nation there's a whole lot of bureaucracy and the finance sector of course supports that kind of change because they get a whole lot more work. So I'm just slightly concerned about that we rush into it for sort of rather superficial reasons, and we should be looking at it in much more depth.

Alex So Diana what changes do you think could be made to Kiwi Saver, or should be made to Kiwi Saver?

Diana Well I don’t think a lot. I think one of the things that I agree entirely with the finance sector is let's not change things too much. We did in the beginning and it was a real worry that people would think, that if we can change it that quickly and that often why go into it? There's quite a fear that the government will keep tinkering away at it. So I would suggest that we leave it for quite a while and it's got lots of good aspects to it, and watch and encourage people to save with it.

Rachel I just want to bring it back to the political side of this if I can Diana. Have you spoken directly to the Prime Minister about your belief that we should raise the retirement age? At least had direct conversations and lobbied your points with him?

Diana I haven’t needed to. I have had conversations with the Prime Minister and I've also spoken with other members of the government, and it's very clear what my recommendation is. That it's not so much an issue about my way of doing it, it's the issue of that the Prime Minister made a statement to the nation, that he wouldn’t raise the age of eligibility. So if he was to change that then there are two or three ways you might do that. Of course the Prime Minister could close, as I've said before, he could close some prisons, or do other things to find the money. What I was trying to do was say we need to hold on to New Zealand Super, we need to find a way of finding 3% of GDP. It's not just about the baby boomers, New Zealand's population is ageing anyway, and we're going to have a totally different structure in the future, and we don’t want young New Zealanders to have to pay twice. So we're trying to find a way of doing it within the framework of retirement income.

Rachel Okay so essentially though you’ve said what the Prime Minister could and couldn’t do, ways he could make this work, but he's closed down the debate. What would you like him to do? What would be the tangible way you would like to see him act?

Diana Well it would be very nice if he was able to find a way of saying you know I made a statement in 2008 and things have moved on and I've seen the figures and I agree with the Retirement Commissioner. That would be a nice parting shot for me. But he's made that statement so I think that one of the things for me that’s quite important is that we are having this discussion, we're having this conversation today. New Zealanders are watching it. I don’t think there's probably anyone in the country who's between 30 and 40 who hasn’t heard that it might go up in the future. That was my main concern. I don’t want it to happen in a hurry. I want New Zealanders to be aware of it, to plan for it, and I know that when a 30 year old gets to 67 they’ll wonder what all the fuss was about, cos it'll feel like we do at 65.

Alex Diana, looking to your successor what is one or two things that you would like your successor to have that perhaps you didn’t have?

Diana Well I think the issue of financial education in schools. If we could keep pushing on that, and if my successor could get that over the line it would be fantastic. We do have some successes with PIZA, New Zealand's in the PIZA tests which are testing the 15 year olds on financial literacy, and that'll help a lot, and we do have good resources, and the Minister this week in Money Week, the Minister of Education is going to be launching another resource for schools. So there are those good things. The second thing is around older Kiwis, 55 plus. I think we've done really well with the Sorted website and it is the best in the world of its kind, and no doubt about that. And we do have a third of the population using it. But there's the population 55 plus, how do you manage your money as you get towards retirement and then in retirement, you might have 20 or 30 years in retirement, and that’s quite hard, because we don’t annuity products. How do you manage your money, and how do we get the private sector to help, and how do we get New Zealanders to get that information. That’s a big area.

Rachel Diana would you also like to see whoever replaces you, continue your stance on opposing if you like compulsion, when it comes to Kiwi Saver, because that would be at odds wouldn’t it with Labour's policy.

Diana I have lots of reasons about compulsion. Another concern is – and yet it would be good if the new person was to take up all these issues – the other concern is that the moment you bring in means testing, you bring in an opportunity for people to hide money. Now New Zealanders are very good at hiding money, we've got lots of trusts and we all know that, and the IRD are constantly spending time looking behind trusts. So New Zealanders would learn like other countries have at the margin to hide their money so that they also can get the pension and be means tested. Also people spend up large just before they get to 65 or whatever the age is, so that they don’t have so much money and then they are eligible, and so those are sort of important issues around the age.

Rachel Retirement Commissioner, Diana Crossan, we have to leave it there, thank you.

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