About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Monday, March 30th, 4:30PM
Latest Headlines

Turn the lights on and make sure the drivers are licensed

The history of superannuation over the past 25 years was recently described as being like driving down a country road at night in a car with no suspension and the headlights turned off.

Wednesday, June 20th 2001, 5:34PM

The history of superannuation over the past 25 years was recently described as being like driving down a country road at night in a car with no suspension and the headlights turned off.

That's a pretty apt analogy for what has gone on over the years thanks to the behaviour of our elected politicians.

It seems though, we are now at a point where we, as New Zealanders, need to look at upgrading our car.

When we consider what sort of car we can afford the answer is that it ain't going to be a Rolls Royce or even an BMW.

In all likelihood we can afford a decent second hand family saloon that isn't a Japanese import with the clock wound back.

The car will make the ride more comfortable, but it certainly won't be luxurious.

Perhaps the Government's idea of partially pre-funding the state pension is within our price range.

It smoothes out some of the bumps for the first part of the superannuation model and it's probably affordable, as long as it's not bought on hire purchase, ie: don't borrow to invest in a fund.

Before we put the car on the road though we need to make sure all the people expecting to drive it have valid licences.

Some of the politicians are young bucks for whom speed and popularity are the prime motivations.

What's scary is the lack of skills displayed by these people, all of whom should know better.

A quick scan through recent reports on the superannuation debate shows many politicians clearly either have no understanding of basic investment principles, or they choose not to let the facts get in the way of a good story.

For example, investing offshore has been described by one politician as taking out a loan and giving the money to your accountant to gamble on the international sharemarkets.

Such comments show little understanding of investing or what professional funds management is all about.

Next we have the comments about exporting capital offshore - which is really saying New Zealanders shouldn't invest in offshore assets.

This comment goes totally against what has been proven to be a sensible and prudent investment strategy, and what successful investors and money managers currently do.

What's more if people were given tax cuts and told to invest the money they would, judging from current trends, invest something like 40% to 50% offshore.

Here's another pearler: "Figures released yesterday show the returns of managed funds means if the Government had put $600 million into managed funds last year, it would probably only be worth $570 million this year. That is not a smart investment."

Think about it this way. If the money was invested offshore three or even two years ago, it would now be sitting on top of a substantial profit. Also, this isn't a one year investment, it is a long-term one.

Clearly some of our politicians should not be allowed out of the paddock in the new car.

If we get the new car on the road, turn on the headlights and have competent drivers it's possible to see a bit further ahead than before.

To make the journey safer and more comfortable future road works have to be planned years ahead that way some of the concerns raised about pre-funding can be dealt with.

For instance, one of the biggest issues is that at its peak the fund is only likely to contribute 14% of the cost of future pensions.

Politicians should work towards changing the design of NZ Super and develop ways and means of reducing the cost of the pension.

This leads to another criticism that the fund will over decades be wound down to zero. By changing the shape of super benefits maybe the investment strategy can be changed so instead of using capital to pay for pensions, they can be funded out of the fund's income, thus giving the fund greater longevity.

We are approaching a major intersection with super, partly because the current Government wants to do something about it. Politicians have to look ahead and think about the design of NZ Super.

We have to make sure our drivers know which turn to take because the intersection looming is a roundabout which some drivers prefer to stay on indefinitely rather than risk navigating along an untried road.

Discuss this editorial and Super here

Special Offers

Commenting is closed



Printable version  


Email to a friend
News Bites
Latest Comments
  • What is the value of CPD?
    “With respect Pragmatic and JM, in this instance, G.Lindsay's point is fair. Where does a Risk Specialist AFA go for relevant...”
    3 days ago by dcwhyte
  • Clients complain about adviser fees
    “All quite good comments really. The issue about not getting paid is clear communication/disclosure to clients. How do...”
    3 days ago by gavin austin adviser business compliance
  • Trauma problematic, Fidelity boss says
    “New product? This seems nothing more than the old Lifecare product Fidelity has had for ages, just now available on a standalone...”
    3 days ago by Tash
  • What is the value of CPD?
    “Even though I was waiting for it, I still get heartily sick of assertions that pension funds are the only way, and nobody...”
    4 days ago by Dirty Harry
  • Watch out for the newly promoted income protection client
    “The design aspect cuts both ways, presently it usually works in favour of the client as they often have a drop off in income...”
    4 days ago by RiskAdviser
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 6.74 5.89 5.99 6.29
ANZ Special - 5.39 5.39 5.79
ASB Bank 6.75 5.99 5.99 6.39
ASB Bank Special - 5.59 5.39 5.59
BankDirect 6.75 5.99 6.09 6.39
BankDirect Special - 5.59 5.39 5.59
BNZ - Classic - 5.69 5.39 5.59
BNZ - Mortgage One 7.15 - - -
BNZ - Rapid Repay 6.74 - - -
BNZ - Std, FlyBuys 6.74 5.89 6.19 6.29
BNZ - TotalMoney 6.74 - - -
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 5.95 5.99 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.65 5.69 5.39 5.69
HBS Special - 5.59 5.19 5.49
Heartland 6.70 7.00 7.25 7.85
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.70 5.70 5.40 -
Housing NZ Corp 6.74 5.70 ▼5.99 6.29
HSBC Premier 6.84 5.65 5.65 5.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 5.29 5.29 5.29
ICBC 6.75 5.99 6.39 -
Kiwibank 6.65 5.69 6.09 6.29
Kiwibank - Capped - - - -
Kiwibank - Offset 6.55 - - -
Kiwibank LVR > 80% - - 5.55 5.55
Liberty - - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.95 6.15 6.60 -
NZ Home Loans 6.85 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
Resimac 6.59 5.92 5.95 6.04
SBS Bank 6.65 5.69 5.39 5.69
SBS Bank Special - 5.59 5.19 5.49
Silver Fern 5.95 6.10 6.55 7.05
Sovereign 6.85 5.99 6.09 6.39
Sovereign Special - 5.59 5.39 5.59
The Co-operative Bank 6.70 5.59 5.39 5.59
Lender Flt 1yr 2yr 3yr
TSB Bank 6.74 5.70 5.70 6.00
TSB Special - - 5.35 5.60
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.59 5.99 ▼5.99 ▼5.99
Westpac - Capped rates - 6.74 6.99 -
Westpac - Offset 6.59 - - -
Westpac Special - - 5.39 5.89
Median 6.70 5.89 5.97 5.99

Last updated: 30 March 2015 10:22am

News Quiz

Who's ceo has just received the 2015 Women’s Empowerment Principles (WEP) CEO Leadership Award in a ceremony at the UN headquarters in New York, being only the second NZ ceo chosen for the honour?


Fisher Funds

Partners Life

Fidelity Life


About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by PHP Developer and eyelovedesign.com