"Labour's proposal to set up a 'New Zealand Superannuation Fund' has not been properly debated, or subjected to rigorous analysis. Yet Dr Cullen wants to start the Fund with legislation that will take effect from 1 April 2001.
"Labour says it wants to set "New Zealand Superannuation Tax" at a "constant level" to fund New Zealand Superannuation over the next 60 years. We have had some estimates done on the amount that might be needed to achieve Labour’s objective – by 2004, the "New Zealand Superannuation Tax" could need to be about $3.7 billion a year to "smooth" the cost of New Zealand Superannuation as Labour intends.
However, Littlewood said that the whole idea of the Fund represents muddled economic thinking.
"Labour's funding proposals are no more than economic window dressing. Putting money into a Fund tagged to cover future superannuation payments only robs Peter to pay Paul. It is a smoke and mirrors trick that does nothing to address the real issue – enhancing our economic growth.
"The only way that we can all help to support tomorrow's larger retired population is to help the economy to grow.
"We want voters to understand that the proposed Fund is more likely to increase the cost of New Zealand Superannuation over the next 30 years. The Fund is more likely to detract from, rather than improve, New Zealand's economic health and increase future governments' exposure to risk" Mr Littlewood said.
"Labour’s policies will hinder rather than help Kiwis prepare for their retirement, and in the process, they will hinder our progress as a nation.
"People need to know the facts before the election – the last thing we need is another policy U-turn that creates still more uncertainty and confusion in superannuation" Littlewood said. "We need good information, proper debate, consensus and a settled long term, sustainable superannuation policy. Labour’s policy contribution is more likely to destabilise the superannuation policy environment than ‘guarantee’ the security of tomorrow’s retirees" he said.
The list of signatories to the paper follows – the paper itself is attached. A separate paper explains how much the proposed "New Zealand Superannuation Tax" might need to be to achieve Labour’s objective.
Several people have agreed to sign the paper. They are (in alphabetical order):
Michael Chamberlain, actuary, of MCA NZ Limited, Auckland
Leo Harper, financial adviser, Auckland
Dick Jessup, actuary of Melville Jessup Weaver, Wellington
Roger Kerr, economic, business and financial markets commentator Auckland
Michael Littlewood, director, Planit Services Limited, Auckland; former member of the Task Force on Private Provision for Retirement 1991-92; author of How to Create a Competitive Market in Pensions, the International Lessons
Grant Niccol, chartered accountant and company secretary, Auckland
Angela Ryan, economic consultant, Melbourne; former Secretariat Manager of both the Task Force on Private Provision for Retirement 1991-92 and the Periodic Report Group 1997
Jeff Todd, company director, Auckland; former Chairman of both the Task Force on Private Provision for Retirement 1991-92 and the Periodic Report Group 1997.
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Full copies of the Littlewood papers
Costings of Labour's policy
Experts say policy flawed
Press release
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