The Government's idea to set up a multi-billion fund to pay for some of the future costs of New Zealand Superannuation has received qualified support from several prominent commentators.
Investment Savings and Insurance Association chief executive Vance Arkinstall, and Auckland University senior lecturer Susan St John Speaking told a Financial Planners and Investment Advisers Auckland branch conference yesterday that the idea had some merit.
However, St John and Panit Services director Michael Littlewood questioned why the Government was appearing to panic over superannuation.
Littlewood and St John, who have each formerly been members of Government appointed superannuation task forces, said the problems facing New Zealand on super are minor relative to other OECD countries.
Research shows that over the next 50 years the actual cost of New Zealand Super as a percentage of GDP (currently 4% and estimated to rise to 9%) is much lower than the OECD average.
"I think we might be worrying too much," Littlewood says.
Although New Zealand's current system is out of step with the rest of the world a number of countries are starting to look at it with some envy, St John says.
"New Zealand is a shining light in a sorry world," she says. "Other countries are paying more attention to the New Zealand model (at the moment) because it is effective and efficient."
St John also points out that the problem of a reducing ratio of workers to retired people isn't anything new. New Zealand had the same problem in the 1950s and managed to get through it in tact.
While she believes it is highly likely the Government will get its policy in place, she questions whether putting aside money and earmarking it for super only is a good idea.
Her idea is that the Government remains fiscally prudent and puts aside money. However, by not calling it a super fund future governments have more choice about what they can use the money for.
Littlewood, who calls the proposed scheme dopey, prefers the country keep the status quo with some minor modifications. He says tax incentives and compulsion don't work.
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