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NZ First wants fund invested in NZ

Winston Peters has given more details of New Zealand First's superannuation policy. Besides creating individual accounts, he wants to invest the NZ Super Fund in NZ, and offer savers tax incentives.

Tuesday, June 25th 2002, 6:49AM

Do you remember who removed the superannuation surtax?

Superannuation has always been a major issue for New Zealand First.

As you know there have been more twists and turns in superannuation policy than in the plots of an Agatha Christie novel.

But the New Zealand public is tired of games.

New Zealanders need to be able to plan their lives knowing where the state stands on pensions.

Because superannuation is about the very long term - decisions made now or not made will echo across future decades.

The adequacy of income in retirement is critically important to all New Zealanders, not just those who are actually receiving a pension today.

And the issues are becoming more, not less critical, as the demographic transition to a population with a much greater proportion of elderly gathers pace.

From now on we have to put common sense first.

Common sense dictated that we supported the New Zealand Superannuation Fund introduced by the present government.

The fund is not the perfect or ideal solution to superannuation - all schemes have their limitations and drawbacks and this one is no exception.

Specifically, there is a need to introduce individual accounts.

New Zealand First voted in support of the legislation setting up the New Zealand Superannuation Fund because the time for indulging in endless theorising about the perfect superannuation scheme was past.

New Zealand First was not prepared to go along with further indecision and procrastination.

We wanted to see something in place - something to build on and improve.

Having got the fund under way what do National, Act and the Greens now want to do?

You guessed it!

Their brand of brilliance is to scrap the fund and have us start all over again.

In the area of pension security, common sense suggests that anyone who is approaching or over 50 would be daft to vote National, Act or with the Greens.

Those parties want to abandon the progress that has been made on superannuation and cast the country back into to another decade of debate.

New Zealand First’s view is that there are three parts to a successful superannuation policy:

  • First, ensuring that the elderly have the income they need to live in dignity and security
  • Second, getting the economics of paying for pensions right so it is sustainable over the long term
  • Third, building a superannuation scheme that addresses the underlying psychology of saving and retirement planning and not just the financial aspects.

Adequacy of Income

In relation to the adequacy of the public pension, New Zealand First will incrementally raise the base rate for New Zealand Superannuation for a married couple from 65% to 72.5% of the net average wage. (With a similar adjustment of rates for single people)

This is the level we see as a minimum to ensure all New Zealanders can expect to retire with dignity.

To maintain the adequacy of income provision we will:

  • cement in place the age of entitlement commencing at 65 years
  • ensure that the real purchasing power of the pension is preserved through appropriate indexing
  • Facilitate the transition from the pay-as-we-go scheme through the cost smoothing mechanisms of the newly established fund to a new save-as-we-go scheme
  • Provide, on a pro rata age basis, that entitlements of superannuation at death will form part of the deceased estate - there will be no requirement to make repayments.

Investment Policy

New Zealand First will put the New Zealand Superannuation Fund to work in growing our own infrastructure and economy

We will use the fund to give New Zealand a greatly expanded savings base.

To this end we will require the fund managers to invest in New Zealand infrastructure and to assist the expansion of New Zealand industries and businesses.

We would only agree to offshore investment when the fund grew too large for exclusive investment in New Zealand.

We are not going to be at the mercy of smart young men with cell phones playing the overseas stock markets with New Zealand’s precious capital when there is a desperate need to fund worthwhile investment right here in New Zealand.

Individualised Accounts

New Zealand First policy will go directly to the underlying motivation for saving.

As most New Zealanders know the most powerful tool in moving towards a goal is having clear measurement of what progress is being made.

For this reason, New Zealand First wants every adult New Zealander to be able to measure their progress towards individual savings goals - giving people a sense of ownership of their pension plan.

Aggregated schemes can come and go.

As things stand the New Zealand Superannuation Fund can be demolished the moment the government changes, or it changes its mind.

The only way to ensure that the progressive build up of funds is not squandered to meet some short term political agenda is to turn it from a huge, amorphous and essentially meaningless series of naughts into personalised accounts for every adult citizen of New Zealand.

New Zealand First will amend the legislation relating to the New Zealand Superannuation Fund to tag individual entitlements, guaranteed by the state and to make them untouchable by future generations of politicians.

When what we propose is in place woe betide the politician or party who threatens to tamper with people’s personal savings!

In addition, New Zealand First will add, over time, tax incentives for personal savings in the name of the saver and thus ensure that the national interest will served to the maximum through enhanced domestic savings.

In other words, the fund becomes individualised for all New Zealanders supported by tax breaks.

The amount of funds in an individual’s account will be part of that individual's estate

We will provide on a pro rata age basis that receipts of superannuation at death will form part of the deceased estate - there will be no requirement to make repayments.

We will also insist that the contributory scheme must contain portability provisions over time and between jobs and that it must be able to be drawn upon if the recipient is outside New Zealand.

We would ensure that any modified scheme would not affect any person who at the time of introduction was aged 55 years or older and thus maintain certainty for that group currently closest to retirement; and, as a final protection, legislate to ensure that any modifications to the superannuation scheme can only be made with the support of 75% of parliament.

And finally we would take serious steps to encourage the development of good savings habits for our children - something completely lacking at present.

New Zealand First will not adopt the ground zero approach to superannuation of National, Act and the Greens.

New Zealanders have been through too much anguish already over superannuation.

We say, enough is enough.

What we propose to do is move forward, and build on what is now in place in a constructive and common sense way.

The net result of New Zealand First superannuation policy would be a state pension that is:

  • sensible,
  • sustainable
  • secure

Can we fix it? Yes we can!

This is an extract from a speech New Zealand First leader Winston Peters gave on Monday June 24.

« Alliance withdraws support for NZ Super fundAMP & Good Returns launch superannuation website »

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