The office is widely understood to have put in a substantial budget bid this year, in the hope of funding a stepped up education programme boost savings. There was also some hope within the financial services industry that there might be more of a commitment from the government to educating people about the need to save more.
That has not happened.
What the government is doing instead is boosting the New Zealand Superannuation Fund further. By June next year the fund will hold $6.3 billion, and by 2040 the fund will contribute 36% of the total expected costs of the state funded pension, Finance Minister Michael Cullen says.
“That represents $138 a week on the current married couple rate. If the fund did not exist the money would have to be found elsewhere.”
As far as an education programme goes, the government appears to prefer to lead by example. Cullen cites the government’s own workplace superannuation programme, the state sector superannuation savings scheme, which is being boosted in the Budget.
Contributions from state sector employees will be matched by 1.5% of gross base salary in the first year, and to 3% thereafter.
The government has budgeted for $8.9 million for the current financial year, growing to $35 million in the coming financial year and $58.1 million in each of the following three years.
That money is being invested, along with the employee contributions, with three private providers – AMP, AXA, and ASB Group Investments. The fourth provider, the Global Retirement Trust, pulled out of the scheme in April, citing rule changes to the scheme by the State Services Commission and also loss-leading business practices by the other providers.
Overall, Cullen said the government’s “no surprises” economic and fiscal management allowed people to plan for the future with greater certainty.
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