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Big hurdles for compulsory superannuation

Major hurdles have to be overcome before compulsory superannuation is realistic, says National Party Finance spokesman Bill English.

Monday, February 19th 2007, 1:53PM

by Bill English

"Much of the commentary I hear is reaction to understandable concerns, but it is the result of short-term frustration with Michael Cullen's refusal to proceed with tax cuts and Australian private equity buying New Zealand companies," English told the Institute of Chartered Accountants today.

"Any move to compulsory super needs much stronger foundations than just arguments about tax cuts and private equity.

"Some commentators have proposed that the untested Kiwisaver scheme be turned into a compulsory scheme. But Kiwisaver hasn't even started yet. It's a complex system with high costs and is nowhere near well enough understood or robust enough to become a compulsory scheme.

"More importantly, there is a fundamental misunderstanding of the Australia compulsory savings scheme. The Australian scheme is designed to replace publicly-funded retirement income. It sits alongside a low level pension, which is strictly income and asset tested.

"After 30 years of debate, New Zealand has just reached a consensus to go in the opposite direction with universal superannuation, no income and asset testing and pre-funding to help sustain the scheme for at least the next 50 years.

"For many Kiwis who struggle to save over and above their mortgage, national superannuation offers a guaranteed inflation-proofed, growth-proofed, risk-free retirement income. It's one reason New Zealanders invest so much in housing, rather than other forms of investments or savings.

"There is no evidence that moderate income earners are willing to forgo wage increases, or allow the Government to take money off them that they can't afford.

"There are no simple means of increasing savings. I believe the country needs a more balanced strategy, including investment opportunities and growth, not just more savings."

This is a press release from Bill English.

Bill English is the deputy leader of National and the party's spokesman on finance and superannuation.

« Cullen raises idea of mandatory savingsKiwiSaver default scheme providers announced »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.29 ▼2.59 ▼2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
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The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
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TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

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