Long life for NZ Su­per – with some changes

Auckland City Harbour News - - NEWS -

‘‘Cheer up, it never hap­pen!’’

There are fewer more an­noy­ing things to say to some­one look­ing a bit down in the mouth.

But it’s the right mes­sage for youth about NZ Su­per.

Many of those aged 30 and un­der ap­pear con­vinced that NZ Su­per, the uni­ver­sal state pen­sion that forms the bedrock of New Zealand re­tire­ment sys­tem, won’t ex­ist by the time they re­tire.

Faced with their user­pays world of stu­dent loans, health­care bills and high mort­gages, they are a gen­er­a­tion who has come to think that there just isn’t the money about to pay for state help in their lives.

Hey, if free ed­u­ca­tion and health­care is gone, won’t the same hap­pen to NZ Su­per?

It’s an ar­gu­ment that has a sur­face logic to it but I think the logic is wrong.

Re­tire­ment Com­mis­sioner Diane Maxwell has just pub­lished her three-yearly re­view of NZ Su­per and con­cludes rightly that it is the envy of the world.

The trou­ble is we are an age­ing coun­try, not so fast as some, but we are age­ing.

That puts a strain on

might gov­ern­ment fi­nances be­cause a lot more will have to be spent on NZ Su­per.

This will, the com­mis­sioner says, mean some nec­es­sary changes to the pen­sion scheme as the num­ber of over65s heads up to a peak of 1.5 mil­lion by 2060.

It is sug­gest­ing link­ing the age of el­i­gi­bil­ity for NZ Su­per to longevity and maybe lim­it­ing the amount it in­creases by each year, though not by less than the rate of in­fla­tion.

But no­body, and I mean no­body, is sug­gest­ing an end to uni­ver­sal NZ Su­per be­cause it is cheap, in­clu­sive and pro­vides a re­turn on a life­time of be­ing a New Zealan­der.

Sure, it’s not re­ally enough to live on com­fort­ably, though 40 per cent of cur­rent re­cip­i­ents are forced to solely rely on it, but it does mean al­most noone over 65 is in poverty.

It’s paid to ev­ery­one re­gard­less of wealth, so you know ev­ery $1 you save equates to $1 in re­tire­ment to help gen­er­ate ex­tra in­come.

And what­ever the fi­nan­cial ser­vices in­dus­try tells you, pay-asyou-go, with in­di­vid­u­als sup­ple­ment­ing their in­comes through their own sav­ings, makes sense.

For me, it means 25-year-olds are jus­ti­fied in think­ing they will have to save more than their grand­par­ents.

But as the elec­torate ages, politi­cians will have to be­come more mind­ful of our el­ders, not less. All this to me ar­gues that NZ Su­per is here to stay.

So, I feel pretty con­fi­dent in say­ing to youth: You will live longer.

You will re­tire later (and don’t imag­ine it will be at age 90). And the NZ Su­per you get maybe a gen­er­ous.

But equally, I’d say, it can’t be very much less or we’d have co­horts of im­pov­er­ished el­derly peo­ple.

If you are of a par­tic­u­larly gloomy na­ture, live your life and save/build as­sets as though NZ Su­per will be worth half what it is now, and plan your work­ing lives a bit longer.

That’s no great hard­ship. A fifth of over-65s work al­ready.

Just carry on do­ing the things that will make you suc­cess­ful, and don’t buy into the shrill dooms­day rhetoric some spout about an age­ing pop­u­la­tion, and don’t buy into any­one’s at­tempts to stir in­ter­gen­er­a­tional ha­tred.

If your el­ders did get more help and faced lower house prices, they had war, prej­u­dice and shorter lives, and you’ll get to buy their as­sets on the cheap in a cou­ple of decades when they are all try­ing to turn them into cash to live off.

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