Cheap pen­sion

Sunday Star-Times - - FOCUS | OPINION -

In ‘‘Re­think­ing re­tire­ment’’ (Busi­ness, June 3) Shamubeel Eaqub pro­poses a hard Rexit from our pen­sion sys­tem de­spite it be­ing one of the best in the world. And as he lets fly with the hand grenades, he makes some highly chal­lenge­able state­ments.

For ex­am­ple, that New Zealand Su­per­an­nu­a­tion is ex­pen­sive. Ac­tu­ally, as a pro­por­tion of GDP, our state pen­sion is one of the cheap­est in the OECD.

Next, Eaqub ar­gues that our ap­proach to tax­a­tion un­fairly pe­nalises savers, while at the same time propos­ing that Su­per be means-tested. This would surely pun­ish peo­ple who have saved ex­tra for their re­tire­ment. Then there’s the old saw of mak­ing Ki­wiSaver com­pul­sory, thereby forc­ing low­er­paid peo­ple to take a min­i­mum 3 per cent cut in income. And watch out for com­pul­sion and means test­ing go­ing hand-in-hand, turn­ing Ki­wiSaver into a gi­ant con­fi­dence trick.

It is true that bet­ter tar­get­ing of as­sis­tance to su­per­an­nu­i­tants is likely to come through the ac­com­mo­da­tion sup­ple­ment, and this will cost a lot. But our re­tire­ment income poli­cies have evolved over many decades, and are what they are for good rea­sons. There are ways of im­prov­ing their sus­tain­abil­ity with­out sim­ply blow­ing them up. Mal­colm Men­zies, Welling­ton

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