Labour’s super policy
Labour will immediately restart contributions to the Superannuation Fund if it wins the election, says leader Andrew Little.
It has promised to pay in $500 million in the current financial year if it leads the next Government. Contributions would build up annually to $2.5 billion in 2021-22, the year in which National has said it would resume payments.
Little said that by the time National planned to resume payments, Labour’s contribution would have almost doubled the size of the fund from its current value of about $33b to $63b, based on its average current performance.
“This would equate to $6500 per person extra in the fund by 2021-22 under Labour.
“More importantly we can continue to afford to leave the retirement age at 65, unlike National, which has promised to lift the age to 67.”
Both National and Labour have reversed their positions on the age of entitlement since the last election, in which National promised no increase and Labour promised to lift it to 67.
One of the first things Bill English did as leader was to announce the age would change — but it would not begin rising for 20 years.
Little now says the argument to lift the age “doesn’t stack up”.
“I’ve spent 20 years working with people who struggle to get to 65 now before they retire because of the physical nature of their work — that hasn’t changed.
“A Labour Government I lead will keep the age of entitlement at 65 and we will restart contributions to the New Zealand Superannuation Fund immediately.”
Little made the announcement ahead of the unveiling of Labour’s alternative budget.
National suspended contributions in 2009 during the global financial crisis. Its last contribution was $250m.
Little said the value of contributions missed by National would have amounted to $14b.
At the last election Labour had planned to restart contributions the following financial year.
The scheme was started by former Finance Minister Sir Michael Cullen in 2001. It is to offset the costs of the state pension during the babyboomer bulge and can’t be drawn on before 2020.