Superannuation changes

The Commission for Financial Literacy and Retirement Income has made 16 recommendations around future superannuation. Some of the more significant are:

That a new method of indexation of New Zealand Superannuation, based on the average of percentage change in consumer prices and earnings but no less than price inflation in any year

This change is highly desirable, and important.It would do more to make superannuation sustainable than adjusting the age. All other benefits are inflation adjusted only. Superannuation also has a floor linking it to the average wage and as wages rise faster than inflation this means the gap between NZ Superannuation and other benefits will continue to increase. It also means that as the population ages, the cost of superannuation will increase as a share of the economy.

That as soon as fiscally prudent, an  auto-enrolment day be held for employees who are not currently members of KiwiSaver, with retention of the right to opt out

I believe this is planned.

That in line with a recommendation of the Savings Working Group, the Government remove tax on the inflation component of interest on simple savings products such as bank deposits and bonds

Does any other country do this? Might cost a bit, but worth considering.

That the proportion of life over the age of 20 in receipt of New Zealand Superannuation be kept at a minimum of 32 per cent

This is code for saying have the age increase over time, which I also support.

They key for me is that we should not tinker with just one aspect in isolation.  We should give certainty to everyone aged 50 or over and pass entrenched legislation guaranteeing the current scheme for those born before 1963. This would then allow a proper debate over the appropriate scheme to have in place for those yet to retire.