Labour on superannuation

The Herald reports:

Labour would raise the age of eligibility for New Zealand Superannuation to 67, make KiwiSaver compulsory for employees and increase the KiwiSaver contribution rate if voted into power.

Deputy Labour leader David Parker told members of the superannuation industry his party was not afraid to tackle the age of eligibility issue despite it being politically challenging.

“I am willing to deal with the age of eligibility for superannuation. This is not populist politics.”

Parker said the Census data released this week backed its decision. He pointed to the number of people in the 50 to 59 age group increasing by 22 per cent since 2006 to 989,000.

“Although the total population increased, fewer people are under 15 than in 2006 and this reinforces the need to address superannuation.”

Paying for superannuation cost more than all benefits combined and within two years he expected it to exceed the annual spend on education. Labour has proposed raising the age of eligibility for New Zealand Superannuation from 2020 increasing it two months at a time to reach 67 by 2026.

I back raising the age. It is worth noting that in the fine print of Labour’s policy is that they are not so much increasing the age, as applying a means test for those aged 65 and 66. So if you stop working at 65 and have few investments you will still get super.

The party would also make KiwiSaver compulsory for those in employment. It would be optional for the self-employed and those without an income.

This means a take home pay cut for those who can least afford it. If you make KiwiSaver compulsory, then you should over time cut the level of NZ Super to recognise that everyone will have private savings.