Wednesday , January 20 2021

Some myths about NZ Super



Susan saint john

Hon Associate Professor Susan St. John of the School of Economics at the University of Auckland School of Business and Economics. She is an economics advisor for the Anti-Poverty Action Group.

Show more

Futurelearning

Let's not raise the age silently, says Susan St. John, but try to solve the actual problems that ordinary people face.

Recently, a well-known New Zealand weekly magazine published the story “Fresh moves to raise the age of super to 67”. However, the Labor-led government did not give any indication that it was considering advanced training. In fact, he locked himself in promises not to raise the age. Other commentators joined the statement that an increase in life expectancy inevitably increases age. Problems are usually expressed in New Zealand’s growing budget expenditures, as society undergoes profound demographic changes.

There are many misleading information in public commentary. It is easy to misinterpret OECD statistics, as has been done recently. The New Zealand base super for one person at 43 percent was compared with a pension in the Netherlands at 100 percent of the average wage, which led to the statement that we have one of the most unbearable pensions in the OECD. However, this happy outcome in the Netherlands is a person who not only completed a 50-year residence for a full basic pension, but also contributed to a professional scheme for a full 40-year career with an average salary,

In fact, New Zealand has one of the highest basic pensions, as shown in OECD statistics, at 43 percent of the average salary for a single person living alone. Thus, despite inaccurate requirements, as well as due to low housing requirements and its universal nature, NZ Super is one of the most generous basic pensions in the OECD.

Despite this, New Zealand spends only about 4 percent of GDP on NZ Super, and while it is growing, at the peak it will still be significantly lower than the pension costs of many other countries. We don’t spend too much on private subsidies. KiwiSaver subsidies are very small compared to other countries' expensive tax breaks for private savings.

To think that raising the age is some kind of financial savior who misses so many qualifiers. It is important to note that, as National found out, when they tried to do this, it should occur gradually over a long period of time for political acceptance and give people enough time to adapt. According to the plans of the national level, 67 years will be reached only by 2037. Budget savings will be minimal for the first decade, and even then savings will be mitigated by the additional costs required by the social security system, for many unable to work full time.

Probably, the age of age is a bit inevitable in the long run, since there are so many impulses for it, but this is not the answer to the real problems that ordinary people face. This does not make the NZ Super more accessible today, but simply keeps the line, as people live longer.

So what is the problem that needs to be solved?

Well, it may just be social justice. Many people of working age have few chances to accumulate an additional nest egg, which will cover 270 dollars a week, which is said to have been unnecessary for a good retirement. At the same time, these same people of working age are taxed on the NZ Super pay for today's rich superantiants, who can also work in high-paying jobs. Today's taxes also contribute to the New Zealand Super Fund for retirement, which may be harder for today's working age to gain access, especially if the age increases.

Already, many low-income pensioners leave NZ Super part-time and cannot and probably should not work full time. More and more new retirees are reaching 65, still renting out on an unstable housing market. The reality would be that if there is no basic retirement income before the age of 67, many other people will reach a higher age of an even poorer one.

For most wealthy superantiants, the NZ Super is a dip in the bucket. They do not notice this. They, of course, did not need expensive payment for winter energy. You can develop a higher tax rate for the very wealthy, which can provide useful savings of at least 10 percent of the total cost of the NZ Super without any difficulty. In the pension policy and research paper as NZ Super can be changed to basic income, the same non-taxable grant for each person over 65, with a separate tax scale for other income. Nearly 1 billion dollars a year could be saved very easily.

These savings can be used to improve KiwiSaver for low-income people and provide housing for those who retire with a small amount of assets. Let's not silently raise the age, but instead note that New Zealand is at the head of the world with the simple visionary idea of ​​an inclusive basic pension for all 65 years of age based on residency rather than contributions

With New Zealand’s visionary approach, many of those over 65 years of age are contributing to critical voluntary unpaid activities, such as nursing, mentoring, and supporting NGOs, without which society will not function. Paid work is nothing better, and many people find freedom and satisfaction in the work they love without worrying about paying. Hopefully, the promised review of retirement incomes in 2019 rightly considers all options for sustainability, fairness, and affordability, not relying only on the chimera that raises the age of law.


Source link