NZ Super changes

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Forums › Finance and wealth management › NZ Super changes

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#3380908 6-Jun-2025 06:36

National also clobbered a 1974 Labour manatory pension contribution scheme.

National has a sound track record of making sure the future of superannuation is an ongoing issue.

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GV27

5896 posts

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#3380912 6-Jun-2025 06:55

toejam316:

There's no good arguments against means testing, it's pure greed to not do it. It's just another thing the older generations are happy to make the younger generations problem.

There's plenty of good arguments, particular from a cohort coming through who are having to live with $1m houses as the average in places like Auckland, as well millennials who are halfway through their working career and won't have the disposable income while working to save enough for shortfall that super suddenly being taken away for their retirement will cause, nor will they have enough time left in the workforce for any tax changes to Kiwisaver to be of real benefit to them.

mudguard

2114 posts

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#3381014 6-Jun-2025 07:57

The argument against means testing simple, if it costs more than you save by doing it then keep it universal.

And if it is introduced you'll see outcomes that may not be fair, IE those that can structure their assets in a way that appears to minimise assets in their name for example. Which tends to cost a bit of money. So your average PAYE couple with a house just over the threshold might get penalised as they are unable to restructure their affairs.

I do think the debate could be helped of every year a little diagram was published showing how many workers were there were for each superannuitant.

That said, it does seem a bit odd that in theory we could have a widower in a house in Invercargill and another in Devonport getting the exactly the same super each week. But being universal keeps the costs down.

Dingbatt

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#3381031 6-Jun-2025 08:13

So having worked for nearly 50 years, never shirking my tax obligations and doing without to save for retirement, people now think I should not be entitled to my pension because of my prudence? You can take a running jump.

With careful planning, we can afford to have a comfortable, but not lavish retirement. Having watched our parents struggling on just the pension, doing without sometimes to make ends meet, we stepped in to pay some of their bills. Particularly for medical care when the public system virtually abandoned them. I don’t want to be in that position.

Likewise we don’t want to be a burden on our children, who have their own bills and (huge) mortgages to pay. We have already assisted them with getting into their first homes by dipping into our retirement savings.

My social contract for the last 50 years is that I will contribute on the understanding that I will be looked after in my retirement.

“We’ve arranged a society based on science and technology, in which nobody understands anything about science technology. Carl Sagan 1996

mudguard

2114 posts

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#3381041 6-Jun-2025 08:52

Dingbatt:

So having worked for nearly 50 years, never shirking my tax obligations and doing without to save for retirement, people now think I should not be entitled to my pension because of my prudence? You can take a running jump.

It's even more simple than that. Because it's universal welfare rather than individuals contributing towards their own super it can be altered at any time.

It's not about what anyone deserves, the bottom line is at the moment the ratio of workers is 4.5:1 retirees, and that will shrink to 2:1.

Imagine what the income tax rates will need to be to sustain that.

The simple answer is pushing the age out.

cddt

1548 posts

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#3381054 6-Jun-2025 09:27

Dingbatt:

My social contract for the last 50 years is that I will contribute on the understanding that I will be looked after in my retirement.

No, the "social contract" which was repeatedly voted for is that the current year's taxpayers will pay the current year's elderly a benefit. Nothing about it extending indefinitely into the future.

Edit: if the intention had been for the benefit to be guaranteed in future, when the ratio of workers to recipients decreases, then surely the government(s) of the day would have put aside some funds for this purpose? But they didn't.

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cddt

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#3381056 6-Jun-2025 09:34

An easy change would be to increase the tax rate of anyone claiming the superannuation benefit as well as earning income from other sources. This could be set so that for people earning over a certain threshold (100k? 150k?) claiming super would not be sensible. There are currently around 50,000 people claiming the superannuation benefit, who also earn over $100,000 from other sources. This is a kind of "means testing" which would immediately save the country billions... This is without considering assets at all.

Susan St John sets it out, along with some scenarios, in this very accessible paper: https://www.auckland.ac.nz/assets/business/PIE%20WP%20%202025%20NZS%20as%20basic%20income%205th%20March%20final%20.pdf

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GV27

5896 posts

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#3381063 6-Jun-2025 10:01

cddt:

No, the "social contract" which was repeatedly voted for is that the current year's taxpayers will pay the current year's elderly a benefit. Nothing about it extending indefinitely into the future.

There's nothing in there about working Kiwis staying in NZ and contributing to the tax take either, when they could take a flight to a country with a similar culture, language and better lifestyle that offers far more support when saving for your retirement.

The reward for working Kiwis in their 30s and 40s for supporting current retirees can't be for the ladder to be pulled up, yet again, after already copping the same treatment with student loans, affordable housing and possibly now retirement.

Many will just simply choose to leave.

cddt

1548 posts

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#3381117 6-Jun-2025 10:32

GV27:

The reward for working Kiwis in their 30s and 40s for supporting current retirees can't be for the ladder to be pulled up, yet again, after already copping the same treatment with student loans, affordable housing and possibly now retirement.

I agree completely. Therefore, something needs to be done to make it more affordable and sustainable. Ensuring that those who truly do not need it are disincentivised to claim it is a first step.

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Asteros

252 posts

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#3381123 6-Jun-2025 11:00

The path of least resistance is hyperinflation due to self interest.

Quinny

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#3381124 6-Jun-2025 11:14

If someone currently works while on the pension, they pay one of the two at Secondary Tax. I wish that when the media reports that someone is receiving both, they also mention that they are paying tax twice. They also forget that employers can stop paying the KiwiSaver levy.

Most will agree that something will need to change, but will disagree on what and how. An increase in pension age also needs to allow for those who have worked and may be unable to secure a new job in the 60s due to age, recruitment bias, or physical limitations. How do we allow for that? Anyone 50 plus can tell you all about age discrimination that's there now, let alone after changes.

The recent media reports that highlighted a $66,000 loss to someone aged 18 due to the KiwiSaver changes never mentioned how much someone aged 40, 50, or 60 received in their lifetime, as they likely did not receive anything at all in the years before KiwiSaver was introduced.

Change is good, fairness is good, but not all people in their 60s live in $1m freehold homes with several hundred thousand dollars in the bank.

johno1234

2794 posts

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#3381167 6-Jun-2025 11:36

They could means test it but people plan long term for what they know about so any change to bring in means testing would have to be well out into the future - decades away.

eracode

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#3381204 6-Jun-2025 12:23

Quinny:

If someone currently works while on the pension, they pay one of the two at Secondary Tax. I wish that when the media reports that someone is receiving both, they also mention that they are paying tax twice.

Interested to know what you mean by this. Secondary Tax is only a timing issue during the tax year and the actual tax payable is resolved in each annual return at standard income tax rates. Tax is not paid twice - it all comes out in the wash.

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openmedia

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#3381232 6-Jun-2025 13:00

Personally I think we need a zero tax threshold similar to the AU, UK and many other countries. Here the NZ Pension is immediately subject to income tax,

For example

Australia first AUD 18K is taxed at 0%
UK first £12,570 is taxed at 0%

If we had a 18-20K 0% tax threshold it would be a big boost to low income earners and mean those on the pension without additional income source like a large Kiwisaver income would also benefit. Meanwhile higher income earners would still need to pay tax on their additional kiwisaver and other investments.

I know a couple of people who still work post 65 as they have no additional investments and the basic pension doesn't cover their living costs.

Generally known online as OpenMedia, now working for Red Hat APAC as a Technology Evangelist and Portfolio Architect. Still playing with MythTV and digital media on the side.

Handle9

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#3381298 6-Jun-2025 15:23

Dingbatt:

So having worked for nearly 50 years, never shirking my tax obligations and doing without to save for retirement, people now think I should not be entitled to my pension because of my prudence? You can take a running jump.

New Zealand superannuation is not a pension. A pension is a fund into which you make regular contributions to pay out in your retirement. You have an individual account and defined benefits in proportion to your contributions.

You did not pay into a pension fund. New Zealand superannuation is a benefit paid out of the general taxation. It can be changed or withdrawn at any time at the whim of the government of the day. Superannuitabts are beneficiaries just the same as those on sickness or unemployment benefits.

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