Retirement planning

mattwnz:

Don't assume everyone agrees, because I don't agree. There shouldn't be any reason for there to be less money tp pay pensions....if everyone pays their taxes, and these overseas companies operating in the NZ market also pay their taxes. The fact is that it costs 100k to keep a prisioner in prision, but it only costs 1/5 of that for pay someone the pension (which people have paid for in the taxes they paid over their working life to pay for anyway).

The media seems to be conditioning NZers that there will be restrictions on pensions, such as means or asset testing. This maybe because our media companies are overseas owned, and overseas they have restrictions, and they look on NZs system with envy. But in NZ we pay high taxes, and earn low incomes, and one reason for our high overall taxes is that we do have a universal pension scheme, which is fair to all. Otherwise why save, if the government are going to discentivise the pension by asset testing it. Income testing will just mean that people will go out buying more houses, so they are not earning an income off their investments, which will make houses more unaffordable.The baby boomers may put stress on it, but that will be a bubble that will end, and we do have the super fund to offset that cost. Unfortionately National stopped paying into it. Bring on a capital gain tax that applies to all property, and get tougher on people and companies not paying their share of tax.

It's a question of maths, and I'm afraid that your logic is a bit flawed.

The comparison of pensioner costs to prisoner costs is essentially irrelevant:

Firstly, the cost of a prisoner may be a lot more than the standard rate of pension. However, there are a *lot* more pensioners than prisoners. There are around 8,500 prisoners in NZ, and my understanding is that the number is falling slightly. In contrast, there's something like 650,000 people getting NZ Super, and the number is rising by more than 20,000 a year.
Secondly, the cost of a pensioner to the State is a lot more than pension bill. The pension may not even be the biggest expense - health costs for the older age group are large and growing rapidly (hospital, disability, rest homes, home help, dementia care etc). If you read the Treasury's 50 year long-term fiscal projections (on the website, actually quite a good read) it seems this worries them more than pension costs.

It has essentially nothing to do with wage rates (our pensions are linked to average wages anyway, so higher wages raise the pension bill as well), convoluted chains of logic about transactions in the housing market, or theories about whether the nationality of the shareholder of a media company means that their (NZ) journalists have a distorted view of our system. It's simple arithmetic to look at whether, and how, any government can set rules to balance:

the costs of an aging population with rising pension and health costs, and
the taxes that they are able to collect from the working population, given
a rising ratio of retired to working people.

It isn't exactly rocket science to figure out that (given the limits to the taxes companies/people are prepared to pay before they change their behavior to avoid them, work less, or simply relocate offshore) the costs have to be managed. That means setting payment rates, health entitlements and eligibility rules at levels that the tax base can sustain.

And finally, the point about some companies minimising their taxes is a bit of a red herring as well. Absolutely, the government should clamp down on this. Yes, there is tax revenue to be gained from doing so. But, in the scheme of things, the dollars in question don't make a material difference to the fundamental problem of the cost pressure from an aging population. Its hundreds of millions a year compared to tens of billions a year.

Geese

JimmyH

Batman