Should pensions be means tested like Disability Benefits?

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#1678317 27-Nov-2016 15:06

Scott3:

I would like my analysis to be more about the what's best for the country, and less about what's best for me, but frankly things aren't looking that positive for my generation at the moment.

Im with you, it sincerely looks bleak unless your 55 and in Auckland with a house earning combined $150k plus until 65 and have a nice wad in the bank of which you will invest in Assets, not that it matters because your super wont be means tested.

Its very bitter.

Every generation blames the one before, but in this circumstance I cant help but feel the one before definitely got shafted, not deliberately but thats politics.

Id like to be fair and say, I dont want elderly people who cant afford to live to have no super, thats not what Im on about. But what does a 65 year old with $4m property and $2m in the bank need $300 a week for? Dont think social policy rubbish, Im just asking from a common sense perspective. Even if they lived to 105 they dont need $300 a week.

As for 9/10 Health, Education and Small business? serious? How many young ones are dying from dank damp state housing? How many cant afford an education? How many small businesses cant get off the ground due to lack of mentorship and funding like is given in Aus. How many cant get tests in NZ and have to pay mega bucks for standard tests in Aus/US to be sent away, how many have to wait 19 months with prolapsed discs to see a back specialist? Our health system is this, wait until you are nearly dead and its critical, then we will see you.

Its the back bone of society and economy. Unless of course you are a modern yuppy living in Auckland and you dont see how the other half lives..... 9/10 might sound real. Not an attack, but honestly I really dont think

TeaLeaf

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#1678331 27-Nov-2016 15:29

Thanks to everyone who contributed to the thread, young or old. Its interesting to see some agree, some have other ideas, and some just want it to stay the same forever which is IMPOSSIBLE, there will be a loser and we know who it will be. Everyone has an opinion and entitled to it.

I just hope this country really doesnt crash in the next 2 decades due to greed and lack of fundamental social and economical rights.

mattwnz

20164 posts

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#1678334 27-Nov-2016 15:44

TeaLeaf:
Scott3:

I would like my analysis to be more about the what's best for the country, and less about what's best for me, but frankly things aren't looking that positive for my generation at the moment.

Im with you, it sincerely looks bleak unless your 55 and in Auckland with a house earning combined $150k plus until 65 and have a nice wad in the bank of which you will invest in Assets, not that it matters because your super wont be means tested.

Its very bitter.

Every generation blames the one before, but in this circumstance I cant help but feel the one before definitely got shafted, not deliberately but thats politics.

Id like to be fair and say, I dont want elderly people who cant afford to live to have no super, thats not what Im on about. But what does a 65 year old with $4m property and $2m in the bank need $300 a week for? Dont think social policy rubbish, Im just asking from a common sense perspective. Even if they lived to 105 they dont need $300 a week.

As for 9/10 Health, Education and Small business? serious? How many young ones are dying from dank damp state housing? How many cant afford an education? How many small businesses cant get off the ground due to lack of mentorship and funding like is given in Aus. How many cant get tests in NZ and have to pay mega bucks for standard tests in Aus/US to be sent away, how many have to wait 19 months with prolapsed discs to see a back specialist? Our health system is this, wait until you are nearly dead and its critical, then we will see you.

Its the back bone of society and economy. Unless of course you are a modern yuppy living in Auckland and you dont see how the other half lives..... 9/10 might sound real. Not an attack, but honestly I really dont think

Why do you have to have a house in Auckland, for it to be bleak? In fact I think having a house in Auckland where it's current value is more than 10 times the average wage, is potentially a major problem, especially if you have purchased as a first home buyer within the last few years. Unless you are planning on selling and moving elsewhere to free up your cash and get a tax free capital gain. If houses prices dive, then potentially it could be a major problem for both the house owns who overpaid, and the nz economy in general, with the potential for bank stress. I would far prefer to own a house elsewhere for less than half of an Auckland house.

TeaLeaf

6325 posts

Uber Geek

#1678363 27-Nov-2016 16:05

mattwnz: I would far prefer to own a house elsewhere for less than half of an Auckland house.

I dont disagree, but keep in mind jobs and the type of jobs, not everyones a chippy or a tiler.

But I did create a thread a while back about Satellite cities and Aucklands transport and the need to push big business out of Auckland into Satellite cities, ie Whangarei.

High speed train from the start of Hamilton to outskirts of Auckland connecting to Auckland train line. High speed train from Whangarei to Auckland replacing the Bus lane and under the sea tunnel to Auckland. More Business pushed West and East as well as connecting train lines.

Build 3-4 tesla Factories (self sufficient factories via solar roofing), (we might only need one), aim for 100% renewable energy (Wind turbines, Solar) like Sweden, Germany, Denmark etc to power the batteries to run the trains and all of NZ's power. Redirect employment from energy sector to this concept.

Put a $12 (in line with Sydney tolls) carbon tax toll to enter the motorway at any point during work hours, get the cars off the roads, educate people to Global warming and that they are causing it and their car will mean .... all when they are gone and the planet is dead, ie grow some self awareness to the environment.

Educate people to the speed of new trains and do it properly with real train lines and stops and not some hodge podge bus system with inadequate parking.

Make Auck a model for the rest of the world to follow a truely sustainable city with low environmental footprints. Germany is up to 80% energy sourced by renewable energies, why cant kiwis ? Self awareness and a spiritual knowing of our connection to the environment.

Scott3

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#1678366 27-Nov-2016 16:06

mattwnz: Super is actually an entitlement, and everyone who pays taxes is paying into it. The problem is that it is managed by winz, so people think that it is a benefit. But it is really no different from any other retirement scheme. The media is also writing all sorts of stories of late, to say whether it should be means or income tested, and whether we can afford it, so I get the impression that they are wanting it changed, but many people want it kept like it is which is simple. . Our PM says yes we can afford it without putting up the age. The big problem is the government doesn't actually save the money we are paying into it, so money being paid out now is coming out of taxes. If this government hadn't suspended payments into the superfund that labour setup, nz likely could have a huge amount more in the super fund, as shares have increased substantially over their term.
If you have money in KiwiSaver you don't want the age of entitlement to Go up as it delays when you can withdraw that money so you have less time on earth to use it.

In economics Superannuation is classified as a transfer payment. Money that is transferred from the government (from general taxation pool) to eligible people with nothing expected in return (beyond meeting eligibility criteria). In this regard it is no different to the jobseeker's benefit, sickness benefit, or domestic purposes benefit apart from the differing eligibility criteria. In regards to it being an entitlement, the only thing you're entitled to is receiving any benefits you are eligible for at that point in time. Note that governments can change rates & eligibility criteria or add/remove benefits at any time.

I think there dramatic difference between this and other retirement savings schemes. (i.e. kiwisaver)

You touch on a much bigger issue, Politicians are terrified to touch on this issue despite ample evidence (including statements from the government's own treasury) that the situation is unsustainable.

The very same thing that is causing the issue, makes it politically costly to resolve. The dramatically increasing ratio of those aged 65+ compared to those working age, not only represents a massive cost increase of superannuation payments, but a massive block of (high turnout) voters. The NZ population tryangles demonstrate this quite clearly link.

Regarding John Keys statements, he has flip flopped on issues like the GST increase in the past so I wouldn't say this is set in stone. It however does indicate the lack of political palatability of any changes to the current superannuation scheme. I think the will to change would need to come in a backroom deal between the major political parties, for the benefit of the country, without any one political party losing too many votes over it. This does seem unlikely though.

I note there is not necessarily any need to for the age of access to kiwisaver funds to match the age of entitlement for superannuation.

Geektastic

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#1678395 27-Nov-2016 16:47

I'd be more than happy to save for my own pension. However:

1) I require the government to reduce my tax bill because:

2) I expect money saved to my pension fund to be given tax relief

Under those circumstances, you could consider means testing any state pension but not before.

TeaLeaf

6325 posts

Uber Geek

#1678397 27-Nov-2016 16:48

Same in Aus, you can access your super early, but if you run out, bad luck.

Yeah its politics. By those nearing the retirement age who have multi million dollar properties :-)

Id agree with GST increase only if we do a Trump and rebuild NZ and support small business with mentors and more grants, Aus has a great small business mentor programme, you are teamed up with someone successful in your industry who helps you through the initial years.

If we start making more than Milk and Lamb, and actually produce some products and reduce our imports (clearly we need some) then create this Satellite system with 100% renewable energy and high speed trains pushing business and people out of Auckland. I think we really could save NZ for future generations.

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TeaLeaf

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#1678398 27-Nov-2016 16:50

Geektastic:

1) I require the government to reduce my tax bill because:

2) I expect money saved to my pension fund to be given tax relief

Or just do the Aus where companies pay your 9% super compulsory and give them a tax break, promoting more business activity. Either way.

Scott3

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#1678425 27-Nov-2016 17:29

Geektastic:

I'd be more than happy to save for my own pension. However:

1) I require the government to reduce my tax bill because:

2) I expect money saved to my pension fund to be given tax relief

Under those circumstances, you could consider means testing any state pension but not before.

#1 seems fair enough. If we decide to scrap superannuation, government costs would drop, and it would seem fair for a portion (we do have $80B odd of dept to pay down too) of this to be passed on as tax cuts. We would have some major issues transitioning though.

#2 is a bit tricker. I'm sure you're aware that tax incentives for retirement savings are not unheard of in other countries, and this is definitely behaviour we want to incentivise. On the other hand, in NZ, currently superannuation is taxed at normal income tax rates. Also I'm not sure that favoring retirement savings over other kind of savings is equitable(i.e. saving to start a business, or to buy a house a few years before retirement, with the anticipation of living there during retirement). I haven't worked out where I stand on that issue.

Radically dialing back the superannuation budget is hard. Easiest way is to slowly (i.e. 2 months a year) increase the age of entitlement (given increased life expectancy I think it is fair we step up the age a bit).

- If super was scrapped entirely, you would have a lot of people plunged into poverty, or retirees having to go back to work, not something I really want to see in NZ, I don't think we can take super off those who already have it (possibly we could fix the amount (rather than trying to median or average income and let inflation decrease the real value, but even this is really harsh)

- Keeping super for those near/at retirement age, but phasing it out, leads to the situation where current workers have to fund both current retirees (via their taxes), and their own retirement at the same time.

- A rapid jump (say from 65 to 70) in age of entitlement would lead to massive boundary issues, imagine having to work 5 years longer to be eligible for super than your twin that was born the other side of midnight.

I want to see our elderly live in dignity, but I don't want the country to go broke as treasury predicts either...

driller2000

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#1678426 27-Nov-2016 17:29

Personally and in principle I believe they should on the basis that assuming that there is no disaster in my current financial plan I will not need super when I turn 65.

Note: I also believe this age should be increased from an affordability point of view for NZ Inc- but acknowledge this is easy for me to say as a professional who doesn't smash my body to bits as part of my job.

So I would rather these funds were spent on a better and more deserving cause then a 65 year old (and hopefully) cashed up version of me!

I also disagree with the argument "I've paid my taxes - so I have earned it" - if you don't actually need super to have a "decent" life.

The fact of the matter is we withdraw and deposit into NZ Inc in varying degrees throughout our lives and as long as these funds are fairly and wisely distributed - then I am happy.

However - I appreciate that actually means testing - the bureaucracy, costs, the complexities, the workarounds, the potentially perverse behaviour it may drive are all problems that are not easily solved.

sbiddle

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#1678435 27-Nov-2016 17:55

Scott3:

You touch on a much bigger issue, Politicians are terrified to touch on this issue despite ample evidence (including statements from the government's own treasury) that the situation is unsustainable.

The very same thing that is causing the issue, makes it politically costly to resolve. The dramatically increasing ratio of those aged 65+ compared to those working age, not only represents a massive cost increase of superannuation payments, but a massive block of (high turnout) voters. The NZ population tryangles demonstrate this quite clearly link.

Politicians are scared to touch it because the results of the 1997 referendum were pretty clear - 91.8% against compulsory super with an 80.3% turnout.

While I'm no leftie the introduction of compulsory super by Labour was a very smart thing. It's a shame Muldoon canned this, as you only need to look at Australia to see how successful this would have been.

TeaLeaf

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#1678439 27-Nov-2016 18:07

Scott3:

I want to see our elderly live in dignity, but I don't want the country to go broke as treasury predicts either...

Summed up the point of the thread in one sentence. I dont blame the Baby Boomers. They didnt set the policies. But they did get way more out of NZ than the gen behind. And a lot of them are politicians in government now. Oh, no bitterness lol.

The point is to find a system that keeps people at a good standard of living in their retirement. In a lot of countries (more so the Germanic speaking or Nordic ones) this is done by Tax, they pay shed loads. But, they receive all the benefits of communism with the benefits of socialist democracy.

Again Aus super is 9%, tax breaks to small business, phased in and old scheme phase out. Kiwi Saver is BS IMO.

TeaLeaf

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#1678440 27-Nov-2016 18:08

sbiddle:While I'm no leftie the introduction of compulsory super by Labour was a very smart thing. It's a shame Muldoon canned this, as you only need to look at Australia to see how successful this would have been.

Bingo. ding ding ding, the Fruit Machine Jackpot just got won. :-)

sbiddle

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#1678444 27-Nov-2016 18:11

TeaLeaf:

Again Aus super is 9%, tax breaks to small business, phased in and old scheme phase out. Kiwi Saver is BS IMO.

Kiwi Saver was a highly watered down system but an attempt to at least do something about super because 91.8% of people voted against compulsory super in a referendum.

PhantomNVD

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#1678447 27-Nov-2016 18:15

gzt: The multi millionaire in the op would probably not claim super.

Perhaps the four million dollar sale transaction is a better argument for CGT.

Conversely, perhaps requiring retirement before collecting the Super is actually a way to reduce the deficit?
One would like to think a cashed up multimillionaire wouldn't claim super, but why wouldn't they if they feel "they earned it"?

I know at least 3 super collecting, cashed up NON retired people, who are currently living in their paid up house earning a full income and claiming the $300/week super as "my right".

They don't need it, we can't afford it (in the long term), and I think this is just 'wrong', but they'd be stupid NOT to claim what they're legally 'entitled' to, right?

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