Greens' Proposed restrictions in Kiwi Saver?

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#1617313 25-Aug-2016 12:37

Most people think they're entitled to the Super, and I can completely understand why. You've paid taxes your whole life with that expectation.

I think this mindset needs to change. It needs to be viewed the same way as any other social welfare, you should only receive it if there is a genuine need.

Obviously there's countless arguments against means testing. However, if you look at Studylink or retirement care as an example, there is strict criteria you must meet in order to get government assistance. Sure there are people that will lie and manipulate things to there advantage. But the bulk of society will stick to the rules and it should work pretty well.

It just annoys me when I see my parents' friends with vast wealth collecting the super for the hell of it : P

I'm fairly young and I don't expect to ever get the Super.

MikeAqua

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#1617355 25-Aug-2016 13:32

Sam91:

Most people think they're entitled to the Super, and I can completely understand why. You've paid taxes your whole life with that expectation.

...

I'm fairly young and I don't expect to ever get the Super.

I'm 41 and I don't expect to receive govt super either. I think it will be delayed and/or means tested and/or significantly reduced.

My plan is: -

1) Kiwisaver (at contribution my employer matches);

2) Property(multiple)

3) Other investments;

4) Work as long as my health enables me to.

We've enrolled all our kids in KS, and told them to expect nothing from govt.

Mike

PolicyGuy

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#1617388 25-Aug-2016 14:18

Sam91:

Most people think they're entitled to the Super, and I can completely understand why. You've paid taxes your whole life with that expectation.
I think this mindset needs to change. It needs to be viewed the same way as any other social welfare, you should only receive it if there is a genuine need.
Obviously there's countless arguments against means testing.

However, if you look at Studylink or retirement care as an example, there is strict criteria you must meet in order to get government assistance.

Sure there are people that will lie and manipulate things to there advantage. But the bulk of society will stick to the rules and it should work pretty well.
It just annoys me when I see my parents' friends with vast wealth collecting the super for the hell of it : P

The number of people eligible or potentially eligible for Studylink or Rest Home (not 'retirement') Care is relatively very small, whereas somewhere around six hundred thousand (and increasing rapidly) people are currently eligible for National Superannuation. A means-tested pension system would have to be able to handle that many applications and re-applications every year, this would be very expensive to run.

The Studylink and Rest Home Care provisions are infrequently rorted because people who can afford expensive lawyers & accountants and all the associated time & aggravation aren't in their target demographic.
On the other hand, a relatively large proportion of retirees would have the financial resources to hire the right experts, a high level of motivation to re-arrange their affairs, and all the time in the world to do it. This would require an even -more-expensive enforcement regime and frequent law changes as the legislators play Whack A Mole with cunning advisers finding and exploiting new holes in the regulations.

A universal pension scheme has very, very many administrative and cost-containment advantages.
If you want to stop 'rich guys' getting an 'unfair' advantage from a universal pension then a more progressive income tax system is likely to be far more effective.

MikeAqua

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#1617395 25-Aug-2016 14:41

PolicyGuy:

A universal pension scheme has very, very many administrative and cost-containment advantages.
If you want to stop 'rich guys' getting an 'unfair' advantage from a universal pension then a more progressive income tax system is likely to be far more effective.

A significant problem is the many ways to structure wealth to avoid paying PAYE. Loading up the higher earning PAYE earners isn't going to help very much.

A significant problem OECD countries face is the amount of money made without tax being paid on it. Solve those issues and we are looking at some sort of solution ...

Mike

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#1617533 25-Aug-2016 19:07

BarTender:

Policies such as opposing cutting the super fund contributions which have meant $5B lost for that fund to date. With the compound interest on that taking it to over $6B.

The Super fund might have made sense when the Government had large surpluses and was salting them away from a rainy day. It makes less sense with a deficit as they would have to add to gross borrowing to contribute the money - essentially borrowing to punt on the sharemarket.

Continuing to borrow and the "Tax Swap" that raising GST and lowering income tax left a 1B per annum hole in the budget to the point we now have $100B more debt than we did in 2008, thanks in part to Christchurch and the GFC. Had Labour not payed off so much debt from 1999-2007 National wouldn't have been able to spend up so large. Such borrowing even though international interest rates are at a historic low if our credit rating gets downgraded further things won't be as rosey in the future. Your children and my children will be paying that debt off for years. Just like Think Big, how many years did that take to pay off.

I don't know where you get the $100 billion from? I was curious, so I looked. The Chart in Treasury's 2016 Budget Economic and Fiscal Update can be found HERE. It shows (page 43) that the Crown has consolidated gross debt at about $30 billion in 2008, and sitting at just over $80 billion now. So the increase is (give or take) about $50 billion. And that's being generous and looking at the number that gives the biggest increase (ie for the consolidated reporting entity, including SOEs etc), the rise in net core Crown debt is considerably less. Given that net debt is sitting at around $60 billion, and gross debt at around $80 billion - I have no idea where you get your number from?

Plus, as you point out, there has been a couple of things like a major international recession and the Christchurch earthquake to contend with. Treasury estimates (page 40) that the cost of the earthquake alone was over $17 billion.

They were mocked by National for suggesting Quantitative Easing yet that's exactly what other OECD countries were doing. That would have helped to bring down the NZ Dollar and given a much needed relief to exporters.

QE is more complex than you think it is. We didn't need it (we have positive price inflation, a growing economy and very low interest rates), and it would have further stoked house and other asset price rises, without necessarily doing anything for the dollar. Plus, it isn't costless free money. Those countries that did massive QE will have a big problem unwinding it in the future when they need to quickly (and expensively) drain all those excess bank reserves out of the system again as the velocity of circulation recovers.

Has repeatidly called for the retirement age to be raised which has been ignored by National. It's not like the Retirement Commissioner or Treasury think it has to be done.

I thought that was Labour? Nevertheless, I agree that is a good idea. It needs to be done gradually, and start now.

And lets not talk about Housing eh?

Why not? The environmental policies of the Greens would have cramped build rates even more than the councils are now, and the QE you call for would have stoked even bigger price rises as investors reached for yield. Plus, the restrictions the Greens want to put on rental stock would likely have driven rents up as well.

NZ has some pretty major issues ahead which the current government seem unable or unwilling to tackle. They far prefer to be popular than to do the right thing for the nation now, and into the future.

Agreed. And if the Nats won't tackle them Labour will need to. Both parties, while differing in some respects, are fundamentally centrist and sensible. But on the economics front, I don't have any faith in the Greens (or Act, or the Maori Party), and not much in NZ First.

Nigel Latta on Retirement Bomb is essential viewing in my view.

As was said during the above show, 3 options for paying for retirement. 1-Raise Taxes, 2-Raise GST, 3-Cut Healthcare. Choose one.

All of which was published by the Treasury years ago, as I recall

Edit: Two typos

shk292

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#1617576 25-Aug-2016 20:40

It's a great shame that JK promised not to raise super age while he was PM, before he was elected because I think most people would acknowledge it needs to be raised, or at least made flexible (eg start at 65 on a lower rate or 70 at a higher rate). And we all know that if he changes that policy now, the usual suspects will take great delight in calling him a liar who doesn't keep election promises. We can only hope that once he has handed the reins on to his successor, the issue can be looked at again.

I'm against means testing - as others pointed out, it's expensive to administer. Also, I have a fundamental problem with effectively rewarding people for not investing for their retirement, by penalising those who do save by taking away their super eligibility. The idea of a universal super which covers the bare necessities, possibly topped up or those in real hardship, with personal savings allowing a bit of discretionary spending, seems a good model.

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Geektastic

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#1617616 25-Aug-2016 22:44

BarTender:

Geektastic:

Perhaps New Zealand could look at doing what they do in a significant number of other countries with which we might compare ourselves: make saving for your own retirement free of tax.

This would also make retirement saving a more attractive option when comparing it to buying a second property and thus take a little of the demand out of the housing market at the same time. It would also reduce the burden on the state.

Wouldn't even come close to making a dent in the Grey Tsunami coming for the working tax payers. Please come back to us when you have a realistic way to increase the funding for Super from 12B to approx 20B+ per annum. I assume you haven't watched: https://www.tvnz.co.nz/ondemand/the-hard-stuff-with-nigel-latta/09-08-2016/series-2-episode-2

Current 2016

20% Sub 18

65% 18-65

15% 65+

Fast forward to 2048:

16% Sub 18

60% 18-65

24% 65+ (with 4% over 85 or 20 years of Super this )

There is a 62% increase in the number of people over 65 that will be drawing from Super being supported by 10% less people of the working population between 18-65. And everyone sub-30 is now being told there won't be Super so you need to save for it yourself. So it's a double whammy, funding the over 65's with their free super using your taxes and needing to save for a retirement with Kiwisaver.

I am not sure that doing something now that could help reduce the severity of any funding issue from today onward is negated by the fact that that one single idea does not solve the problem stored up by successive governments....

PolicyGuy

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#1617677 26-Aug-2016 09:07

shk292:

... super age ... made flexible (eg start at 65 on a lower rate or 70 at a higher rate).

This.

It's not often I agree with Peter Dunne but I do on this. It's a pity that it is seen as his idea, which makes it harder for other parties to adopt it.

His full proposal is, IIRC, that you can take the pension starting from between 60 and 70.
For each year before 65 you elect to start the pension, you take a 5% discount from the existing rate for the whole of your life, and for each year after 65 you elect to start the pension, you get a 5% loading on the existing rate for the whole of your life.
Working this through, based on the current single rate of $691.44 after tax per fortnight for a person starting at age 65, someone who started on the pension at age 60 would get $518.58, starting at 63 $622.30, starting at 67 $760.58, and starting at 70 $864.30

This both encourages those who are able to work past 65 by rewarding them with more pension for their continued working and paying taxes, and also provides a safety net for those who are unable to work between 60 and 65, or who have the misfortune to get laid off in an age group where finding meaningful well-paid work is darned near impossible.

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#1617717 26-Aug-2016 09:56

PolicyGuy:

shk292:

... super age ... made flexible (eg start at 65 on a lower rate or 70 at a higher rate).

This.

It's not often I agree with Peter Dunne but I do on this. It's a pity that it is seen as his idea, which makes it harder for other parties to adopt it.

His full proposal is, IIRC, that you can take the pension starting from between 60 and 70.
For each year before 65 you elect to start the pension, you take a 5% discount from the existing rate for the whole of your life, and for each year after 65 you elect to start the pension, you get a 5% loading on the existing rate for the whole of your life.
Working this through, based on the current single rate of $691.44 after tax per fortnight for a person starting at age 65, someone who started on the pension at age 60 would get $518.58, starting at 63 $622.30, starting at 67 $760.58, and starting at 70 $864.30

This both encourages those who are able to work past 65 by rewarding them with more pension for their continued working and paying taxes, and also provides a safety net for those who are unable to work between 60 and 65, or who have the misfortune to get laid off in an age group where finding meaningful well-paid work is darned near impossible.

I seem to recall my late father being able to do something like that with his various pensions in the UK. He was always extremely irritated that you could only defer things until you were 70 (I think) and then had to buy an annuity at what he regarded as risible rates.

Recent changes to UK pensions allow people to take all the money in their pot as a capital sum and do with it as they wish - although I understand quite a few pension companies are attempting to deny policy holders that right!

Given that (up to the max limits) money you save in a UK pension is tax free, this means that if you are a higher rate tax payer, each GBP1 you save is made up with the income tax you would have paid, making it about 1.40. Thus the pension policies can end up with a lot of money in them.

Changing the age as suggested above makes sense to me, regardless of who thought of it.

Lias

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#1618302 27-Aug-2016 13:18

Seeing as you asked, @bartender

I don't disagree with all of the greens policies, but of the ones I do like I believe most are simply not fiscally reasonable or responsible. They are voter bribes or pie in the sky utopia policies not grounded in fiscal reality.

However, here are some examples of things I actively dislike.

Anti truck / anti diesel policies

Anti offshore oil drilling

Anti building new Hydro Dams

Emissions taxation

Wasting money on cyclists

Increasing petrol taxes

Anti GMO/GE

Anti Vivisection

Destroy our armed forces

I could go on, just about every single policy page has has at least one thing on it that I am opposed to. Not to mention the overarching Marxist claptrap that is just rampant through everything on their website. e.g. "for a fairer society" "everyone is equal" "human rights" etc. It's like the grown up political party equivalent of the "everyone's a winner" garbage they teach in schools. Life's not fair, some people are winners, some are losers, and yes some people are worth more than others. Suck it up buttercup.

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Rikkitic

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#1618309 27-Aug-2016 13:45

At least you're specific about it. Points for that. I can't imagine what Greens policy is left for you to agree with, though. If I invert the things you disapprove of, your redneck jungle doesn't sound like a particularly pleasant place to live, but to each their own, I guess. Enjoy your deer heart.

Plesse igmore amd axxept applogies in adbance fir anu typos

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#1618337 27-Aug-2016 15:53

@Lias:

Seeing as you asked, @bartender

I don't disagree with all of the greens policies, but of the ones I do like I believe most are simply not fiscally reasonable or responsible. They are voter bribes or pie in the sky utopia policies not grounded in fiscal reality.

However, here are some examples of things I actively dislike.

Anti truck / anti diesel policies - Since oil is an unlimited resource and air pollution isn't something to worry about.

Anti offshore oil drilling - Deepwater Horizon meets NZ Tourism. What have we got to loose?

Anti building new Hydro Dams - Erm wasn't that link mostly about making sure our rivers are safe to swim in. Pfft who wants to do that, crazy talk. Plus when Tiwai shuts down in a few years we will have more generation than we know what to do with. Transmission may be a problem but Transpower certainly isn't sitting on their hands as they know it's pretty much a certainty.

Emissions taxation - Hang on didn't we sign up to Kyoto and Paris? Let's just ignore we did that right as agriculture emissions aren't a problem? As you said below perhaps we need to suck it up buttercup on that one?

Wasting money on cyclists - Can't argue with you on Island Bay as that was a unmitigated disaster. But light rail to the airport and Newtown does make a lot of sense IMHO.

Increasing petrol taxes - Same as #1, oil's unlimited right so burn baby burn?

Anti GMO/GE - I think GMO/GE jury is still out as I am personally on the fence. If they were 100% safe then why have such an issue with labeling them as such? Nothing to fear, nothing to hide right?

Anti Vivisection - My view on this is if you want to do it, make sure you publicly express you do with associated videos of it being done. If people are happy to buy products much like cigarettes then full 'ya boots. As above, nothing to fear, nothing to hide.

Destroy our armed forces - Since we have bottomless pits of money to fund overseas wars?

I could go on, just about every single policy page has has at least one thing on it that I am opposed to. Not to mention the overarching Marxist claptrap that is just rampant through everything on their website. e.g. "for a fairer society" "everyone is equal" "human rights" etc. It's like the grown up political party equivalent of the "everyone's a winner" garbage they teach in schools. Life's not fair, some people are winners, some are losers, and yes some people are worth more than others. Suck it up buttercup.

Cheers for confirming the above. I've added a few comments to the above. Interestingly noting specifically about the actual topic of this thread about not investing default Kiwisaver funds in weapons that tend to have a pretty devastating impact on the civilian population especially children.

As a parent my view is hopefully this world could at least be left in the same or better state that inherited it from my parents. I'm also of the view that as a society you are judged by how you treat your sick and destitute. Plus internationally it's well known that the better the bottom 10% of your population does the better the whole country does. You seem to be of a slightly different view to that. For that I pity you.

gzt

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#1618358 27-Aug-2016 16:22

BarTender

It's entirely unclear which comments are yours and which are Lias's. Bold your comments and note it or ideally use the quote mechanism properly. Ideally the only comments in a quote should be those quoted. If not things gets really messed up when quoting a quote etc etc. Total mess.

MikeAqua

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#1618416 27-Aug-2016 18:05

Labelling of GMO food is an example of a requirement based on public concern, where that concern is not supported by scientific evidence of health effects.

Mike

gzt

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#1618420 27-Aug-2016 18:16

MikeAqua:
Labelling of GMO food is an example of a requirement based on public concern, where that concern is not supported by scientific evidence of health effects.

You are implying the consumer concern is entirely about health effects. It isnt entirely. It is not public health labeling.

It is similar to 'Dolphin Safe' labeling on cans of Tuna. Consumers are concerned about dolphin kill and other non-sustainable fishing practices.

Likewise consumers are concerned about cross-contamination of (gene transfer) to non-GE crops and traditional crops.

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