Tuesday, April 29, 2014

Who won't be advantaged by the VSR?

  Kiwiblog posts:

Labour proposes a cut in everyone’s after tax income

April 29th, 2014 at 2:00 pm by David Farrar David Parker has announced:
Introduce a new tool – a variable savings rate or VSR – allowing the Bank to vary savings rates (which would be universal under ) as an alternative to raising the OCR to take the heat out of the economy. This VSR would mean Kiwis would pay money to their retirement savings instead of higher mortgage payments to overseas banks.
Something that people should be aware of is that only a relatively small proportion of households or earners have a mortgage. While a VSR will impact every single person who earns money, by lowering their take home pay to reduce inflation.

I heard Larry Williams make a similar remark tonight so wanted to verify what a "relatively small" proportion is.

According to Families Commission research, Beyond Reasonable Debt:

Relatively few families have mortgages (26 percent of single families and 55 percent of couple families).
So three quarters of single families and nearly half of couple families will be disadvantaged by the VSR in the short term (and there is no cast-iron guarantee KiwiSaver will deliver in the long-term).

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