Wednesday, May 27, 2015

Super gaining traction as election issue

If Labour was my party of preference, I'd be very frustrated with their lack of clarity on major issues. Andrew Little dumped the policy of raising the Super qualifying age, and he also quickly put to bed any idea that a Labour government would means-test Super.

The NZ Herald sensibly advises Andrew Little to keep his options open.

It is patently clear that human life expectancy has lengthened considerably, even in the short time since the age of entitlement was raised from 60 to 65 in the 1990s. We do not need the Census to tell us that, or the fact that a rapidly increasing proportion of today's superannuitants are continuing to work in jobs they enjoy. Mr Little cited their double-dipping as an issue of fairness when asked after a post-Budget speech whether Labour would consider means testing superannuation. He said Labour would be looking at it.
Within hours his office issued a disclaimer, insisting Labour would most certainly not be looking at it...

 Labour went to the last election with a policy to increase the age of entitlement, which Mr Little blames for its loss, alongside its intention to impose a capital gains tax on rented housing. Since taking over the leadership he has backtracked on both policies, leaving him in an awkward position now that National has activated just such a tax on rental housing resale gains. That announcement, five days before Mr Little's difficulties on superannuation last Friday, ought to have been a lesson to keep his options open. Otherwise he will be often overtaken by events.
The issue of Super has unusually been off the hot topics list for some time. But it's back. And it divides people. Even households. It has the potential to affect the outcome of the next election considerably.

I don't know why it has come to this. Australia (70 by 2035), the UK (67 by 2028)  the US (67 by 2027) Canada (67 by 2023) are lifting their entitlement ages with seemingly little political fall-out.  It was a mistake by Key to draw a line in the sand that any government he leads cannot step over. But by the same token, it's a gift for Labour.

The arguments for raising the age, and even for means-testing (which has many fish-hooks but generally aligns with Labour's view of 'fairness'), are compelling and it looks gutless not to make them.

1 comment:

JC said...

As this giy (and others have said we have a world class system and we change it at our peril.

We need to look at the ledger and look at some of the things it tells us.

Super.. about $15,000 plus say $20,000 if work continues (it could be a hell of a lot more)

Less tax at say 17% on all income (and may be a lot more at a higher rate)

Less GST on $20,000
Fewer health costs for active elderly
Plus $20,000 in services to employer (and it may be worth much more than that to the business)
Plus cumulative effect on GDP from wrinklies continuing to work
Mentoring at work

We need to evaluate all these things and see what the values are at the finish including the political aspects before we play around with the system.