Budget no place for retirement issues: expert

TIM HUNTER
Last updated 17:26 15/05/2014

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Budget 2014

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The absence of any policy on savings and retirement in the Budget is a major bonus, says Auckland University retirement specialist Michael Littlewood.

"As one of the soldiers in Hamlet said, 'for this relief much thanks'," he said.

While there had been no expectation the Budget would announce compulsory KiwiSaver contributions, the Government did confirm its expectation that contributions to the NZ Super Fund would resume in 2020 when net government debt fell to 20 per cent of gross domestic product.

"I think that's a bad idea and hopefully by then the Government will agree with me," Littlewood said.

The bigger issues on the age of retirement should be addressed through a national debate after the election, he said.

"In a way it's not fair that politicians should have to make these decisions."

Where Littlewood was relieved, others were concerned.

PwC tax partner Geof Nightingale said the Government was still not addressing the "looming tsunami" of retirement costs and "that's the elephant in the room".

The Financial Services Council, representing the investment and insurance industry, expressed disappointment there was no change to the tax position of savers. New Zealand had "the world's most punitive tax regime for superannuation savings", council CEO, Peter Neilson said.

Most New Zealanders would need KiwiSaver fund tax cuts to be able to save sufficient to fund a comfortable retirement at twice the level of NZ Super, he said.

Phil O'Reilly, chief executive of lobby group Business NZ, said that in the absence of new measures, business would like to see some signposts towards a reform programme covering student loans, Working for Families, pensions and health costs.

"While the Government's steady, gradualist approach is delivering good economic outcomes, there is still a risk of being left behind other countries pursuing more ambitious reform," O'Reilly said.

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