Letter: Refusal to means-test makes state pensions unsustainable
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OPINION: Len Bayliss (Letters, March 15) makes a case for raising NZ Superannuation based on the "shameful" statistics in the OECD publication, Pensions at a Glance 2009.
In the same publication, Figure 2.5 shows poverty rates for people aged over 65. It shows New Zealand has the lowest poverty rate in the OECD, with 2 per cent of older people considered income-poor compared with the OECD average of 13.3 per cent.
This suggests that NZ Superannuation is an effective safety net for those in need.
However, a state pension without means testing isn't sustainable in an ageing population.
There are many over-65s with high incomes, who don't need financial support from the state.
The latest NZ Income Survey (June 2009 quarter) shows that 37,900 people in the 65-plus age group have incomes of more than $1040 a week.
This amounts to more than $500 million in annual superannuation payments to relatively well-off New Zealanders.
Surely now is the time to review whether this is the best use of limited government funds?
NICK TREADGOLD
Roseneath
- © Fairfax NZ News
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Yeah, why are we being nice to those people who have worked hard and saved some money all their lives? Why should we give them the same pension as those who have contributed totally diddly squit to society. Totally unfair. I mean, it would be silly to encourage a society that actually wanted to better itself, wouldnt it?
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In doing comparisons, there needs to be an awareness of contributing facts such as rates of home ownership. More of our current superannuanats own their own home than overseas, Thus while their incomes are lower, most have less costs to face.
However with falling home ownership rates at present, we are on track for greater poverty levels (amongst those without homes) on our low super payment level. Thus we have to hope Kiwi Saver mitigates this or home ownership levels improve.
Another factor we have is the age at which Maori and Polynesians die at, and their poor health as they get towards age 65. Their proportion of the population is increasing.
It is difficult to do much about super payment and access (universal) without creating disincentives to save. But there are some which are balanced and fair.
We need to maintain a means tested (for most) rate at say 66.6% of the net average wage to combat poverty. A lower universal rate could be established - which all get regardless of income and assets, which would allow saving. It could start at the current rate (66%) and be increased by the CPI. By c2030 this could mean a 66% rate and a 50% of the net average wage rate - for those still working and those with investment income/assets. To reduce political opposition this should effect only new entrants to Super (who have gained from Kiwi Saver), not those already on it.
The other issue is longer lifespans - and here rather than simply raise the age to 70 - when that would leave many people unemployed and in poverty between 60 and 65 and onto age 70, we should simply continue to have Super available between age 65 and 70 - but work test it in those years. People in that age group would either have a job or get Super. Again the target should be 2030 - thus an from 2025 and 2030, this is introduced. That allows 15 years notice and then the 5 year introduction.