Bill English PM : Super changes

john-key-54-and-bill-english-54-in-aug-2015-david-white-fairfax-via-stuff-co-nz-1

“New Zealanders are healthier and living longer so adjusting the long-term settings of NZ Super while there is time for people to adapt is the right thing to do.” –Bill English PM

### NZ Herald Mon, 6 Mar 2017 3:19 PM
PM Bill English announces Super changes [+ Videos]
The eligibility age for superannuation will rise to 67 years old by 2040, Prime Minister Bill English revealed this afternoon. In a major political development, English promised to begin progressively lifting the threshold from 65 to 67 years old in 2037. That means the changes will not affect anyone born on or before 30 June, 1972. The Government will not act on the promise until after the general election in September.

English said the major change would be legislated for next year. The Government will also limit superannuation eligibility to people who have lived in New Zealand for 20 years, rather than 10 years. That is lower than the commissioner’s recommendation of 25 years. English said the new residency requirement would apply to people who arrived in the country after the law was passed – likely to be next year if the National-led Government remains in power.

Other settings such as linking NZ Super to the average wage and universal Super without means-testing would remain unchanged. The age at which people could access Kiwisaver would remain at 65.

In justifying the change, English noted that even someone who retired at age 67 was likely to receive NZ Super for longer than someone who retired at age 64 today. “That is because average life expectancy is increasing by about 1.3 years each decade.”

The changes to the age of eligibility and residency requirements would save the Government at estimated 0.6 per cent of GDP or $4 billion once fully phased in.

Finance Minister Steven Joyce said New Zealanders’ life expectancy had risen by 12 years over the past 60 years. “When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super. That has since increased to about a quarter. Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average.”

Experts have said the Government will have to do more than raise the age of eligibility to keep the Super scheme affordable. The cost of the scheme is expected to triple in the next 20 years from $11 billion to $36b as more people reach the over-65 age-group and live for longer.

….English said raising the retirement age in 2037 would more fairly spread the costs and benefits of NZ Super between generations, ensure it remained affordable, and would give people time to adjust. It would also bring New Zealand into line with other countries like Australia, the UK, Denmark, Germany and the United States. English said he did not think his proposals would damage National’s chance of winning a fourth term. “I think they will enhance it,” he said.
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Posted by Elizabeth Kerr

This post is offered in the public interest.

*Image: stuff.co.nz – John Key (54) and Bill English (54) in August 2015. Photo by David White/Fairfax, tweaked by whatifdunedin

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2 Comments

Filed under Business, Democracy, Economics, Events, Finance, Geography, Health, Leading edge, Media, Name, New Zealand, People, Politics, Public interest

2 responses to “Bill English PM : Super changes

  1. Lyndon Weggery

    Bill English needs to front up to his 2008 promise and start making capital contributions to the Cullen Fund once the Government accounts were back in surplus. There is nothing wrong with Superannuation Fund and as a Superannuitant myself I have only partially retired since aged 65 with tax on all my income still being faithfully paid. We are being conned and I am sure Winston Peters will have something to say about this.

  2. Elizabeth

    RNZ National Mon, 6 Mar 2017 6:08 p.m.
    Labour opposes Govt plan to increase NZ Super age to 67 Link
    From Checkpoint with John Campbell
    Labour leader Andrew Little responds to the government’s announcement on raising the NZ Superannuation age.
    Audio | Download: Ogg MP3 (7′ 58″)

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    Retirement age will increase to 67 in twenty years time.

    ### Stuff.co.nz Last updated 18:50, March 6 2017
    A guide to NZ Superannuation – what you need to know, and why
    By John Edens
    Superannuation has been reset. Prime Minister Bill English has announced that the age for state superannuation will rise up to 67 in gradual steps starting in 20 years time. Earlier speaking on TV3’s The Nation on Saturday, English said there was room for change in the superannuation scheme, which meant a change to the retirement age or the formula for calculating super. Following the announcement, English said Kiwis were living longer and healthier lives so adjusting the long term settings for superannuation while they had time to adapt was the right thing to do. [….]

    What’s the big deal?
    Changing the age, the requirements, or the mix of rules around eligibility and rates has been introduced in other comparable countries, but New Zealand has not changed. There are more older people living longer, working longer, and in better health than previous generations. Superannuation costs a fortune, representing about 5 per cent of GDP – or $11 billion a year – to fund. By 2031, super is forecast to cost $20b a year. The sustainability of the fund is a longstanding debate. Should it be tweaked to better manage the long-term social welfare support of aging Kiwis?

    So, what exactly is superannuation?
    OK, it’s not the sexiest subject. It is important, though. Many argue it’s overdue for an overhaul. It’s a universal state old-age pension by another name. Based on your time spent living, working, and paying taxes, the state guarantees financial support in later years. NZ Super is paid to eligible Kiwis over the age of 65 – for now. Anyone who is eligible receives a fortnightly payment regardless of assets, earnings, or savings. The actual pot of money (it’s not really a big pot of money) is managed by a Crown entity whose staff run it as an investment fund, putting money from the $33b fund into businesses and asset management. 

    Who’s eligible?
    You must be a New Zealand permanent resident or citizen to get super. You can currently receive super after the age of 65, even if you’re still working. Compulsory retirement doesn’t really exist in developed countries any more, except for certain professions. To be eligible means living in New Zealand for at least 10 years after the age of 20, and five of those years must be since turning 50. The changes announced today will double this from ten years in the country to 20 – for permanent residents. Time in other countries may count, in some cases, and if you receive a state pension from another country, this may be counted as part of the overall superannuation and your New Zealand payments will be reduced accordingly. If you travel out of the country for more than 26 weeks you’ll need to talk to Work and Income. Payment depends on the country you’re visiting

    How much do I get?
    Depends on things like relationship status, any payments from other Government departments such as ACC or Veterans’ Affairs, and any payments from other jurisdictions. The rates vary, and depend on things like your relationship and whether your partner is eligible for super or a veterans’ pension. If, for example, a partner is ineligible for a state payout then any income earned may affect the amount paid as a pension. Depending on your tax code and all the other factors, rates range from $591 a fortnight for someone in a relationship to $769 for a single person living alone. If you’re single and living alone, you get about $20,000 a year. A married, or de facto, couple with both partners qualifying gets about $30,000 in total.

    How do we compare?
    Other countries such as Australia, the United Kingdom, and Canada have tweaked their old-age social welfare policies. The intent of some of those policies is no longer applicable in the first decades of the 21st century. The argument, at its simplest, calls for the retirement age to increase to reduce the overall burden on core state revenue. In the UK, retirement ages are different for men and women, but next year this longstanding disparity will be abolished and the ages for men and women to retire will be 68. In Australia, our neighbours plan to raise the retirement age to 67. The United States and several mainland European nations also plan to increase the age.
    Read more

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    ### Scoop.co.nz Sat, 4 Mar 2017, 2:20 pm
    The Nation: Lisa Owen interviews Bill English

    Press Release: The Nation
    On The Nation: Lisa Owen interviews Bill English

    Headlines:
    Prime Minister Bill English says he won’t continue John Key’s commitment not to change the age of eligibility for superannuation. He says there’s room for a “reset” around super, which could mean a change in the retirement age, or the way super is calculated.

    English also hinted at changes to immigration levels, tax brackets, and the accommodation supplement.

    Bill English has raised concerns about US President Donald Trump’s trade policy, saying if the United States does “put in place significant protectionist measures, that will have an impact on us and our trading partners”.

    As election year positioning begins, English took aim at Labour and the Green Party, saying the country’s most vulnerable need protection from the opposition parties, who are “locked into a 1970s view of the state”. He also says Labour are “no longer the moderate alternative government they used to be”.

    Lisa Owen: Well, New Zealand’s political landscape looks very different now to how it did when we signed off last year.
    Patrick Gower: It certainly does. There was a guy called John Key in place who had a seemingly unassailable hold on the prime ministership until he quit, until he pulled the pin and jumped out of the place.
    Lisa Owen: And that’s left Bill English with big shoes to fill, so I sat down with him for his first long-form TV interview since becoming prime minister and asked him what he’s done so far to differentiate himself from his former boss.

    The Interview [transcription]

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