Friday, May 25, 2012

Super Annuation

Prime Minister Key famously stated the age of entitlement for NZ Super would never be raised on his watch - or words to that effect.

On the surface that seems a daft thing for a politician to say but perhaps it's not so silly.

The problem is not the age of entitlement.  The problem is (a) the aggregate amount of the entitlement as years go by and (b) the availability or lack thereof of funds to support it.

If Adolf were PM here's what he'd flick into next year's ( pre-election by one) budget.

  1. Means test NZ Super, restricting payment to those individuals or couples having personal income less than say $30,000 with an abatement of payment starting at $20,000.  Effective immediately.*
  2. Make Kiwisaver compulsory for those individuals or couples whose gross household income exceeds $100,000. Effective immediately.
  3. Make all Kiwisaver contributions tax deductible.  Effective immediately.  This to encourage low income people who are frugal and do not smoke, drink piss or take drugs to join Kiwisaver.
  4. Introduce a top income tax rate of 46.5c on all earnings over $180,000.
Australia's 'age pension' is asset and means tested which is as it should be and of course a top tax rate of 46.5c will bring us in line with Australia.  I think they call it closing the gap.  And best of all, it will give Labour the shits because they didn't do it.

So you see folks, the idea is not to increase the age but to reduce the amount of entitlement.  All those people forcibly contributing to Kiwisaver will remove themselves from the pool of NZ Super recipients.

Furthermore, I'm not sure how much faith I'd put in anyone's prediction about what super will be costing in twenty or thirty years' time.  Hell, these are just more computer model predictions.

I reckon it will all turn out like global warming.   People will look back and ask "What the hell was all the fuss about?"

* 'Effective immediately' means as soon as the boffins can administer the changes.


Anonymous said...

I think the main problem is that everything mainstream in economics relies on growth somewhere in the model yet the evidence for real growth looks less encouraging over time. We may be approaching the end of an era in the west but no-one mainstream has noticed or, if they have, are too scared to mention it.


Anonymous said...
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Adolf Fiinkensein said...

Go and read the rules. Then go back and read the post. DO NOT comment until you comprehend the written word.