11 Mar 2009

PM confirms cuts to Super Fund considered

4:16 pm on 11 March 2009

A lowering of the amount the Government pays into the Superannuation Fund looks set to be included in the Budget in May.

At present, the Government contributes $2 billion a year to the fund, which will be used to off-set the rising cost of universal super payments from 2020.

When questioned about the possibility of reducing contributions in February, the Government would not confirm that it was being actively considered.

However, Prime Minister John Key said repeatedly that it made no sense to borrow money to put into a savings account.

Now, Mr Key has confirmed the Government is looking at cutting the annual contributions as part of the budget process.

He has vowed to resign if Super payments to retirees are lowered while he is Prime Minister.

Labour Party leader Phil Goff says reducing the contributions now will have implications for those retiring in 20 to 30 years' time.

Mr Goff says the contributions should be maintained to ensure Super Fund payments can be paid out to future generations.

But Mr Key says reducing the contribution would ease the pressure on the Government's finances, as it faces serious challenges ahead.