3 Jun 2009

Taskforce members say superannuation not at risk

10:27 pm on 3 June 2009

Members of the former Todd Taskforce on Superannuation have spoken out to reassure New Zealanders that pensions remain sustainable despite the Government's decision to suspend payments to the Superannuation Fund.

The Government has suspended its annual payments of about $2 billion into the Super Fund until its books are back in surplus.

Prime Minister John Key says the decision will have no effect on entitlements over the next 20 years, while Labour says it may mean pensions are reduced.

Jeff Todd, who chaired the taskforce which assessed superannuation in 1993 and 1997, says it concluded at the time that the country's pension system was affordable, and says this will still be the case in 2040 when super payments are set to peak.

However, he warns the age of entitlement is likely to rise, while pensions may be trimmed.

Auckland University's Retirement Policy and Research Centre co-director, Susan St John, who also served on the taskforce, says people should not confuse the fund with pensions, which are paid for by taxes.

Independent actuary and superannuation specialist Jonathan Eriksen says Finance Minister, Bill English based his budget on figures which may have overstated the extent of future debt on the Government's books.

He believes contributions to the fund could resumer earlier than expected.

Retirement Commissioner Diana Crossan says the Superannuation Fund does not dictate the ability to pay pensions, but is merely a tool for raising funds.