7 Mar 2017

Parties waiting to gauge public on super - English

8:14 am on 7 March 2017

The National Party is short on friends in Parliament when it comes to its new pension policy, receiving criticism from across the political spectrum.

Caucas run. Prime Minister Bill English.

Photo: RNZ / Rebekah Parsons-King

The government yesterday announced that if re-elected it would progressively raise the age for superannuation from 65 to 67, starting in 2037 and being fully implemented by 2040.

Every other party in Parliament, except ACT, opposes an increase in the age of eligibility.

But Prime Minister Bill English said he thought MPs could be won over, given time.

"I won't be surprised if politicians' initial reaction is that this is a difficult issue and they'd like to see how it's going to run with the public before they decided they could support it."

United Future's Peter Dunne said the goverment had just injected a whole lot of uncertainty back into the debate.

"Twenty-three years out from the implementation, who knows what future parliaments will do? Whether they will shift the age even further? Who knows?"

New Zealand is to have seven elections between now and 2037.

New Zealand First leader Winston Peters said the change was so far in the future it was essentially meaningless.

"It's pretty arrogant to say you're going to bind every Parliament from election 2017 all the way through to 2037," he said.

The Green Party said the government should be trying to build cross-party consensus, given the many years the policy would stretch over.

But co-leader James Shaw said the prime minister had instead turned the issue into a "political hot potato in an election year".

The only voice arguing alongside National for an increase was ACT leader David Seymour, but even he was scathing of the government, saying the policy should kick in much earlier - as soon as 2020.

"It's an entirely cynical political calculation with not a hint of leadership in it.

"Not only is it bad politics, it's bad economics. Because it's actually not going to capture those large cohorts of baby boomers who are going to be retiring from now till 2030."

The government said it would also double the residency requirements for superannuation from 10 years to 20. The change would apply to all those who arrived in New Zealand after the legislation had been passed.

Under its new policies, the government estimates that the cost of superannuation will be 6.6 percent of GDP by 2045.

That was down from 7.2 percent under the current settings.

Finance Minister Steven Joyce said the cost of superannuation was not an immediate problem but would grow and over time New Zealand had to deal with it.

Mr Joyce told Morning Report the population was ageing and in 2060 there would be two people of working age for every retired person, compared to four now.

Mr Joyce said Labour's previous policy, before the 2014 election and Retirement Commissioner's recent proposals, had been "too keen" and raised the age of eligibility too fast.

Labour Party leader Andrew Little said if the government was genuinely concerned about affordability the one thing they could do immediately was resume contributions to the New Zealand Superannuation Fund.

The government stopped making payments to the fund in 2009.

"The government books are looking good, they're generating surpluses, they can put money into that New Zealand Super Fund which right now is $20 billion behind where it should be in terms of meeting that future cost of superannuation," Mr Little told Morning Report.

Mr Little said National's policy did not appear to be fixed at all, as the proposed law change wouldn't take effect for more than 20 years. Labour's policy is to keep the eligibility age at 65 because many New Zealanders already struggle to work to that age.

Retirement Commissioner Diane Maxwell recommended last year that the age of eligibility be increased to 67 but starting in 2027 and being fully implemented in 2034. She said the change would save the government about $3.5bn a year in 2034.

The government said its changes would save $4bn a year once fully implemented.

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