The Fundamentals 2 - What people are saying about prefunding

Find out what people are saying about the Government's plans to prefund New Zealand Superannuation.

Friday, November 3rd 2000, 12:00AM

by Philip Macalister

Full debate needed

Cullen’s pre-funding proposal must not be considered in isolation.

The scheme could have major implications for the economy which New Zealanders haven’t even begun to discuss.

It is by no means the only or the best solution to the issue that New Zealand faces as the baby-boomers retire.

As well as examining whether the economics of Cullen’s scheme stands up, we’re looking at alternatives.

We’re also looking overseas for ideas we might be able to use here.

Bill English

National Finance spokesperson

It won’t work, Winston

New Zealand First’s support for the super fund looks like it would hinge on "adapting" the scheme in future to run individualised accounts.

Because he may need NZ First’s support to get his legislation through, Michael Cullen is airily suggesting such an adaptation may be possible.

But that would fundamentally change Cullen’s proposal. He is proposing to keep NZ Superannuation precisely as it is now, merely adding an element of pre-funding using taxpayers’ money.

Peters’ talk of individualised accounts is an entirely different proposal. He is talking about a radical change to the funding of superannuation, based on individual contributions.

Cullen appears to be misrepresenting his own scheme to Winston in order to get his vote.

What you’re saying

New Zealanders are concerned about the future of superannuation. Many people want to see alternatives to Cullen’s super fund fully explored.

Among your comments:

[Any fund] must be in our own names and therefore not able to be touched by any Government. …Monies must be given to account managers to invest in the world economy, and their jobs must be performance-based.

The economy could be crippled when the cost of superannuation blows out in 20 years time. The only way to avoid this … is a broad multi-party agreement now, to progressively slash super in the future. Realistically, this is not going to happen. There is too much political capital to be gained from not agreeing to this.

I fervently hope National will continue to speak and act constructively on this issue. I have already watched New Zealand shoot itself in the foot far to often with misguided or mistimed government policies.

Why don’t we adopt the Aussie model or something similar, with personal accounts … and percentage contributions reflecting current income levels?

No thanks, I can prepare for my own retirement. I do not want the likes of Michael Cullen, Jim Anderton or any other politician deciding what is really an issue for myself alone. However, if I am forced to contribute to a super fund (assuming that all the difficulties can be overcome) then the most important factor is this: give contributors personal accounts. If Singapore can do it, so can New Zealand.

A much more sophisticated electorate is becoming aware of the irreparable damage done over the past 25 years, and while far from perfect this proposal is a lot better than anything that has been mooted to date. It avoids the glaring objections I had to the Kirk scheme and will benefit by transparent international funds management.

In my opinion the proposal may not be the best option but it is necessary to do something.

New Zealanders seem incapable of the discipline needed to save for retirement other than buying property - a very dubious option!

Many people misunderstand the Cullen proposal but would prefer funds gathered in their name rather than one big fund

To afford the future cost of superannuation the New Zealand economy has to grow massively by creating an environment where business can thrive and offshore investors are attracted …. We need a culture of partnership and patriotism fostered between all people of our nation including business, workers, professionals, political parties, government, offshore investors etc. I realise this can’t be done in five minutes but it is the only way forward - look at Ireland!

I arrived from the UK three years ago. From a UK perspective: Why doesn't New Zealand take a good look at the Australian scheme? Since the two countries are inevitably going to become closer, it would make sense for Kiwis and Aussies to be on similar types of scheme, so that there would be fewer complications to working in both countries.