Parties reach agreement on super
Labour and the Alliance are understood to be getting close to announcing details of a planned multi-billion fund to help pay for future superannuation costs.
Tuesday, July 18th 2000, 12:00AM
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Finance minister Michael Cullen told Good Returns at the Financial Planners and Insurance Advisers Association conference that he was very close to finalising details with the Alliance and that a proposal will be put to cabinet for consideration soon.
Also, Cullen is due to make a major speech on the subject at a two-day superannuation conference starting in Wellington today (Wednesday).
Cullen says the Alliance has now agreed there should be some form of pre-funding of New Zealand Superannuation.
However, it is understood that while the Alliance has been convinced of the merits of pre-funding the mechanism for doing so will be different to what was previously proposed.
In earlier pronouncements on the subject Labour has said that it wanted to hive 8 per cent of the annual tax take into a dedicated fund, which would be run by private sector managers at arms length from the Government.
Under the new proposals the Government will instead inject cash equal to a percentage of gross domestic product into the fund.
Cullen has confirmed that the Government will not borrow money to put into the fund when the Budget was in deficit or the surplus small.
Cullen told delegates at the FPIA conference that the Government also intended to facilitate additional private savings as well as prefund NZ Super.
His current thinking is that the taxation regime be changed from TTE (taxed, taxed, exempt) to TET where money is not taxed while it is invested.
The Treasury has estimated that the median income of New Zealanders will be better of under TET as long as they leave their savings untouched for at least 6 years.
Go to SuperTalk for all the latest news on superannuation and an opportunity to WIN.
A full copy of Cullen's speech will be available in SuperTalk after 9am today (Wednesday).
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