Superannuation Bill introduced to House

The government has introduced a Bill into Parliament for the establishment of its super fund and entrenchment of pensions at their current level.

Tuesday, November 28th 2000, 11:23PM

"The New Zealand Superannuation Bill is an opportunity to take super out of the political arena and to offer a much greater level of certainty to this and future generations of elderly," says Finance Minister Michael Cullen.

The Bill, introduced into the House today, consists of three parts.

Part One pulls current New Zealand Superannuation entitlements into a single statute and cements into law the restoration of the floor to 65 percent of the average ordinary time weekly wage.

Part Two establishes the financing and governance arrangements for the proposed New Zealand Superannuation Fund.

Part Three provides a vehicle for other political parties to sign up either to Part One or Part Two, or to both.

"The Government recognises the public is anxious for political consensus on this issue and has built that into the Bill's design," Dr Cullen said.

Any future government wanting to amend the legislation would be required to consult the party signatories to the relevant part and the Guardians of the Fund at least 90 days before introducing the amendment.

"The Guardians will run the Fund at arms-length from the government. The selection process will begin with a nominating committee. The Minister of Finance will make recommendations from the nominations provided. The Governor General will make the appointments.

"Guardians will have to have a background in managing financial investments and will be required to manage the Fund independently of government and on a prudent, commercial basis in line with best practice portfolio management.

"They will be subject to independent performance reviews at least every five years, with the first review to be conducted as soon as possible after 1 July, 2003.

"This elaborate system of checks and balances has been inserted to protect the integrity and independence of the Fund," Dr Cullen said.

"The Government has also moved to try to accommodate the concerns raised by New Zealand First and the Greens.

"The Greens were concerned that the Fund should pursue ethical investment practices. We have addressed this by providing that the Guardians must avoid prejudicing New Zealand's reputation as a responsible member of the world community.

"The Bill also explicitly requires them to report to the House each year on how their investment policies satisfy a list of criteria, including ethical investment.

"New Zealand First wanted provision in the Bill for a future Parliament to convert the Fund into an individualised scheme for eligible individuals.

"This caused us more problems because we are philosophically opposed to individual accounts, regarding them as unfair to low income earners and to those with interrupted work histories.

"They would also be expensive to administer.

"But clearly we cannot bind future Parliaments. If a future Parliament votes to move in that direction, the Bill provides that the Guardians must report within 24 months to the Minister of Finance and the Minister of Social Services and Employment on options for doing so," Dr Cullen said.

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