Time for some honest questions

Two of the scary things about what's going on in superannuation are the near total lack of debate on such an important issue, and where there is debate, the quality of it.

As we have said before superannuation is one of the biggest issues facing this country because of the sheer cost of the public pension system and the low levels of personal savings (and in many cases the quality).

What's more the Government's proposal to partially pre-fund New Zealand Superannuation is one of the most important and far-reaching fiscal policies of this administration. Assuming pre-funding is put in place the first thing the Government will do each year is siphon $2 billion of tax revenues into its super savings fund.

What's particularly galling about the debate is how various interest groups talk about "compulsory superannuation" and the need for individual accounts.

The evidence used to support the calls for compulsory savings scheme are usually linked to a bland, unexplained question in a survey which goes something like this: "Do you support a compulsory savings scheme?"

The problem with these surveys is that there is absolutely no definition of what such a scheme is. One could argue we already have a compulsory scheme as we all have to pay taxes, and some of that revenue is used to pay NZ Super.

Maybe a compulsory scheme means something like they have in Australia where money is deducted at source by employers and put into individual employees' accounts?

Maybe it is a scheme like the Winston Peters' inspired Retirement Savings Scheme that was comprehensively defeated in a referendum?

All of these are very different, yet they are all arguably compulsory savings.

Anyone who trots out the argument promoting superannuation based on a meaningless question, is being disingenuous to say the least.

The other misleading argument is one that was trotted out by Act leader Richard Prebble at the Finance and Expenditure Select Committee last week.

The argument is that a poll done by Act shows that most people want their savings in individual accounts.

As with the compulsory question dealt with earlier this research, if you can call it that, is highly questionable. According to Prebble the sample used was 2000 Act party members in Auckland (do they have that many?), plus 2500 other people.

Hardly a representative sample of the population considering that Act struggles to reach 5% support in the political opinion polls, yet its membership makes up nearly 50% of the survey's sample.

What's more important about the issue is that the survey is patently designed as a gimmick to push Act's desire for NZ Super to be put into individual accounts.

Where this get interesting is that that option is already available.

To explain. National (according to its recent policy paper on super) is very close to Labour on the issue. Both parties agree support the three tiered system of super, that is a state pension (NZ Super), workplace superannuation and voluntary savings.

While National's paper (which isn't official policy) doesn't support pre-funding it does endorse the state pension.

Both parties also support tier two which is workplace savings, and they support tier three which is voluntary provision for retirement. That means they support the broad status quo.

Tier one is hardly ever likely to be privatised and put into individual accounts. However, tiers two and three are both individual accounts.

Considering that tier one is only meant to provide sufficient money for the absolute basics of life, then everyone should be saving on their own account.

If a Government puts tier one savings into individual accounts, then why don't they do the same for health and education? Simply because it's a daft idea.

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