National rethinks super

Further shifts in the National Party's thinking on superannuation and savings appear under way.

Leader Bill English confirmed to Good Returns that the party is examining the idea of individualised accounts for superannuation.

New Zealand First leader Winston Peters favours that approach, but English says that "we wouldn’t go as far as Winston."

The shift stakes out the difference in approach between National and Minister of Finance Michael Cullen’s government run-fund.

"In principle, National is keen on people controlling their own savings and making their own investment decisions," he says.

"In the long run, that works better than having the government make those decisions for them. And that’s the key difference between our approach and the Cullen Fund.

"Cullen’s approach is to use tax-financed savings; we’re looking at a private, individual approach with incentives to help those savings."

In a further nod to the Peters' approach, English says the party is taking another look at compulsory savings.

"We’re not saying we want to go down that route, but there is more interest doing it that way in the business community. If you did want to go down that line, incentivised private savings is a much better place to start from than the pre-funded Cullen scheme."

It was reported earlier in the week that National is looking at a personalised account approach not only to superannuation but in other areas, particularly health. English has taken a step back from that, saying that savings is the only area being studied at this stage.

But he adds that problems in health will grow.

"The superannuation issue is largely settled now."

National last year shifted its position on superannuation entitlements, agreeing to the 65% of the average wage at the age of 65. Only Act now hold out for a lower entitlement.

National has also promised tax incentives for savings, with an upfront rebate on contributions made to a locked-in savings scheme, which will be subject to a cap.

English says National won't be releasing superannuation policy for a couple of months.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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