Parties outline their concerns

*Rated on a scale of 1 to 10 where 1 = no reform needed, 10 = in need of urgent reform.

Act promotes personal responsibility, opposes the cost of New Zealand Superannuation, and opposes partial pre-funding of New Zealand Superannuation because its funding relies on borrowed money, it does not change the costs or affordability, it funds a small portion of the benefit, and is only an equalisation account. Act is committed to a universal superannuation scheme, in individual accounts, and will link the state benefit to inflation, not wage growth.

The Alliance supports current or higher levels of universal superannuation and would like to see as much money from the New Zealand Superannuation Fund invested onshore in accordance with an ethical investment policy.

The Greens are happy with the current New Zealand Superannuation regime and believe that ‘there is no need for urgent or radical changes to fund super.’ If the New Zealand Superannuation Fund goes ahead, the Greens would want the funds invested onshore in an ethical and socially responsible manner, and they oppose the creation of individual accounts that they see as discriminating against women and Maori.

Labour maintains that the New Zealand Superannuation Fund is ‘designed to secure current entitlements for the foreseeable future’, and has ‘substantial built-in flexibility’. Labour acknowledges, however, that this may discourage personal savings.

National states that the roles of the state and the individual are not clear in the provision of retirement income, that individuals are uncertain about what they should be doing, and expressed a concern that ‘too many [individuals] are doing nothing’ about their future retirement income needs. National believes the New Zealand Superannuation Fund has increased peoples belief ‘that [their] retirement income is more secure than it was before, which is clearly not true.’ It supports existing arrangements for New Zealand Superannuation while acknowledging that the entitlement can do no more than provide ‘a basic lifestyle in retirement’.

New Zealand First criticises the New Zealand Superannuation Fund for being only a cost–smoothing device, for not having individual accounts, its vulnerability to ‘raids’, that the benefits are too low, it disadvantages certain groups and has limited lifespan. The ‘present scheme is [seen] merely [as] better than doing nothing but it can be converted into Individual Accounts.’ New Zealand First proposes to ‘provide a stand-alone fund that is free from political interference and that provides a secure savings and investment plan.’

*Rated on a scale of 1 to 10 where 1 = no reform needed, 10= in need of urgent reform.

The Alliance would like to see more employer provision and acknowledges the complexity of associated tax issues. It proposes to review these and to encourage employer provision.

The Greens believe that real wages need to be increased so that more discretionary income can be saved for retirement. They believe that tax disincentives for employers offering superannuation to lower paid workers should be removed.

Labour, in recognising the danger that New Zealand Superannuation might convince people there is no need to save, points to ‘the need for staged reforms to encourage private provision’.

National emphasises the need for a ‘high degree of emphasis on self-reliance and the need for individuals to provide for their own retirement’.

New Zealand First believes that there is a ‘lack of incentive to save’ privately and proposes to ‘explore a range of incentives to increase private savings’.

3.1 More general questions relating to the superannuation framework and taxation issues were posed with regard to:-

• the party’s opinion on the current tax regime as it affects 1. contributions, 2. investment income and 3. benefits, and whether those taxes are considered punitive, suitable or advantageous;
• the changes proposed to taxation as it impacts on retirement savings;
• whether the party feels that retirement savings deserve incentives compared to other forms of saving; and
• whether the party has a preference for the method of payment of benefits from superannuation schemes (lump sums versus annuities).

The parties’ responses are summarised below:

3.2 Questions on industry involvement were asked with regard to:-

• whether the party feels the industry sends conflicting messages on what it would like to see for retirement savings, and
• what the party would like to see from the savings industry to assist government in retirement savings policy formulation.

The responses were are follows:

Act did not answer these questions directly, but stated that it ‘does not promote tax incentives for savings and promotes lower taxes as the key policy to enabling people to make their own provision for retirement. Act believes in individual responsibility and strongly promotes the importance of private provision.’

The Alliance offered no comment on the first of these questions and would like ‘open and honest dialogue from an industry speaking with a united voice.’

The Greens do not especially think that the industry is sending conflicting messages and feel that some commendable work, particularly with the Retirement Commissioner, has been done. They would generally like to see a good, ongoing contribution and, in particular, would like to see some innovative thinking regarding ethnic and gender disparities in superannuation. They would also like progress to be made on scheme-to-scheme portability.

Labour is ‘disappointed at the withdrawal of private sector funding for promotional work by the Retirement Commissioner’, and would like to have ‘continued dialogue and input’ from the industry.

National wants a consistent and united approach from the industry and believes that the silence on the New Zealand Superannuation Fund is disappointing.

New Zealand First stated that ‘the industry often provides "targets" that are out of the reach of most savers and has not had a good record in providing sound schemes.’ It would like ‘greater agreement on the essential elements of retirement savings packages.’