Optimism over super
Good Returns looks at what impact the new government is likely to have on the superannuation and savings area. Is the Big Cullen Fund safe, What does United Future stand for, Are tax incentives coming and more...
Sunday, July 28th 2002, 9:22PM
Savings issues were notably absent from the election campaign over the past four weeks, however there is a feeling the new Labour-led government will be quite positive for the industry over the next three years.
Part of the reasoning behind this feeling is that there is a growing realisation amongst the politicians that savings issues need to be dealt with.
Also there is a slowly emerging consensus on some issues. The most noticeable area where this has occurred in the past three years has been around New Zealand Superannuation - the state pension.
Currently there is almost total agreement that NZ Super should be a universal entitlement set at no less than 65% of the average weekly wage for a married couple.
One other area of agreement is support for tax incentives for savings.
In previous years many parties totally ruled out the idea of tax incentives. Now nearly all of them are supportive of the idea.
That would indicate that we can expect some form of tax incentives to be introduced in the next three years.
Finance minister told Good Returns at a meeting in Rotorua before the election that sorting out tax incentives are "at the top" of his list of things to do in the next term.
His approach is to develop 'smart' incentives that can be used in the workplace superannuation area.
One of his ideas, which the Greens appear to support, is making the 6c tax break high-income earners enjoy available to people on lower incomes.
Cullen's preference is to put the incentives in at the workplace level as that is where they would be most effective.
Workplace super is also an area we are likely to see more on as the Government is taking a leading role in this area.
During the last term it formed a working party of ministers to look at ideas, plus it did a deal with the primary school teachers whereby the Government matches teachers contribution to a super fund fund.
Good Returns understands that is likely to start later this year, and the investment vehicle to be used is the Global Retirement Trust.
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