Workplace super "glorified Christmas Club": Key

Don’t look for major changes to superannuation from the National Party if it forms a government after the election. Finance spokesman John Key – the only politician to speak at this year’s Super Funds conference – says any major reforms are off the agenda.

Friday, March 11th 2005, 8:29AM

He says New Zealand “probably” has a savings problem but is not advocating any major changes to fix it.

Changes would have to be clear about adding to economic growth, he says.

One idea he would consider is special savings account for education – most countries of our type have such accounts, he says.

National is not keen on the Workplace Savings Group proposals, currently under consideration by the government.

Key calls the proposals “a glorified Christmas Club” and says he is “a little sceptical that a compulsory opt-in scheme that anyone can opt out of with relative ease will prove to be successful.”

He believes the recommendations under consideration by the government will have a high churn rate.

“I don’t believe people will stay in those savings schemes. The first big bill or trip to Australia or whatever they’re going to pull the money out.”

That does not mean he favours tax incentives.

“Whether the national quantum of savings would rise and the distribution of these savings across a range of income cohorts is a completely different issue. On that I need more convincing.”

And on compulsion, Key says “we have compulsory super now. It’s just at a wholesale level, rather than with individual accounts.

“And if you gave [New Zealand Superannuation] individual accounts you would not necessarily get people to save more. But it would be a much more expensive to administer.”

The party has already endorsed the New Zealand Superannuation Fund.

Key reiterated that the party believes the age of eligibility will have to rise above the present 65 at some point before the mid-2020s.

“There’s no coded message here: we just believe it will have to be raised eventually, but I am happy to leave that to a future finance minister.”

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