Increased superannuation payouts likely under new government

The price of Labour’s deal with New Zealand First looks set to be higher superannuation payouts – although the Winston Peters-led party is unlikely to get all it wants.

Friday, October 14th 2005, 9:48AM

by Rob Hosking

As Good Returns reported in January, New Zealand First is pushing for an increase in the pension from the present “65 at 65” level (65% of the average wage at the age of 65) to 72.5% of the average wage.

Peters’ office indicated yesterday the raise in the payout is “very high” in the party’s priorities, but that it is unlikely, initially, to get the full 72.5%.

The level is more likely to be 68%, at least initially. Prime Minister Helen Clark is understood to be in the final stages of stitching together a government with the support of New Zealand First and other minor parties.

Labour’s satellite supporter, Jim Anderton’s Progressives, also has a policy of raising the payment to 72.5% of the average wage, and United Future has advocated raising it form its present level, although it has no target level.

Finance Minister Michael Cullen has previously described setting the level at 72.5% as “ruinously expensive”.

The Treasury has calculated that, with the aging population, an increase of that degree would cost taxpayers an extra $1 billion by the end of the decade, and $1.6 billion a year by 2015. No figures are available for an increase to 68%, although New Zealand First is suggesting the party would see that as an initial step.

New Zealand First is also still pressing for the New Zealand Superannuation Fund to be converted into individualised accounts, although this is understood to be extremely unlikely to be conceded by Labour.

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

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