tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, November 1st, 10:39AM

News

rss
Latest Headlines

Tax changes suggested to hit richer pensioners

Something will have to give when it comes to NZ Super, but whether that is an increase in the age of eligibility or a tax claw back from higher earners is up for debate.

Wednesday, May 25th 2016, 6:00AM 3 Comments

by Susan Edmunds

Retirement Commissioner Diane Maxwell is working through this year’s review of retirement income policy.

She said a clear focus was taking the review beyond just the issue of whether the age of entitlement needed to increase.

“Last time we put a review document out it was 100 pages and people looked at it and said ‘are you going to raise the pension age?’ The entire thing was reduced to one conversation.”

But she said it was inevitable that something would have to change.

“Super is going to have to have some changes in the future,” she said.

“Because our dependency ratios will be 2.5 to one by the middle of the century, things will change. People will work longer which will help but there will be fewer people paying tax for more retirees. There’s no way to fudge that.”

She said there would not be enough people to pay the rates of tax required to fund the super system with an ageing population.

“At the moment someone who is earning $60,000 is paying $1800 to a superannuitant out of their tax. If fewer people are earning and more are receiving, are you going to raise the $1800? Do you revise what the superannuitant gets? Or do you take it out of health care? It’s not a cunning plan by the Government to take people’s money away, the maths won’t add up.”

But Susan St John, of the University of Auckland’s Retirement Policy and Research Centre, said the tax system could be used to claw back some of the cost of super from high-income recipients.  The “living alone” rate could also be eliminated, she said, to reduce the cost of the pension.

Someone who is living alone gets $20,007 a year, compared to a married person who receives $15,390.

“A tax claw-back has the advantage of being capable of delivering meaningful savings immediately to help address the needs of the working age population without increasing poverty rates among the old. If the rates of super are aligned over time especially the single sharing and married rates, further saving is possible,” she said.

“When working-age families are taxed to pay universal pensions to many who are still working and appear much better-off than they are, intergenerational equity and fairness may be questioned.”

She said the level of super needed to be high enough to prevent hardship but a tax clawback should not make much difference to most pensioners.

“Given that for the bottom 60% of recipients, as measured by gross incomes, super payments comprise at least 80% of their total income, and for the bottom 80% of recipients it comprises at least 55%, the majority of over-65s will face little if any reduction in disposable income,” she said.

Tags: superannuation

« Code changes likely by year's endLVR restrictions to be reviewed »

Special Offers

Comments from our readers

On 25 May 2016 at 12:40 pm Tash said:
This business of "intergenerational equity and fairness" needs sensible perspective. The "young" taxpayers may be paying for the "oldies" super but they in turn are driving on roads, using infrastructure etc paid for by these oldies and the deceased. While I do believe self-funded pensions or taxes on the wealthy are less of a burden on then current taxpayers (and some might argue this is "fairer intergenerationally" (whatever that might actually mean)) there will always be many, the poorest, for whom pensions will have to be paid for by "young" taxpayers.
On 26 May 2016 at 4:44 am henry Filth said:
". . . the majority of over-65s will face little if any reduction in disposable income,” she said."

And what does she suggest that the reduction will be for the minority?
On 26 May 2016 at 7:35 am Ricardo said:
The pension is supplemented by savings, interest rates are going down, therefore incomes are reducing. And now we have this woman attempting to further screw over the retirees. Madness.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com