Cutting superannuation costs without setting off political landmines

RNZ News

5 hours ago

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Means testing is being introduced on a wide range of benefits. Questions are being asked over how long it will be before superannuation is targeted.
Whatever age we're at, means testing for benefits is creeping into our lives.
From the Best Start allowance for parents of newborns, to the parents of teens applying for Jobseeker, and those in Kiwisaver earning over $180,000.
But when it comes to the old age pension, means testing is too touchy politically, says NZ Herald political editor Thomas Coughlan.
He tells The Detail why the pension is off limits, for now.
"There are things we get universally. Universal free education, a lot of health services are free. But cash payments, those are mostly means tested with one big exception."
Every New Zealander who hits 65 is entitled to NZ Superannuation.
"You could be a billionaire or you could have absolutely nothing and you will get it.
"Culturally, politically we tell ourselves that we earn superannuation, we work hard we pay taxes our whole lives and when you retire you deserve to get the benefit from the government that you have paid for for your entire working life. That is the political bargain, I guess, at the heart of superannuation."
Means testing superannuation is also not as straight forward as other benefits where Inland Revenue knows exactly how much beneficiaries or their parents earn. But most superannuitants don't work, making a means test on income difficult to manage.
That leaves asset or wealth testing "which is just uranium wrapped in barbed wire".
Coughlan says raising the retirement age is seen as the better of "two horrible options" and National has already signalled plans to gradually raise it to 67. But that is also fraught.
The Retirement Commissioner Jane Wrightson doesn't like either option but is "more keen on the consideration of means testing than I am of raising the age".
"But if that became a thing (raising the retirement age) then I would be arguing that it's a really comprehensive and well thought through policy change that considers a retirement system as a whole, not just about NZ Super, not just about Kiwisaver but the impact overall on future citizen New Zealand pensioners," Wrightson says.
She calls the debate around superannuation a gender issue.
"The commentators are mainly men. The issues around NZ Super, and who gets it and when, need to be looked at with a really strong gender lens because women are the ones who get disproportionately affected."
The Detail also talks to pensioner Doug Beever in Australia where the pension kicks in at 67 and is means tested.
Beever says he's happy with the arrangement because all of his working life he has been paying into a private retirement fund, a compulsory version of a Kiwisaver scheme that has been in place for decades.
Wrightson says that is the difference between the two countries and why we can't copy Australia's pension model.
The historic superannuation plan is a reason why the country is quite well off, "because those funds are in the billions and billions now. And secondly, people have got a decent pot themselves, so when you get that you can absolutely then talk about means testing, you can talk about raising the age ... you've got more levers to your bow when your citizens have been protected by a decent regulatory environment.
"This is not what's happened here."
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