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Wednesday, December 12, 2012


Old Mickey Cullen, the socialist saviour... putting the price of postage stamps up as a National appointed board member of NZ Post and now he's sounding like Roger Douglas. That's how he's spending his retirement on the mega-super-plus-airfares parliamentary scheme of yore he enjoys, so why not start lecturing about retirement?  Oh - and chuck in a knighthood too so he can get a decent upgrade at the right places. That and the last term of squander like buying back the railways from the Aussies at twice the price it should have been all starts to overshadow his incremental, tentative acheivements of the NZ Super Fund and Kiwisaver.

Stuff, Vernon Small:
The architect of KiwiSaver, former finance minister Sir Michael Cullen, is proposing a revamp of the scheme to help cut the long-term costs of superannuation to the Government. Under his plan KiwiSaver would be made compulsory in 2016 and contributions would rise to 4 per cent for employees and 4 per cent for employers, followed by further increases to 6 per cent or 8 per cent for employers.
But half of a saver's nest egg would have to be used to buy an annuity.
If that provided an income lower than the current superannuation formula, the state would top it up to the guaranteed retirement income.
Anyone who can tell the difference between what Cullen is saying now and what Roger Douglas has been saying for the last three decades please do so in the comments section.

They are essentially the same position: there's a guaranteed minimum income, individuals are chiefly responsible for their own retirement income through a compulsory savings scheme whereby they have to purchase an annuity and if they can't make it by the time they reach retirement age the state will chip in so they can get the minimum income. That's what Douglas has been pushing as the long-term solution to the unaffordable superannuation demographic bulge since the early 90s - but the principle of compulsory savings goes back to the third Labour government under Kirk, when Douglas was a minister, and the savings scheme that was killed by Muldoon. While many were attracted by the practicality and necessity of Douglas's concept the hard right of Act regarded the scheme as communistic meddling and the party has never been in a position to implement it.

The only other politician to push that boat out was Winston Peters - who took it to a referendum in the term of his doomed tryst with the Nats 1996-98 - and his version of a compulsory savings system capsized spectacularly at a referendum where the voters' short-sighted greed and personal hostility to Winston as the promoter meant it lost heavily.

The problem is the electorate. No-one wants to cut their own super. Everyone 10-15 years before retirement doesn't want to change the system. Those currently retired don't mind changing the system as long as they are grandfathered over and don't have to suffer the consequences. Everyone else aged 18-50 is doomed - and we know it. We ALL know it's unaffordable without major changes to tax levels, elegibility criteria, means testing etc. The alternative is the full-blooded schemes Douglas, Peters and now Cullen have proposed and that involves marginal sacrifices most people can't bring themselves to accept, wrapped up in a blanket of compulsion that makes people suspicious.

One of the ways around the deadlock - or the "accord" as I believe it's called - is to launch the sort of suicidal policy Labour did at the last election and just put an unpalletable plate of it on the table in front of the voter and say "eat this it's all your getting". Which didn't work at all well - in fact it was utterly poisonous. And National's commitment - or at least John Key's personal commitment - to maintain the pyramid scheme of unfunded super paid off electorally. There seems no political advantage at present in creating a compulsory super consensus.


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