Eligibility age of superannuation scheme: it needs to be addressed

EDITORIAL

The change in Prime Minister might have one early effect on an issue the country really does need to address — the superannuation scheme. Outgoing Prime Minister John Key was adamant he would not change the age of entitlement (65) for national super, adding he would resign instead.

New Prime Minister Bill English is not prepared to make that commitment. In a typically measured and logical response he said Key’s stance was a product of its time. The global financial crisis had begun and there was a need to establish trust.

English did give a commitment his government would support those who were dependent on the government for income. They would not put them in a worse position but would work to put them in a better one.

In her latest three-year report, retirement commissioner Diane Maxwell recommended that the eligibility age increase from 65 to 67 in the next 20 years. She also proposed that people should be in the country for 25 years before qualifying.

Something needs to be done. The cost of national super stands at $11 billion and is projected to blow out to $36b in the next two decades. An income means test is unfair in some aspects, penalising people who have made their contribution. One prospect is to withhold the pension from people who are still working.

In a Radio New Zealand interview Labour leader Andrew Little made some intelligent points. Many people in demanding manual jobs are struggling to even reach 65 he said; changing the retirement age would be unfair to them. He also claimed National had made the situation worse by not contributing to the national superannuation fund.

Labour included raising the age to 67 in its pre-election portfolio three years ago but later removed it.

What the country would really love to see is all political parties coming together in a co-operative, non-partisan way to work out a joint policy that would address this pressing issue. But with an election looming, that will probably go on the back burner.

The change in Prime Minister might have one early effect on an issue the country really does need to address — the superannuation scheme. Outgoing Prime Minister John Key was adamant he would not change the age of entitlement (65) for national super, adding he would resign instead.

New Prime Minister Bill English is not prepared to make that commitment. In a typically measured and logical response he said Key’s stance was a product of its time. The global financial crisis had begun and there was a need to establish trust.

English did give a commitment his government would support those who were dependent on the government for income. They would not put them in a worse position but would work to put them in a better one.

In her latest three-year report, retirement commissioner Diane Maxwell recommended that the eligibility age increase from 65 to 67 in the next 20 years. She also proposed that people should be in the country for 25 years before qualifying.

Something needs to be done. The cost of national super stands at $11 billion and is projected to blow out to $36b in the next two decades. An income means test is unfair in some aspects, penalising people who have made their contribution. One prospect is to withhold the pension from people who are still working.

In a Radio New Zealand interview Labour leader Andrew Little made some intelligent points. Many people in demanding manual jobs are struggling to even reach 65 he said; changing the retirement age would be unfair to them. He also claimed National had made the situation worse by not contributing to the national superannuation fund.

Labour included raising the age to 67 in its pre-election portfolio three years ago but later removed it.

What the country would really love to see is all political parties coming together in a co-operative, non-partisan way to work out a joint policy that would address this pressing issue. But with an election looming, that will probably go on the back burner.

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