Labour warning on superannuation

Press, 9 March 1982, Page 14

Labour warning on superannuation

PA Wellington People who are worried about the Government's intentions on superannuation should remember that the Government has already welshed on its 1975 promises, according to the Labour Party’s spokesman on social welfare, Mr G. W. R. Palmer.

“Two changes already made by the Government in the method of updating the benefit have caused beneficiaries to fall behind increases in the cost of living,’’ Mr Palmer said.

“If full compensation for inflation had been given over the last six months of 1981, the married rate for suuperannuation would now be $74.42 instead of $73.40. “That trend will continue and if nothing is done about it the consequences within five years Will be drastic. If the formula for updating remains the same and we assume current rates of inflation, wage increases, and taxes, within five years, a

married superannuitant would be receiving around $115.56 per week instead of the $159.26 required to keep pace with inflation. “In other words, inflation will have knocked more than a quarter off the real value of the benefit within five years.” Mr Palmer quoted a 1975 National Party pamphlet as saying that superannuation rates would keep pace with actual movements in actual wages. He quoted the pamphlet as saying, “Inflation cannot erode this benefit." Mr Palmer said that the 1976 law had come close to doing this but since then the Government had retreated twice.

“In 1979, they changed the formula for determining the rate from paying to a married couple a gross rate of 80 per cent of the gross average ordinary-time wage to a net rate of 80 per cent of the net average ordinarytime weekly wage. This saved them' between $lOO (and) $l5O million per year.

“In 1980, they made another. change. The time of payment was moved to fit in with the November and May quarterly w’age surveys. The annual general wage order was determined in July, 1981. It was not picked up until the November wage survey and will be paid to superannuitants on March 23, eight months after it was paid to wage and salary earners. “The least well off have suffered other setbacks at the hands of the Government. The additional benefit was restructured in 1979 so that it only applied to accommodation costs. This means that needy superannuitants who had previously qualified for assistance which could be used for medical fees, for example, could no longer do so.

“By the (Social Welfare) Department’s own calculation as at March, 1981, over the two years since the new additional benefit was announced. the Government had saved $24 million, with 22,000 people affected.”