Mr Galvin defends retirement ideas

Press, 29 January 1986, Page 20

Mr Galvin defends retirement ideas

PA Wellington The New Zealand Party leader, Mr Galvin, has defended his retirement proposals for those now aged under 40. Earlier, the 60s-Up Movement president, Mr Bill Sievwright, described Mr Galvin’s proposals as patently ridiculous and unworkable. Mr Galvin had said that all people now aged under 40 should be told they would not enjoy Statefunded superannuation.

He also said these people should be told that providing for retirement was their own responsibility, and that they be granted a $2OOO tax rebate every year to invest for their retirement.

Mr Sievwright said that a person would have to be a “financial genius” to invest $2OOO a year in order to provide an adequate retirement fund in 20 or 30 years. Mr Galvin said his critic obviously had little knowledge of the effects of compound interest.-

“The facts are, if a 40-year-old invested $2OOO per annum at the conservative rate of 10 per cent compounding, at age 60 he would have a capital sum of $120,000. “A 30-year-old investing for 30 years would have the sum of $300,000, while a 20-year-old investing for 40 years would accumulate $800,000,” he said. “In fact, under such a

system, Insurance and mutual fund-type schemes ! that would relieve individuals of the responsibility , of making regular personal investment decisions would flourish,” he said. Mr Sievwright was also concerned about those who did not have sufficient capital to live on at retirement. Mr Galvin said their needs would be met by existing social wel- ' fare schemes.

“After ail, the purpose of any social welfare scheme should be to help those who are in geriuine need, and not to provide universal benefits to everyone regardless of need as is the case with the present national superannuation scheme."