Govt hints at changes in superannuation

Press, 13 June 1986, Page 3

Govt hints at changes in superannuation

By

MARTIN FREETH

in Wellington

A study by Government members of national superannuation may lead to sweeping changes in Labour policy by next year’s General Election. The caucus sub-commit-tee’s chairwoman, Ms Annette King, the member for Horowhenua, said yesterday that she wanted

the Government to consider injecting an element of direct contribution back into superannuation. Elderly constituents had told committee members they preferred the old scheme where incomeearners contributed direct to a fund used for superannuation payouts, Ms King said. “People understood it and knew exactly what it was for. Whether it is exactly like the scheme before 1969 or the New

Zealand superannuation scheme of the third Labour Government, we feel that there needs to be some sort of fund that is not just taken out of taxation,” she said. Contributions to the fund could be made as a proportion of the individual’s income taxes or be .levied direct as a percentage of income Ms King said. National superannuation is paid out of the Government’s general finances, with no indication of who pays how much to fund the scheme. In 1985-86 it amounted to a gross payout of $3.3 billion, 57 per cent of State spending on social services. Ms King said that superannuation was 17c in every dollar spent by the Government. Under the present scheme, that proportion was expected to

rise steadily as the sector of the New Zealand population over 60 years of age grew. Ms King said superannuation would be one of the big issues in 1987. Her committee had been working for three months to study its history in New Zealand and examine schemes in other countries. The committee will recommend a policy to the Labour caucus which may set out a new method of contributions and new criteria for eligibility. Ms King said the committee could recommend that Labour adopt a policy of leaving changes until the outcome of the forthcoming Royal Commission on social policy. The Royal Commission will encompass superannuation but will not report until after the next

election.

Changes could ultimately be made to the eligibility criteria, perhaps removing the present universal entitlement from age 60 to age 65. The controversial step in the Government’s 1984 Budget to introduce the superannuation tax surcharge has not, technically, altered universal entitlement to the benefit at 60. Whatever changes were made, said Ms King, the Government would phase them in and consider the impact on those receiving, or about to receive, superannuation. Ms King has previously called for a bipartisan approach in reforming national superannuation in view of a widespread perception that it will impose an increasing burden on taxpayers.