Surtax om national super ‘broke contracts’

Press, 4 January 1988, Page 3

Surtax om national super ‘broke contracts’

PA Wellington The introduction of the surtax on national superannuation broke longstanding legal and social contracts, according to a superannuitants’ group. In its submission to the Royal Commission on Social Policy the Wellington National Superannuitants Association said the surtax should be removed and the money already paid as surtax refunded. National superannuation had been a contributory insurance scheme since its introduction in April, 1939, the association said. "The Government has no more mandate to remove its benefits from its long-term subscribers

than it has from any other scheme, such as long-term subscribers to life insurance endowment policies. “It is clear that the introduction of universal superannuation was intended to be a contract of insurance similar to other insurance schemes,” said the association.

The contract guaranteed a “superannuation benefit without conditions as to income and property” and this had been violated by the introduction of the surtax, said the association.

The surtax was "discriminatory, iniquitous and most unjust." It made superannuitants the highest-rated r taxpayers in the country. '

It also was bad far the

country because it penalised thrift and saving.

“Our members have saved by forgoing their consumption over most of their lives thus contributing to New Zealand’s capital development,” said the association.

“Superannuitants are entitled to the income from those savings in the same way as other savers.” The argument that the country could not afford national superannuation because the elderly were a growing proportion of the population was "specious” and “completely invalid,” it said.

The country’s ability to pay superannuation depended on the productivity of the workforce, not

on the ratio of workers to superannuitants.

"Computerisation and automation will increasingly boost production per capita.” The association urged the commission to recommend that national superannuation payments be continued under existing qualifying conditions. “Retirement and being elderly bring many problems, we have little to look forward to and a lot to fear. “We face ill-health to a much greater extent than any other age group. We have to pay for lawn mowing, painting, repairs, jobs that young people can do for themselves and we fear how our future care, can be paid for out of incomes.”