Elderly upset at super, ‘tinkering’

Press, 28 July 1989, Page 3

Elderly upset at super, ‘tinkering’

By

SUZANNE KEEN

It is “utterly grotesque” for the Government to make plans for superannuation up to the year 2025, says the president of Grey Power, Mr Alan Ryan.

The Government’s new system of a guaranteed retirement income, to be introduced from April next year, was the third superannuation scheme in 15 years and was no assurance for older people, he said. Future Governments would probably alter the scheme again. “A system is needed that will prevent the Government from tinkering with it, or we should require an all-party agreement from the Government. I am not at all pleased to see it will be changed a third time,” said Mr Ryan. In the Budget, the Government says the age of eligibility for retirement income will gradually be lifted between the years 2006 and 2025. The rate of a new retirement tax is projected for the next 30 years. Mr Ryan said he opposed the intention to gradually reduce the rate of superannuation payments relative to wages and other benefits be-

fear,” said the firm’s general manager (corporate business), Mr John Errington.

“While the Government has gone some way to contain the cost of national superannuation, the announcement still handicaps the ordinary New Zealander in planning for a dignified retirement. The existing superannuation tax regime provides no financial incentive for long-term savers. “However, we support the decision to reduce the superannuation surcharge for pensions and annuities, gradually increase the. age of entitlement, make the retirement component of taxation more visible and avoid the easy option of compulsion. “The Government has at last taken some notice of the Brash committee. It is a pity that they did not take their recommendation and introduce a scheme which allowed tax concessions on contributions,” he said.

Superannuation

cause the basis of the move was that the country could not sustain the present rate. The Government had failed to prove it was not sustainable, he said. Its statements on the matter had contained many inconsistencies. Mr Ryan said that in discussing the percentage of the population out of the workforce, the Government failed to mention those aged under 16 who were equally as dependent on the country. The baby boom of the 1960 s meant the number of people outside the workforce then was similar to that predicted for 2040 with the increase in the number of elderly. "If we can support them in the late 60s then we can by 2040.” If it was true the rate of superannuation could not. be sustained, increasing the age of entitlement was

probably the best way to deal with the issue, he said. Mr Ryan was annoyed that in comparing superannuation with other social welfare payments, the Government was essentially calling it a benefit. “It is completely different. The people receiving it have served their lives in the workforce.” He saw as a positive move the decision that 50 per cent of the income from registered pension schemes would be exempt from surcharge tax. National Mutual says people expecting a big change in the direction of retirement saving policy would have been disappointed. “The Budget only confirms one thing — people now have no option but to save more for retirement and the only incentive they have continues to be