National Rejects Superfund - Costs Outweigh Benefits

National announced today that it is rejecting the Government's proposed superannuation fund.

"We will be supporting legislation locking in a super payout to a married couple at aged 65, at 65 percent of the average wage," National's Finance spokesman Bill English said.

"But National will not be supporting the second part of the legislation which puts in place a scheme to prefund up to 14 percent of the pension over the next 100 years.

"We have considered Dr Cullen's proposal with an open mind because we support saving for the future. However, in our view, the evidence is that the costs of this scheme far outweigh its benefits.

"The Government is already having trouble meeting the required contributions to the Superfund. We have seen proof of this with recent cuts in funding for care of the frail elderly, along with a range of other health services.

"This is a direct result of the pressure the Government has created by putting $600 million aside this year. It just doesn't make sense to secure 14 percent of the pension in 30 years' time by cutting health care for older people now.

"This burden will only grow as required contributions to the scheme rise to over $2 billion in three years' time.

"At a time when New Zealand is searching for the path to stronger economic growth, the Superfund will export billions of dollars of capital to foreign economies, capital needed here to increase investment.

"We believe this is one aspect of the fund many people are unaware of.

"National will look at options for increasing long term savings, including tax incentives to help people save and individual accounts.

"We are looking at these options in context of a wider plan for boosting our economic growth rates and sustaining health and education. Because we are not supporting the Superfund, National has a wide range of choices about its future policies.

"Labour, in contrast, is forcing the country into an economic straitjacket. There will be few choices left on Government spending and current tax rates will be locked in for decades to come," Mr English said.

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