Scoop Feedback: Treasury's Pension Wizardry
Recognising the looming problems associated with an ageing population and the fiscal burden of funding retirement income, Treasury is floating a great new idea. Let people work longer by progressively lifting the age of Superannuation entitlement (5 April).
Sounds a great idea, except for the fact that with changes that have occurred in the Employment Contracts Act and contracts generally, many are already working well beyond when they would normally have retired.
This is because forced changes in their personal contracts have reduced or taken away provisions of retirement payments requiring them to top this up with personal superannuation schemes to cover the shortfall.
Adoption of such a scheme would also have to take account of the impact this will have at the other end of the employment spectrum. People staying in the workforce longer means fewer opportunities for young people to come into the workforce. It also impacts on the promotional and earning prospects of people already trying to climb the employment ladder.
Where will all the compensatory jobs come from. What will be the added health, social and financial cost of all those young disillusioned people who have no prospect of work ending up on a benefit and how will this be funded.
By all means, spark debate on the economic impact of the ageing population (as if it has not already been debated over the past decade). But to suggest people simply work longer just pushes the problem out by another five years or so and does not one jot to resolve the issue.
I expect more from our Treasury wizards.