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Pensions to rise as Super wage floor restored

27 January 2000

Pensions to rise as Super wage floor restored

Married superannuitants will receive another $21.42 a week in their pockets from April 1.

"The increase fulfils election pledges from both coalition partners," Finance Minister Michael Cullen said.

The married rate for New Zealand Superannuation and for the Veterans' Pension will increase from $325.58 to $347. The single living alone rate and the single sharing rate are calculated at 65 per cent and 60 per cent of the married rate.

They will rise to $225.55 and $208.20 a week or by $12.86 and $12.36 respectively.

"Under National, the adjustments would have been a miserly 2 cents a week for those living alone, 50 cents for those sharing and $1.66 a week for married couples," Dr Cullen said.

The increases announced today will cost an estimated $684 million net over the next four years.

They flow from the Government's commitment to restore the floor for New Zealand Superannuation from 60 per cent to 65 per cent of the average, ordinary time weekly wage.

"The 1993 multi-party Accord decided that a 65 per cent wage floor was the minimum necessary to ensure all retired New Zealanders may continue to enjoy a reasonable level of participation in and belonging to the community.

"But the National Government smashed the Accord and unilaterally dropped the wage floor to 60 per cent. National's intention was that New Zealand Super should steadily lose value relative to wages.

"The ratio is now down to 62.66 per cent. The increase the Government is announcing today is expected to take it up to around 67 per cent.

"We are doing that to keep faith with the electorate," Dr Cullen said.

Statistics New Zealand had this year redesigned the Quarterly Employment Survey and the way in which it calculated the average wage.

It had changed the survey sample to make it more reflective of the modern economy, and had included small firms employing fewer than three full time workers.

"The effect of these changes has been to produce a lower wage figure than would have been produced under the previous QES system. The Cabinet felt that to have calculated the new pension rates on this lower figure would have been unfair given the reasonable expectations created in the electorate.

"The rate at which the pension drifts to 65 per cent of the average wage will depend on the relative movement of wages and prices over the next few years.

"For as long as it is over 65 per cent, it will be adjusted for inflation only. But it will never be allowed to sink below 65 per cent again under this Government. That is our undertaking to the New Zealand public," Dr Cullen said.

ENDS


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