Budget 2004 Strengthens safety net under NZ Super
Hon Dr Michael Cullen
Minister of Finance
Budget strengthens safety net under NZ Super
Budget 2004 further strengthens the safety net the government has put under NZ Super' entitlements by committing another $2.1 billion to the New Zealand Superannuation Fund.
"The payments will be made in fortnightly instalments over the course of the 2004-05 financial year. As at 30 June 2005, the Fund will contain $6.3 billion. By 30 June 2008, this is forecast to have increased to $15.5 billion.
"The Fund honoured a key Labour Party election commitment and is designed to deal with the fiscal burden of an aging population by setting aside savings now to smooth the cost pressures created by the baby boomers as they retire.
"The alternative is to send the bill to younger generations in the form of punishing tax hikes," Dr Cullen said.
"In the year 2040, the Fund will contribute 36 per cent of total anticipated NZ Super costs. That represents $138 a week on the current married couple rate. If the Fund did not exist, this money would have to be found elsewhere."
But Dr Cullen said NZ Super could only provide a basic income. New Zealanders wanting to enjoy the little luxuries in retirement would have to make additional private provision.
"The government as an employer has set an example with the creation of the new State sector superannuation savings scheme. The government will match contributions to a maximum of 1.5 per cent of gross base salary in the first year and to 3 per cent thereafter," he said.
"Budget allocations bring the total provision for this purpose to $8.9 million in 2003-04, $35.7 million in 2004-05 and $58.1 million in each of the following three years.
"We have also recently set up a Savings Product Working Group with industry representatives to report by the end of August on ways to overcome barriers that might be inhibiting the use of work-based schemes in the private sector."