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Saving For Our Future

Phil Goff
Labour Leader

27 October 2011

Saving For Our Future

Labour’s new savings package will give all Kiwis a secure retirement by creating a universal savings scheme, guaranteeing NZ Super for future generations and preparing the country for the financial impact of our ageing population.

“We have to act now. If we don’t our children and grandchildren will be forced to pick up our bill,” Phil Goff said.

“Under National’s watch, we have gone from a surplus three years ago to an $18 billion deficit this year. We must pay back our debt and live within our means. Assets sales aren’t the answer.

“We can’t just muddle through, trying to keep our heads above water. Pretending nothing needs to change simply leaves our children and grandchildren drowning in debt.

“John Key is offering short-term fixes. The package I am announcing today is a long-term solution.

“We must have the courage to make the hard decisions to secure a prosperous long-term future for all New Zealanders.

Labour’s savings plan includes:

• Making KiwiSaver universal and compulsory for all wage and salary earners
• Re-starting contributions to the New Zealand Super Fund
• Gradually increasing the age of eligibility for New Zealand Super from 65 to 67 over a 22 year period

“We will restart contributions to the NZ Super Fund starting with $750 million in 2012/13, ramping up to around $2.4 billion a year by 2016.

“National’s decision to suspend contributions in 2009 will cost the Fund $30 billion. It’s a hole that needs to be filled while baby boomers are still in the workforce.

“We do not save enough as a country and that must change. Standard & Poor’s said this was a key reason for our credit downgrade.

“Labour’s compulsory KiwiSaver will see the employer contributions gradually increase by 0.5% a year from 3% in 2014 to 7% in 2022.

“We understand though that many families are struggling with the rising cost of living and will find it hard to save more right now, so employee contributions will remain at 2%.

“By making it easier to save, everyone in the scheme will have a nest egg to supplement their pension and give them a secure retirement.

“Universal KiwiSaver also reduces our reliance on foreign borrowing and builds up our own pool of savings to invest in Kiwi businesses and create jobs. We will be able to own our own future, and grow our economy – not someone else’s.

“To make this more affordable for the country, we’ll phase in the $1000 kick-start for all members at $200 a year for the first five years. This spreads the up-front cost to the government books.

“We will also gradually increase the age of eligibility for NZ Super from 65 to 67 years.

“By 2050, the number of people aged 65 and over will double to 1.35 million. Our bill for superannuation will also double so it’s vital we plan for our rapidly ageing population now.

“This will be done over 12 years from 2020 to 2033. This means no-one currently aged 55 and over will be affected by the change. For those aged 45-55, the age of eligibility will rise by two months a year and for people 45 and under, they’ll be retiring at 67.

“We believe it’s important to tell Kiwis the truth. As our population ages, the cost of superannuation will double and the cost of medical care will rocket upwards. Already one in three people aged between 65 and 69 are still in the workforce today and this proportion is projected to increase rapidly.

“John Key is wrong when he tells New Zealanders nothing needs to change. If we don’t confront the issue now, we’ll be forced to in the future when the solutions will be harder and people will have less time to make adjustments.

“I won’t make promises I can’t keep. And I am prepared to make the tough decisions so we save more and give all Kiwis a future to look forward to.”

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