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Super shake-up poses many risks

Council of Trade Unions media release
7 December 2010

Super shake-up poses many risks

The recommendation to increase the age of entitlement for NZ Super to 67 years would, if implemented, be tough on many workers, said the CTU today in response to the report by the Retirement Commissioner.

To remove universal entitlement at age 65 but replace it with a selective means tested benefit for some people until they are 67 is a major change to a universal entitlement. There is a case for additional support – such as subsidised power bills – for those on low incomes but not for any removal of basic entitlements.

“It will be interesting to see the Government’s full response to this report given the Prime Minister’s pre-election commitment not to alter the retirement age or reduce entitlements.”

The reduction in the relative level of NZ Super is also of considerable concern.

Peter Conway said the fundamental problem is that we have low wages and that translates into low savings. That is what needs to be addressed rather than reducing incomes and entitlements in retirement

Peter Conway said that the CTU also supports a form of compulsory Super based on the successful KiwiSaver model because retirement income is not adequate and reducing the relative value of NZ Super would only make this worse.

The CTU supports phasing in compulsory superannuation over a four-year period.

This is on the basis that: workers are required to contribute a maximum of 2 percent when compulsory employer contributions reach 6 percent; the Government contribution remains at 2 percent; the minimum wage is increased by an additional amount at the time the compulsory worker contribution of 2 percent applies; the Government contribution of 2 percent (of minimum wage or benefit level or another amount) applies to all those of working age that are not earning for a period; New Zealand Superannuation remains as it is currently structured; additional welfare payments are available to low income superannuitants, and that there is a review of retirement income adequacy every 5 years.

ENDS

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