Being a rather modest, self-effacing sort of fellow who helps old ladies to cross streets and pets cats, I am always happy to assist with solving problems. To date my articles on The BFD have solved the climate crisis (there isn’t one) and poverty (the poor man should imitate the rich man) and urged readers to put their money into safe government bonds for a while: just to name a few matters which greatly benefit readers. For my next miracle… I have decided to solve the superannuation timebomb.
The theory of superannuation goes something like this. Baby boomers started to retire a decade or so back; the cost of paying them pensions skyrocketed and will continue to do so; too many indolent “Kevin”, “Rangi” and “Charlene” types sit on the sofa eating Kentucky Fried Burgers and smoking meth, rather than working; insufficient tax dollars are being collected to afford pensions long term.
In typically unsophisticated fashion, Seymour and ACT proffer a solution of simply raising the retirement age. National is unlikely ever to touch the issue again as it remembers losing a quarter of its voters and decades of credibility overnight – back in ’91.
My solution is rather more well thought out and takes into account modern New Zealand so pull up a chair and I shall explain, dear reader.
What I suggest is the following:
1. Everybody born on or after 1 January 2000 is henceforth ineligible for superannuation and needs to look to Kiwisaver (and perhaps that silly “Cullen Fund”) for income in their old age.
2. Those born between 1 January 1990 and 31 December 1999 are also ineligible, but will receive Kiwisaver tax credits to compensate for taxes paid to date which fund something they will themselves not be eligible for. $40,000 should cover it.
3. Introduce a sliding scale for those born in the 1980s; a mix of Kiwisaver income topped up by the “Cullen Fund” if required.
4. Have a major advertising campaign to change the view of most people towards their Kiwisaver, which is seen as some kind of glorified ACC levy rather than a store of wealth. Quite different to Australia where every man and his dog never stops talking about his “super”.
5. People born after 1 January 1990 receive tax-free Kiwisaver returns (actually quite a small amount of tax money)
My reasoning is simple. Kiwisaver, even on the minimum wage (and which loser has spent their entire working life earning just the minimum wage?), generates a capital sum which would in turn generate an income greater than the current rate of superannuation.
The more you earn, the more you contribute, the greater the capital, the higher the income at the other end. The occasional lump sum – compounding for decades – also makes a huge difference.
This is simply a matter of letting nature take its course; 10 years from now how many people currently receiving super will still be alive? Or what about 2040? By 31 December 2054 – the last day anybody can ever begin receiving superannuation from the government – the Cullen Fund, alone, should cover the entire (fast reducing) cost. By the year 2070 government pensions could end altogether, and rightly so.
As for the younger folk, it should be noted that even the oldest person in my example – born 1 January 1990 – still has well over three decades to pull his socks up. Most have over four decades. This is plenty of time to become self-reliant and prosperous rather than end up like current superannuants living in government-created poverty.
You’re welcome.
