Executive Summary
MISSION
Grey Power New Zealand’s policy on superannuation is dedicated to meeting the needs of those people presently retired, approaching retirement and of the needs of succeeding generations of the retired.
Specifically, the policy overview states:
“Superannuation to be a state funded scheme payable at the age of 65 years that allows the retired person an adequate income to live in reasonable comfort and dignity and be able to participate fully in the community. That superannuation be accepted as an entitlement and non-means tested. This income should include a special provision to provide for the needs of the person living alone.”
General
THE NEED FOR AN ADEQUATE PENSION LINKED TO AVERAGE INCOMES
Grey Power believes one of the most important foundations of a secure and decent society is the ability of its citizens and permanent residents to confidently anticipate an equitable standard of living on reaching the qualifying age of retirement. New Zealanders must be confident they will receive government-funded superannuation with payment levels, which not only provide the essentials of living but also ensure their continued participation in the normal activities within their community. To this end, Grey Power should support an increase in the minimum wage rate.
In a market economy the cost of all the component parts of a reasonable standard of living are directly influenced by the disposable income and spending power of working people. Retired people can only continue to participate fully in their communities when their pensions and other incomes have a secure and stable relativity with the average incomes of the working age population.
It has been a recent occurrence that wages and other incomes increase at a rate in excess of the Consumer Price Index. To some extent this reflects greater productivity by the nation’s working people. Grey Power believes retired New Zealanders should also share in the rewards of increased national productivity, they are after all retired workers and should benefit from these advances rather than suffer relative disadvantage.
Fixing the floor level of the wage band test to 65% of average ordinary time weekly wage has, over time, distanced retired people from those still in the workforce in each and every respect of an individual’s right to participate in their community.
Having this low fixed percentage will make it increasingly difficult for older people to maintain a reasonable living standard, for example, employ trades-people or casual labour to carry out essential home maintenance beyond the diminished physical capability of an ageing retiree. It is imperative, therefore, that the percentage of average ordinary time weekly wage paid to a superannuitant married couple be increased to a minimum of 70% and a single superannuitant, living alone, be paid 70% of the married couples’ rate.
Constant monitoring of the level of superannuation in relation to above wage band test is essential for the well being of all retired New Zealanders.
TERMINOLOGY USED BY GOVERNMENT IS MISLEADING
Grey Power is uncomfortable with politicians and the media persistently comparing the married couples rate of New Zealand superannuation average ordinary time weekly wage by stating the relativity to be approximately 66%. This is a misleading and an unreasonable comparison. The average weekly wage is in fact enjoyed by a single individual, while the married couple’s superannuation entitlement, stated to be at 66%, must be shared by two people.
The true comparison is that each partner in a ‘married couple’ relationship is expected to live on only 33% of the net average wage enjoyed by a person in the work force. The percentage paid to a single superannuitant is in fact marginally higher than that paid to a married couple.
Henceforth, government should be required to make such comparisons on an ‘apples to apples’ basis and should avoid misleading comparisons when making public relations announcements on such a sensitive issue.
“All reference to the guaranteed level of New Zealand Superannuation paid to a married couple should be the amount paid to each individual in a marriage i.e. at this point in time 33% average ordinary time weekly wage”.
QUALIFYING AGE OF ENTITLEMENT
Grey Power recognises that the development of medicines and other health remedies has attributed to an increased life expectancy of older people within New Zealand and now accepts the age of entitlement of New Zealand Superannuation be permanently fixed at 65 years of age following the pattern of the majority of other countries in setting retirement ages.
CONSUMER PRICE INDEX ADJUSTMENTS
Grey Power is concerned that charges imposed by local government rating, energy suppliers and many other basic living costs, such as food and transport, increase in the early months of each year.
New Zealand Superannuation adjustments paid on 1st April each year reflect the movements in the Consumer Price Index (CPI) stemming from the rising costs of the previous year, ending 31st December. As the majority of Superannuitants on fixed budgets Grey Power believes a fairer compensatory method would be for New Zealand Superannuation to be set by an independent body free of political influence and interference and adjusted for movements in the CPI, six monthly intervals. These adjustments being honoured in the payments made for the periods commencing on 1st April and 1st October each year.
MEANS TESTING
Grey Power is fundamentally opposed to any type of targeting of those in receipt of New Zealand Superannuation. Retirees who have saved to supplement their retirement income should not be penalised.
REVIEW OF ADEQUACY AT EACH LEVEL OF SUPERANNUATION INCOME
Grey Power believes that government should implement research programmes at “ regular intervals” to ensure levels of New Zealand Superannuation are sufficiently maintained to ensure retirees have an income adequate to enable their living in reasonable comfort with full capacity to actively participate in the community. Retirees should have sufficient income to provide essential requirements such as communication links, telephones, heating, electricity, water, health care, transport and housing costs.
Such research programmes should include provision to address changed lifestyles and set superannuation levels that have fair relativity with those in the paid work force. The group undertaking such research should include a nominee from Grey Power.
PROVISION FOR FUTURE RETIREES
Grey Power is generally supportive of the Cullen Fund in that it was a positive step to even out the cost of Superannuation when the so-called Baby Boomers come to retirement. Grey Power recognizes that this fund alone does not in itself guarantee the provision of New Zealand Superannuation to future generations.
Grey Power members have a similar diversity of views as the rest of New Zealand on the investment policy pursed by the Guardians of the trust.
Although the social norms are changing in relation to marriage and co-habitation Grey Power still supports the focus on a married couple as the benchmark for setting the level of New Zealand Superannuation for all eligible retirees.
Specific
1. That superannuation should be payable at the age of 65 years universally to all qualifying citizens and permanent residents of New Zealand.
2. That the level of superannuation should be set by an independent body free from political interference.
3. That superannuation should be funded by the state from current taxation and other government revenues on a pay-as-you-go basis.
4. That the level of payment for each individual in a marriage should be not less than 35% of the average after-tax weekly wage and that special provisions should be made for single Superannuitants living alone, and the level of payment should be increased to 50% of the net average wage.
5. That superannuation should be funded by the existing process of 'generation participation' where, just as people presently retired willingly paid taxes during their working lives to provide for their elderly, successive generations should in turn support their elders.
6. That New Zealand Superannuation is adjusted for movements in the CPI, at six monthly intervals. These adjustments being honoured in the payments made for the periods commencing on the 1st of April and the 1st of October each year.
7. That where one partner in a marriage is in receipt of a non-qualified spouse benefit the abatement rate payable on every dollar of family income over $80.00 per week should be no more than 30%.
The Superannuation Committee
Grey Power New Zealand Federation Inc
