Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on the new idea proposed for the future of superannuation

Transcript

Jenee Tibshraeny: NZ Herald Wellington business editor on the new idea proposed for the future of superannuation · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
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• 0:17
  Speaker 2: Boomers reaching retirement age might like this idea. A group
• 0:20
  Speaker 2: representing accountants is pushing an idea where you could opt
• 0:23
  Speaker 2: out of receiving super at 65. You just get more,
• 0:26
  Speaker 2: but you get it when you're older. The Herald's Wellington
• 0:29
  Speaker 2: business editor, Janae Tibshirani, is with us. Hello, Janae.
• 0:32
  Speaker 1: Hi, Heather.
• 0:33
  Speaker 2: Peter Dunn's old idea, isn't it?
• 0:35
  Speaker 3: Yes, that's right. And the Chartered Accountants Group is trying
• 0:39
  Speaker 3: to revive it. Basically, they've come out and said that
• 0:44
  Speaker 3: they're really worried about the cost of super. As we
• 0:46
  Speaker 3: all know, it's due to shoot up because we have
• 0:48
  Speaker 3: an ageing population. So the chartered accountants are saying, why
• 0:52
  Speaker 3: don't we create a system where if you choose to
• 0:55
  Speaker 3: get super at 65, you get super at a rate
• 0:59
  Speaker 3: that's a bit lower than normal. But if you're happy
• 1:02
  Speaker 3: to wait until you're 67 or 70, you get super
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  Speaker 3: at a higher rate, maybe 1.3 times the normal rate
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  Speaker 3: for the rest of your life. So you come to
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  Speaker 3: 65 and you do the math for yourself. You think,
• 1:16
  Speaker 3: how long do I think I'm going to live? Would
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  Speaker 3: I rather get super at a lower rate but get
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  Speaker 3: it now or hold out and get it at a
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  Speaker 3: higher rate?
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  Speaker 2: So if you take it at 65, you get 90%
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  Speaker 2: of the current rate. If you take it at 67,
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  Speaker 2: you get 100% of the current rate. And if you
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  Speaker 2: take it at 70, you get 130% of the current rate.
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  Speaker 3: Yes, that's right. So the accountant's got some consultants to
• 1:39
  Speaker 3: do some modelling around how this could work. And that
• 1:42
  Speaker 3: was one of the scenarios they put on the table.
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  Speaker 3: They thought that by 2048, that could save about 8%
• 1:53
  Speaker 3: of the cost of super over a year. But the
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  Speaker 3: thing is, is that these things are never straightforward.
• 1:59
  Speaker 2: No.
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  Speaker 3: And this type of tearing really does create a potential
• 2:03
  Speaker 3: fairness issue.
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  Speaker 2: Yeah, because it benefits the people who live longer, who
• 2:07
  Speaker 2: work desks and are wealthier, doesn't it?
• 2:09
  Speaker 1: Well, exactly.
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  Speaker 3: You could say it benefits the accountants.
• 2:12
  Speaker 1: Yeah, you're right.
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  Speaker 2: Because you're basically relying on the people... You're relying on
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  Speaker 2: a lot of people dying between the ages of 60
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  Speaker 2: and 70, aren't you, to cut out that cost?
• 2:24
  Speaker 3: Well, yeah. Look, I mean... So they modelled three different scenarios.
• 2:28
  Speaker 3: Two of the scenarios didn't involve very aggressive tearing, but
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  Speaker 3: the one we've just talked about was quite a lot
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  Speaker 3: of aggressive tearing. So arguably that's kind of unfair. I
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  Speaker 3: ran some numbers and I found that if you died
• 2:41
  Speaker 3: in your 60s or 70s, the tearing wouldn't be good
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  Speaker 3: for you. And also if you couldn't wait until you
• 2:49
  Speaker 3: were 70 before you started receiving super, the tearing would
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  Speaker 3: be bad for you. The thing is, if you made
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  Speaker 3: the system fairer and did less tearing, the system wouldn't work.
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  Speaker 3: Like the incentive needs to be high enough for you
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  Speaker 3: to wait until you're 70. If it isn't, everyone would
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  Speaker 3: just choose to get it at 65 and all the
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  Speaker 3: cost savings and all that that this is meant to
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  Speaker 3: deliver wouldn't eventuate. I mean, the big thing here is
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  Speaker 3: if we think we need to save money on super,
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  Speaker 3: the cost is going to fall on someone. And that's
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  Speaker 3: the debate we need to have. Who do we think
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  Speaker 3: the cost of that should fall off.
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  Speaker 2: Yeah, too right. I mean, I can't imagine that this
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  Speaker 2: is going to get, it's not, there won't be much
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  Speaker 2: appetite for it in Wellington, will there?
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  Speaker 3: I don't think so. I mean, half of the parties
• 3:32
  Speaker 3: don't even think we need to do anything about this.
• 3:35
  Speaker 3: And the other half are quite keen on increasing the
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  Speaker 3: age of eligibility to 67. Something that the Treasury is
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  Speaker 3: quite keen on is changing the indexation. So that means,
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  Speaker 3: you know, every year the amount of super you get
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  Speaker 3: goes up and up. But currently, it goes up by
• 3:51
  Speaker 3: the greater of inflation and wage inflation. Treasury's saying, let's
• 3:55
  Speaker 3: just put it up by inflation. It's the same as
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  Speaker 3: other benefits. So if it goes up by less every year,
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  Speaker 3: that'll save money over time. I think that's an idea
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  Speaker 3: that perhaps some of the parties would be keener on.
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  Speaker 1: Yeah, interesting.
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  Speaker 2: Janaye, as always, thank you. It's been good to talk
• 4:10
  Speaker 2: to you. Janaye Tibshirani, the Herald's Wellington Business Editor. It's
• 4:13
  Speaker 2: 19 away from 7.
• 4:14
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