Superannuation Key Facts

A fair and affordable superannuation

There is currently a lot of scaremongering and incorrect information about what is happening to superannuation.

>This Government is serious about finding a medium term way of making superannuation sustainable and affordable for not just this generation but for our children and grandchildren.

There are two main initiatives involved in the Government's move to help secure the accountability and sustainability of the present scheme.

1. Formation of Superannuation 2000 Taskforce.
   • is a proactive move to find a sustainable solution to deliver superannuation to New Zealanders in the new millennium. It will offer an alternative to the failed Superannuation Accord.
   • the Taskforce is a grouping of community leaders and political parties charged with looking at the long-term sustainable solution to the superannuation issue.
   • Superannuation 2000 Taskforce will start in November this year and report to the Government in November 2000

2. Continuing CPI indexing while reducing the wage floor to help ensure that the scheme is fair and financially sustainable for the future.

   What does that mean?

   • No older New Zealander receiving New Zealand Superannuation will have their pension cut now or in the future.
   • Superannuation will not reduce at any stage but will continue to increase in line with inflation.
   • This will protect superannuitants purchasing power. This means superannuation will keep in step as prices increase generally.
   • Superannuitants will not get any less than they are now on 1 April 1999 when pensions will be aligned in line with inflation as usual.

     Superannuation has been linked to the CPI for the past decade and will continue to be.

     Superannuation is also linked within a range to the average wage. This will continue, and a fair linkage will be maintained. However, the bottom of that range cannot be kept at an unsustainable level. That is why the floor is being lowered.

     However, that floor will NOT kick in immediately. It will take several years (probably up to six) before superannuation will actually reach that floor.

REMEMBER:

• All other Government benefits are CPI-linked.

GENERAL POINTS:

• As a country we still have to face up to the cost pressures on New Zealand Superannuation that a maturing population will create, including associated health and welfare costs, and how we manage them.
• We still have to look at the options for managing retirement costs in a way that is fair and affordable for New Zealand and addresses the financial pressures associated with an ageing population. Facts and Figures:
  • as of mid-June 1997, the following number of people received NZ Super:

    NZ Superannuation:

    • 68,000 singles sharing accommodation
    • 130,000 single people living alone
    • 250,000 married people

    Veterans:

    • 8,000 single people sharing accommodation
    • 1,700 single people living alone
    • 4,400 married people
  • All of these people are included in the new wage floor, but NONE will receive any less money as a result of the changes.

In fact, based on Treasury's current forecasts of the Consumer Price Index (CPI), Superannuation rates (per week) for a married couple are likely to move on 1 April 1999, as follows:

Net rates of super as at 1 July 1998 are:

(The forecast average wage as at December 1998 is $487.86 net weekly.)