LAUNCH OF RETIREMENT SAVINGS SCHEME WHITE PAPER

BEEHIVE THEATRE

Today marks a significant occasion in our history.

This White Paper is the first step in a process designed to have the people of New Zealand consider a solution to the problem of providing security of income in retirement to an ageing population.

The development of a White Paper to put to the people by way of referendum was a specific decision taken during the process of forging this Coalition Government.

The challenge is obvious.

Over the past 22 years, since the then Labour Government introduced a compulsory super scheme in 1975 until today, Superannuation has been in a state of constant change.

All recent changes have been made on the basis of cost.

The scheme introduced by Prime Minister Muldoon in 1977 being reduced in various ways from 80 per cent of the average wage at age 60 years to 65 per cent of the average wage at age 65 years.

In the 20 years since the Muldoon scheme was introduced the number of people over age 65 years has increased from 290,930 to 422,667 which required a significant reduction of the scheme to make it affordable.

What happened in the past regarding the ageing of the population is modest to what will happen in the future.

In 50 years time around one in four New Zealanders will be 65 or over, compared to just one in eight today.

Given current policies, age related expenses are set to rise very significantly early next century.

The cost of New Zealand Superannuation is projected to double from 5 per cent to over 10 per cent of GDP by the middle of next century.

There will be a similar doubling of health care costs for the elderly.

Not surprisingly then, many people agree it will be extremely difficult or impossible to sustain the present scheme into the middle of the next century.

The sharp growth in the over 65 year olds starts around 2010 - only 13 years away.

The White Paper "You and Your Retirement Savings" outlines a Retirement Savings Scheme which offers a solution to the pressures created by an ageing population by moving from the present pay-as-you-go approach to a funded approach.

Its design aims to offer a secure retirement income to all while significantly reducing the costs to future taxpayers of providing retirement income assistance.

We all look forward to enjoying a long and healthy retirement, but none of us know just how long it will last.

The need to provide the highest level of certainty possible to people when they reach age 65 years has been a key objective in designing the scheme.

The Retirement Savings Scheme shares that responsibility between the individual and the Government.

Ensuring an adequate and secure level of income for New Zealanders during retirement becomes a critical factor in judging the durability of any solution.

Mr Jeff Todd will report on an update on the present taxpayer funded scheme at the end of the month.

What we all know is that with the rapid ageing of the population the present scheme will require further change in the future to meet the inevitable doubling of the costs in real terms as the number of retirees double.

This is why we are asking New Zealanders directly what they believe best suits the nation's needs.

The status quo will not endure unchanged and any solution must have the support of the people.

We now have just over two months to consider this proposal.

Each one of us now has an opportunity to study the issue, focus on the problem and vote on what is proposed as one solution.

If we vote in September to implement this scheme it will then be introduced in July 1998, exactly 100 years after the first state funded old-age pension was introduced into New Zealand.

An independent referendum panel chaired by Sir John Robertson has been set up to run an education and information campaign to assist New Zealanders to become fully informed and so to exercise their vote responsibly in the coming referendum.

The first material from the panel will be reaching voters at the end of July.

In the interim the Government has prepared a leaflet containing a short summary of the Retirement Savings Scheme taken from the introduction to the White Paper.

This will be delivered tomorrow to all households in the country.

Today you again see the Coalition in action, delivering on the promise we made to provide an innovative option to one of tomorrow's biggest problems - retirement income.

I now hand over to the Treasurer, the Hon Winston Peters, who will describe in more detail the proposed Retirement Savings Scheme.

Ends