Key not ruling out compulsory retirement savings

Monday 16th August 2010 1 Comment

Prime Minister John Key says he is “not ruling out” the possible introduction of a compulsory retirement savings scheme, and may take it to the country as an election campaign issue next year. Key confirmed at his post-Cabinet press conference in Wellington this afternoon that the government was well down the track to establishing a new superannuation advisory taskforce akin to the Tax Working Group, whose deliberations paved the way politically for the October personal tax cuts and GST increase.

Key staunchly defended the existing National Superannuation system, which he said was world-leading for its universal application and the fact that New Zealand had relatively few people over 65 living in poverty, and the equal treatment the scheme delivered for both men and women.

In that sense, the superannuation issue was more a savings than a retirement policy problem, said Key. While this year’s Budget had included new incentives to encourage savings, he said was “sceptical that (they) are the full step required to solve New Zealand’s national savings problem.”

“If we identify and are convinced that New Zealand is vulnerable because of its high international indebtedness”, compulsory savings was one option for helping solve that.

He expected investment of New Zealanders’ savings would be “home-skewed”, and could be used to support the kinds of investment that were increasingly being made by foreign investors rather than local ones.

The new working group is likely to be run from Victoria University of Wellington, which also hosted the tax group and has strengths in public policy and administration. A chair for the group has yet to be named, with PricewaterhouseCoopers New Zealand chair John Shewan tipped in some reports.

Key identified the working group as the next part of the government’s agenda to lift savings and investment, and to deal with high levels of indebtedness, having already guided the economy through the global recession, announced tax reforms, and started lifting productivity in areas like resource management and labour reform.

Businesswire.co.nz

Comments from our readers

On 17 August 2010 at 12:46 pm g murphy said:

is there any incentive to save, maybe kiwi saver-hmmm. you work you are taxed on your earnings you save x amount from your already taxed earnings you get some interest on the savings, you are now taxed a second time. a incentive would be to except tax on savings eg every day savings account, on line savings, etc etc. what the government would lose would be made up for when all these savings get spent through the gst net. and these savings will be spent sooner or later. eg the car needs up dating, the washing macine goes, the tv blows, clothes wear out, and so on and so on.