The Government has not changed its stance on the age of
eligibility for superannuation remaining at 65 years, but
said contributions to the ''Cullen Fund'' could resume by
Also, as surpluses grew, it would conduct a KiwiSaver
auto-enrolment exercise for non-members.
Labour has proposed compulsory KiwiSaver membership,
something the Government seems likely to match through
At present, the number of KiwiSaver members aged 18-64 was
equivalent to 85% of the labour force and auto-enrolment was
expected to increase that proportion, Finance Minister Bill
English said yesterday.
The Government would resume contributions to the New Zealand
Superannuation Fund once net core Crown debt was no higher
than 20% of GDP.
Mr English cut contributions to the fund - named after former
finance minister Sir Michael Cullen, who established it -
when National took power in 2008 and faced what was then
called a decade of deficits.
Treasury forecasts released as part of Budget 2014 indicated
the target debt level would be reached by the 2019-20 year.
''It is important to stress this short delay in resuming
contributions to the NZ super fund will not in any way affect
New Zealanders' entitlement to New Zealand Superannuation -
either now or in the future.
''The Government has been very clear it has no intention of
changing the age of eligibility of NZ Superannuation, the way
payments are calculated, or the link to 66% of the average
wage for a couple.''
Delaying contributions to the fund would not change the
Government's ability to make those payments, because low debt
was as important as super fund assets in meeting some of the
future fiscal pressures from an ageing population, Mr English
Financial Services Council chief executive Peter Neilson was
disappointed the Government kept in place the world's most
''punitive'' tax regime for superannuation savings.
Someone saving for retirement over 40 years, on the average
wage, in a KiwiSaver default fund lost half their retirement
nest egg due to the impact of tax rates on compound returns -
interest on interest.
Any dollar paid in tax within a KiwiSaver fund was a dollar
not reinvested to earn interest on interest for the balance
of the 40 years of saving to 65.
''Most countries have tax concessions for retirement savings.
In New Zealand, the effective tax rates on KiwiSaver funds
are much higher than on any other forms of retirement
savings, such as investing in rental property,'' Mr Neilson
- No change to superannuation entitlement age
- Contributions to Cullen Fund will resume in 2020
- Disappointment in no tax changes for KiwiSaver