New Zealand's $12.5
billion superannuation Cullen Fund should be scrapped and the
age of entitlement raised, economist and commentator Dr
Gareth Morgan believes.
Dr Morgan has launched an attack on the fund, saying the
Government's decision to defer contributions for 11 years -
announced by Finance Minister Bill English with last week's
Budget - had helped seal its fate.
The fund was established by former finance minister Michael
Cullen, who wanted to use budget surpluses to pay for the
costs of an ageing New Zealand population.
Dr Morgan said the fund had been in line to cover about 14%
of the cost of superannuation for baby-boomer retirees by
2040, with taxpayers to pay the remaining 86% of the cost,
but deferring contributions meant taxpayers would now pay 93%
of the cost.
"Why bother? The reality is the dream is over. Economic
circumstances have rendered the Cullen Fund a white elephant,
although it was looking increasingly doomed, anyway, before
the credit crunch sent the New Zealand Government accounts
into a spiral."
He doubted the fund would be able to "catch up" when budget
surpluses returned, meaning the fund would be "stuck at about
$12 billion to $15 billion - an amount "not large enough to
make any meaningful difference" to the future tax demands of
superannuation.
Instead, Dr Morgan said the Government should scrap the fund,
with the $12.5 billion given back to the public in the form
of KiwiSaver contributions, which would see about $3000 added
to each person's retirement fund.
He also urged Prime Minister John Key to get into line with
the United Kingdom, the United States and Australia by
raising the age of entitlement for superannuation from 65 "to
70 or thereabouts".
"The UK has theirs at 68, the US is at 67 and Australia has
just announced theirs is going to 67 over the next 14 years.
"Why do we - this highly indebted nation - remain in denial
and cling to the lie that it can be maintained at 65?"
• Gareth Morgan runs the Gareth Morgan KiwiSaver Scheme. His
analysis of the Super Fund can be read on the ODT's
Opinion page tomorrow.
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