Retirement Commissioner warns of doubling of retirees who have to rent by 2048 & many more retirees with mortgages costing over 80% of pension; She calls for better supplement access & more homes
It’s always the hardest working that get robbed young and old while a big chunk of the middle aged middlemen flog assets on a small and large scale and make their fortunes doing it. The only protection people have from them is a guaranteed and regulated Government that protects a decent income and the personal rights to our own property and equity and universal access to justice and law enforced. They’re just so used to ripping people off without consequences and against both human and legal rights such as the PRA 1976 and CS Act 1992. Which much like our gender parity legislation and many others have simply been ignored for 50 years and disadvantage people with chunks of income and time out, unpaid labour (slaves) iodine years and decades of earning time and life supporting others which has a massive value as an input into the economy, which remains uncounted. Which is why they will never get things right until the male dominated economists and others do start paying for economic inputs
There is a substack of NZ economists that Bernard mentioned recently so i signed up for a week or three. It does brief surveys of it's organization's members. 80 per cent of respondents one day were male. I promise I'm not anti-men, it is just that in a profession that is traditionally male, from the point of view of the human race (or nature), its all done on half a brain - isn't it. In a way i think this is what Kath keeps drumming home. I have to agree with her. I had a book - since passed on - called "Who Cooked Adam Smith's Dinner?" That is the point.
That’s right Wendy that’s why the system privileges and prioritises men. Most don’t even consider the needs and rights of women and children as we are still chattels who I guess historically had higher mortality rates and risks. Men are often quite shocked when they realise how bad the erasure and neglect has. been but many are still Determined to keep the control , power and their privileges and ownership to the extent they are fighting hard to keep women down and out of society and within a role to serve themselves. They really still think that’s ok and lie and abuse to maintain it. Very primitive really. Basically they’re terrified weasels who don’t want to be civilised or decent PEOPLE at all.Allies are not that way thank goodness. It’s embarrassing for everything to be so wrong I guess 😂.. so they keep digging their own hole deeper. Biblically it would be the unseen becoming seen. Exciting changing times even if it’s nearly too late for humanity and the planet. Expand the thinking to others experience is the key. And that great saying nothing about us without us.
I'd be interested for a deep dive into the accommodation supplement i.e. the extent to which it helps versus hurts (via market distortion).
This recommendation warrants a deeper analysis "finding ways to stimulate an increasing supply of affordable, healthy and accessible housing for pensioners, including smaller properties for downsizing and larger properties for multi-generational living". The build-to-rent market would seem to be a good place to start in terms of more smaller homes. The interview you did with Sam Stubbs a while back was super interesting. However, institutions and developers do not seem to be interested in building multi-generational homes, this seems to be led by individual families that have the means. I have a property that I'd love to knock down and build a big multi-generation suitable house (in an ideal location for this) but I just cannot see how I could make it work financially.
And of course unless like Maslows hierarchy of needs if people (not numbers or data) don’t get their formative and other needs met they’re not going to be productive or contributing are they? And the criminals will win by exploiting them. How low will they go , just look around at the state of crime and abuse. There is no bottom line for how low these (usually) men will go to rob others of their rights and oppress others especially women, children and the elderly even in Government by neglect of their duties of cars and family obligations (in law)
The Retirement Commissioner wants the NZ Superannuation accommodation supplement asset limit updated to $42,700 from its present $8,100, set in 1993 as 10 per cent of the average house price.
But $42,700 now would be as meaningless and arbitrary as $8,100 was in 1993.
The NZ Super rate after tax for a single person living alone is $463 a week. Weekly median rent for a one-bedroom flat in Auckland, according to the government tenancy website, is $408 a week in Manukau, $490 in Ponsonby, $535 in Onehunga. Clearly, rent alone will eat the entire pension, so the renter must consume all their savings till they are reduced to the asset-tested limit.
A retired person's savings are needed for living, and for the increasing costs of the health care that successive governments fail to make free.
Thus the NZ Super regime continues to favour home owners and discriminate against non-home-owners.
A fair and just asset limit for receiving an accommodation supplement would be the full cost of buying a lower-quartile one-bedroom apartment. That would be far more than the $42,700 the Retirement Commissioner proposes.
The weekly amount of the accommodation supplement itself should be the cost of the median rent of a one-bedroom apartment minus the weekly maintenance, insurance, rates, and running costs of owning it.
The Retirement Commissioner is right: NZ Superannuation is 'a crucial pillar of the retirement system'. In fact, it is THE crucial pillar of New Zealand's retirement system.
KiwiSaver is a delusion. It is great for those who will have secure, well-paying, full-time jobs from when they're 20 till they're 65. For others, who cannot save because they must consume every dollar they earn, that pot of gold at the end of the rainbow is but a dream.
The Government ought to stop all state contributions to people's KiwiSaver accounts: those subsidies are taking taxes from everyone including the poor and giving them as a reward to the people who can afford to save.
Instead, the Government must restore NZ Superannuation to a level that assures a dignified living to all who are retired.
Three things need to happen:
1. NZ Superannuation needs to be turned into a tax-free basic income, restored to 1978 levels of at least 50% of the average wage after tax for each recipient, about $600 a week.
2. People who don't live in a home they own need an accommodation allowance that really does cover rent, without punitively eroding their savings, as I argue above.
3. To ensure that NZ Super and the accommodation allowance go to those who need it, anyone signed up for NZ Super needs to go on a special tax regime that taxes the first $20,000 of other income at 20%, but all income above that at 45% or even 50%.
Another great change needed in state funding to help all retired people to live their last years in dignity is free health care. New Zealand needs this not only for the retired, but for everyone of any age.
Health care must become free, accessible, and timely for all, and that health care must be comprehensive, including dental care, optical care including the provision of glasses, and hearing care with free hearing aids. What use is a $1022 state subsidy for hearing aids to someone who cannot afford the remaining $6000?
Free medical care should happen now, beginning with the abolition of prescription charges and GP fees.
Jane Wrightson is spot on when she says it would be harmful to raise the retirement age from 65, contrary to the enthusiasms of her two well-paid predecessors, who were never in danger of being hurt by their own advice.
There is also a case for allowing some people to access NZ Superannuation early, before they turn 65. Some people simply wear out before they're 65: some because they had a life of hard physical toil rather than the cushy desk jobs that are the happy lot of those who make the rules, others because of plain bad luck.
So yes, there needs to be provision for people to be able to get NZ Super at an earlier age than 65.
That would need to be tempered, as I propose above, by putting people who sign up for NZ Super on a separate income-tax regime that would deter those with other income from wanting the pension, without infringing their right to it.
Re Kiwisaver: - I agree it is a delusion. In fact I regard it as a tax that isn't called a tax.
The soon-to-be Income Insurance scheme is also a tax.
And Working-For-Families is a wage subsidy for employers. Scrap WFF and watch the demands for pay rises and an increase in the minimum wage.
Free health care I'm a little unsure about. Should a hip replacement for an 85 year old be free? Just because the medical, pharmaceutical, and rest-home industries say "We can keep that person alive", should we do it? There seems to be a bit of conflict with the right-to-die legislation.
Jim Bolger tried to put a surcharge on other income for superannuitants which didn't last long. Maybe just means test Super: - If other income is greater than the median wage then no Super.
As for when you can get Super I've had this idea floating around for quite a while of 60% at 60 through to 70% at 70. Retire at 60 and you'll get Super equal to 60% of the average wage. Retire later and the percentage goes up.
My grand mother just had a shoulder replacement at 88 in Australia for free. The change in her quality of life is incredible, she’s no longer in pain and can care for my 92 year old Pop, who is starting to go blind. They both still live at home and have a much better social life than me in my 30s haha.
So yeah I think a paid for hip replacement for an 85 year old, if their recovery is expected to go well, is 100% worth it.
Also agree KiwiSaver is a delusion, it’s certainly not a solution for retirement.
1. Peter Dunne was keen on the sliding scale for Super: less if one retires early, more if one retires later. I'm dead against it.
First, it implies that Super is either a reward for having worked, so the longer one works the more one gets, or else that it is some kind of lump sum entitlement to be spread thinly from 60 till death, or thickly from 70 till death. Both are untrue. NZ Superannuation is not earned; it is simply a social welfare benefit to assure all people that when old and jobless they can live in (diminishing) dignity and not have to sit on the side of the road begging.
Second, the Dunne plan implies that the decision to retire at 60 or 70 is discretionary. But we all know that by 60, or even 50, some people have been ruined, either by the work they have done or by life itself; others are luckier in work and in life and are able to continue working enthusiastically till they are 70, or even 80. To suggest that those who must retire at 60 should be punished with a lower pension and those who work till 70 or 80 with a higher again assumes that NZ Superannuation is an entitlement for having worked. It isn't: it's a welfare benefit.
2. Muldoon's National Superannuation for a couple was 80% of the average wage (paid from age 60). It needs to be restored to that level now, but for those who need it, not for those who don't. It was the Labour Government in 1985 that introduced the surcharge to claw Super back from those with other incomes, and yes, the Bolger government increased the surcharge in the early 1990s to keep the state pension affordable.
It was the rise of NZ First, the Grey Power party, in 1996 that led to the surcharge's abolition. Till then the surcharge had been pretty successful in keeping the cost of NZ Super down.
A surcharge is better than means testing: it keeps NZ Super a universal right, and leaves it to the individual to decide whether to apply for it. NZ First's destruction of the original surcharge shows that any significant change to make NZ Superannuation better for those who need it, but worse for those who don't, will need the agreement of the main political parties.
3. Free health care. Let's not get ageist. As Hamersley suggests whether to do a hip replacement depends on the general physical and mental health of the sufferer: how much enjoyable life will be restored. Nearly every day in our newspapers we see stories about people complaining that the government (or Pharmac) won't spend huge sums of money to supply them with exotic treatment that will extend their life by six months or a year. That needs to be balanced against how many people's whole lives might be improved by spending that same money to simply make GP visits free. Free health care doesn't mean unlimited free health care, it means free ordinary, sensible health care to enable a greater number of citizens to go about their lives and contribute to society.
4. I agree that Grant Robertson's social insurance plan is unnecessary. We need to improve unemployment benefits for everyone. Those who can afford to buy unemployment insurance should buy their own. But that's another topic.
I stopped reading the recommendations at “increase the accommodation supplement”. The last few decades have proven, categorically, that the “free market” will always fail to deliver on housing needs (particularly for low income households).
When you look at why renting costs have increased faster than ownership costs the accommodation supplement is the reason.
It sets a floor under rental prices and pushes up rents for those who aren’t receiving the accomodation supplement. This pushes up the price of all housing, as the increased rents allow investors to out bid potential home owners. It doesn’t get new housing built, as until recent tax changes, investors have overwhelmingly chosen to buy existing housing stock over building.
The solution is to BUILD social housing instead of funnelling tax payer funds into the hands of investors, who only make the problem worse
You're right, of course. But as John Minto eloquently explains, this government, like its predecessors for the past nigh 40 years, has been pretty useless at fostering social housing. Until we elect a government committed to building 100,000 or more social houses for lifetime, income-moderated rent by all who want them, we're stuck with demanding accommodation supplements for private rentals.
Is there a reason I now have to have, yet another, app to listen to daily articles. Great journalism & information but just having 'listen' to choose was great.
With all our discussions re housing and more recently how the Reserve Bank stunned us, I keep thinking back to Jane Kelsey and her book "The Fire Economy". I struggled with it at the time (2015) but the basic idea seemed to stick in my head and so I plan to re-read it. It seems to me that we have maybe made no progress particularly in dealing with the rich/poor increasing gap. Even the pandemic has only furthered that. If you haven't read the book here is Jane talking about it - much more accessible. https://www.youtube.com/watch?v=MGrBCtOt4Qs&t=17s . Seven years later and covid included, are we still where we were when she wrote this? Her analysis seems right. Bernard and all of you who know much more than me, what is your opinion?
It’s always the hardest working that get robbed young and old while a big chunk of the middle aged middlemen flog assets on a small and large scale and make their fortunes doing it. The only protection people have from them is a guaranteed and regulated Government that protects a decent income and the personal rights to our own property and equity and universal access to justice and law enforced. They’re just so used to ripping people off without consequences and against both human and legal rights such as the PRA 1976 and CS Act 1992. Which much like our gender parity legislation and many others have simply been ignored for 50 years and disadvantage people with chunks of income and time out, unpaid labour (slaves) iodine years and decades of earning time and life supporting others which has a massive value as an input into the economy, which remains uncounted. Which is why they will never get things right until the male dominated economists and others do start paying for economic inputs
There is a substack of NZ economists that Bernard mentioned recently so i signed up for a week or three. It does brief surveys of it's organization's members. 80 per cent of respondents one day were male. I promise I'm not anti-men, it is just that in a profession that is traditionally male, from the point of view of the human race (or nature), its all done on half a brain - isn't it. In a way i think this is what Kath keeps drumming home. I have to agree with her. I had a book - since passed on - called "Who Cooked Adam Smith's Dinner?" That is the point.
That’s right Wendy that’s why the system privileges and prioritises men. Most don’t even consider the needs and rights of women and children as we are still chattels who I guess historically had higher mortality rates and risks. Men are often quite shocked when they realise how bad the erasure and neglect has. been but many are still Determined to keep the control , power and their privileges and ownership to the extent they are fighting hard to keep women down and out of society and within a role to serve themselves. They really still think that’s ok and lie and abuse to maintain it. Very primitive really. Basically they’re terrified weasels who don’t want to be civilised or decent PEOPLE at all.Allies are not that way thank goodness. It’s embarrassing for everything to be so wrong I guess 😂.. so they keep digging their own hole deeper. Biblically it would be the unseen becoming seen. Exciting changing times even if it’s nearly too late for humanity and the planet. Expand the thinking to others experience is the key. And that great saying nothing about us without us.
I'd be interested for a deep dive into the accommodation supplement i.e. the extent to which it helps versus hurts (via market distortion).
This recommendation warrants a deeper analysis "finding ways to stimulate an increasing supply of affordable, healthy and accessible housing for pensioners, including smaller properties for downsizing and larger properties for multi-generational living". The build-to-rent market would seem to be a good place to start in terms of more smaller homes. The interview you did with Sam Stubbs a while back was super interesting. However, institutions and developers do not seem to be interested in building multi-generational homes, this seems to be led by individual families that have the means. I have a property that I'd love to knock down and build a big multi-generation suitable house (in an ideal location for this) but I just cannot see how I could make it work financially.
And of course unless like Maslows hierarchy of needs if people (not numbers or data) don’t get their formative and other needs met they’re not going to be productive or contributing are they? And the criminals will win by exploiting them. How low will they go , just look around at the state of crime and abuse. There is no bottom line for how low these (usually) men will go to rob others of their rights and oppress others especially women, children and the elderly even in Government by neglect of their duties of cars and family obligations (in law)
The Retirement Commissioner wants the NZ Superannuation accommodation supplement asset limit updated to $42,700 from its present $8,100, set in 1993 as 10 per cent of the average house price.
But $42,700 now would be as meaningless and arbitrary as $8,100 was in 1993.
The NZ Super rate after tax for a single person living alone is $463 a week. Weekly median rent for a one-bedroom flat in Auckland, according to the government tenancy website, is $408 a week in Manukau, $490 in Ponsonby, $535 in Onehunga. Clearly, rent alone will eat the entire pension, so the renter must consume all their savings till they are reduced to the asset-tested limit.
A retired person's savings are needed for living, and for the increasing costs of the health care that successive governments fail to make free.
Thus the NZ Super regime continues to favour home owners and discriminate against non-home-owners.
A fair and just asset limit for receiving an accommodation supplement would be the full cost of buying a lower-quartile one-bedroom apartment. That would be far more than the $42,700 the Retirement Commissioner proposes.
The weekly amount of the accommodation supplement itself should be the cost of the median rent of a one-bedroom apartment minus the weekly maintenance, insurance, rates, and running costs of owning it.
The Retirement Commissioner is right: NZ Superannuation is 'a crucial pillar of the retirement system'. In fact, it is THE crucial pillar of New Zealand's retirement system.
KiwiSaver is a delusion. It is great for those who will have secure, well-paying, full-time jobs from when they're 20 till they're 65. For others, who cannot save because they must consume every dollar they earn, that pot of gold at the end of the rainbow is but a dream.
The Government ought to stop all state contributions to people's KiwiSaver accounts: those subsidies are taking taxes from everyone including the poor and giving them as a reward to the people who can afford to save.
Instead, the Government must restore NZ Superannuation to a level that assures a dignified living to all who are retired.
Three things need to happen:
1. NZ Superannuation needs to be turned into a tax-free basic income, restored to 1978 levels of at least 50% of the average wage after tax for each recipient, about $600 a week.
2. People who don't live in a home they own need an accommodation allowance that really does cover rent, without punitively eroding their savings, as I argue above.
3. To ensure that NZ Super and the accommodation allowance go to those who need it, anyone signed up for NZ Super needs to go on a special tax regime that taxes the first $20,000 of other income at 20%, but all income above that at 45% or even 50%.
Another great change needed in state funding to help all retired people to live their last years in dignity is free health care. New Zealand needs this not only for the retired, but for everyone of any age.
Health care must become free, accessible, and timely for all, and that health care must be comprehensive, including dental care, optical care including the provision of glasses, and hearing care with free hearing aids. What use is a $1022 state subsidy for hearing aids to someone who cannot afford the remaining $6000?
Free medical care should happen now, beginning with the abolition of prescription charges and GP fees.
Jane Wrightson is spot on when she says it would be harmful to raise the retirement age from 65, contrary to the enthusiasms of her two well-paid predecessors, who were never in danger of being hurt by their own advice.
There is also a case for allowing some people to access NZ Superannuation early, before they turn 65. Some people simply wear out before they're 65: some because they had a life of hard physical toil rather than the cushy desk jobs that are the happy lot of those who make the rules, others because of plain bad luck.
So yes, there needs to be provision for people to be able to get NZ Super at an earlier age than 65.
That would need to be tempered, as I propose above, by putting people who sign up for NZ Super on a separate income-tax regime that would deter those with other income from wanting the pension, without infringing their right to it.
Hi John
Re Kiwisaver: - I agree it is a delusion. In fact I regard it as a tax that isn't called a tax.
The soon-to-be Income Insurance scheme is also a tax.
And Working-For-Families is a wage subsidy for employers. Scrap WFF and watch the demands for pay rises and an increase in the minimum wage.
Free health care I'm a little unsure about. Should a hip replacement for an 85 year old be free? Just because the medical, pharmaceutical, and rest-home industries say "We can keep that person alive", should we do it? There seems to be a bit of conflict with the right-to-die legislation.
Jim Bolger tried to put a surcharge on other income for superannuitants which didn't last long. Maybe just means test Super: - If other income is greater than the median wage then no Super.
As for when you can get Super I've had this idea floating around for quite a while of 60% at 60 through to 70% at 70. Retire at 60 and you'll get Super equal to 60% of the average wage. Retire later and the percentage goes up.
My grand mother just had a shoulder replacement at 88 in Australia for free. The change in her quality of life is incredible, she’s no longer in pain and can care for my 92 year old Pop, who is starting to go blind. They both still live at home and have a much better social life than me in my 30s haha.
So yeah I think a paid for hip replacement for an 85 year old, if their recovery is expected to go well, is 100% worth it.
Also agree KiwiSaver is a delusion, it’s certainly not a solution for retirement.
Hi Steve, working backwards:
1. Peter Dunne was keen on the sliding scale for Super: less if one retires early, more if one retires later. I'm dead against it.
First, it implies that Super is either a reward for having worked, so the longer one works the more one gets, or else that it is some kind of lump sum entitlement to be spread thinly from 60 till death, or thickly from 70 till death. Both are untrue. NZ Superannuation is not earned; it is simply a social welfare benefit to assure all people that when old and jobless they can live in (diminishing) dignity and not have to sit on the side of the road begging.
Second, the Dunne plan implies that the decision to retire at 60 or 70 is discretionary. But we all know that by 60, or even 50, some people have been ruined, either by the work they have done or by life itself; others are luckier in work and in life and are able to continue working enthusiastically till they are 70, or even 80. To suggest that those who must retire at 60 should be punished with a lower pension and those who work till 70 or 80 with a higher again assumes that NZ Superannuation is an entitlement for having worked. It isn't: it's a welfare benefit.
2. Muldoon's National Superannuation for a couple was 80% of the average wage (paid from age 60). It needs to be restored to that level now, but for those who need it, not for those who don't. It was the Labour Government in 1985 that introduced the surcharge to claw Super back from those with other incomes, and yes, the Bolger government increased the surcharge in the early 1990s to keep the state pension affordable.
It was the rise of NZ First, the Grey Power party, in 1996 that led to the surcharge's abolition. Till then the surcharge had been pretty successful in keeping the cost of NZ Super down.
A surcharge is better than means testing: it keeps NZ Super a universal right, and leaves it to the individual to decide whether to apply for it. NZ First's destruction of the original surcharge shows that any significant change to make NZ Superannuation better for those who need it, but worse for those who don't, will need the agreement of the main political parties.
3. Free health care. Let's not get ageist. As Hamersley suggests whether to do a hip replacement depends on the general physical and mental health of the sufferer: how much enjoyable life will be restored. Nearly every day in our newspapers we see stories about people complaining that the government (or Pharmac) won't spend huge sums of money to supply them with exotic treatment that will extend their life by six months or a year. That needs to be balanced against how many people's whole lives might be improved by spending that same money to simply make GP visits free. Free health care doesn't mean unlimited free health care, it means free ordinary, sensible health care to enable a greater number of citizens to go about their lives and contribute to society.
4. I agree that Grant Robertson's social insurance plan is unnecessary. We need to improve unemployment benefits for everyone. Those who can afford to buy unemployment insurance should buy their own. But that's another topic.
I stopped reading the recommendations at “increase the accommodation supplement”. The last few decades have proven, categorically, that the “free market” will always fail to deliver on housing needs (particularly for low income households).
When you look at why renting costs have increased faster than ownership costs the accommodation supplement is the reason.
It sets a floor under rental prices and pushes up rents for those who aren’t receiving the accomodation supplement. This pushes up the price of all housing, as the increased rents allow investors to out bid potential home owners. It doesn’t get new housing built, as until recent tax changes, investors have overwhelmingly chosen to buy existing housing stock over building.
The solution is to BUILD social housing instead of funnelling tax payer funds into the hands of investors, who only make the problem worse
Absolutely!
You're right, of course. But as John Minto eloquently explains, this government, like its predecessors for the past nigh 40 years, has been pretty useless at fostering social housing. Until we elect a government committed to building 100,000 or more social houses for lifetime, income-moderated rent by all who want them, we're stuck with demanding accommodation supplements for private rentals.
https://thedailyblog.co.nz/2022/11/28/dont-state-house-tenants-want-to-live-in-asquith-ave-in-the-prime-ministers-electorate/
A podcast specifically on the third bullet point would be valuable.
Is there a reason I now have to have, yet another, app to listen to daily articles. Great journalism & information but just having 'listen' to choose was great.
I did not get the usual play link today, which will work in a web browser. The listen link wants the app. Is it only me?
With all our discussions re housing and more recently how the Reserve Bank stunned us, I keep thinking back to Jane Kelsey and her book "The Fire Economy". I struggled with it at the time (2015) but the basic idea seemed to stick in my head and so I plan to re-read it. It seems to me that we have maybe made no progress particularly in dealing with the rich/poor increasing gap. Even the pandemic has only furthered that. If you haven't read the book here is Jane talking about it - much more accessible. https://www.youtube.com/watch?v=MGrBCtOt4Qs&t=17s . Seven years later and covid included, are we still where we were when she wrote this? Her analysis seems right. Bernard and all of you who know much more than me, what is your opinion?
Agree bring back link