Big Questions of 2013 Retirement Income Policy - PowerPoint PPT Presentation

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Big Questions of 2013 Retirement Income Policy

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  1. Big Questions of 2013Retirement Income Policy Dr Malcolm Menzies Research Manager Commission for Financial Literacy and Retirement Income

  2. Think about it • If we’re lucky, we get old • No-one wants to spend their youth in preparing for old age but • We have to keep our future selves in mind (not to mention other generations) • Old age is better with income

  3. Key features of current system of retirement income • Very simple! • No age of retirement • One tier: NZS (though KiwiSaver is a de facto extra tier) • Universal entitlement at 65 (subject to residency) • Paid from taxation • Indexed to wages • KiwiSaver (who’s a member?) • You take your chances with KiwiSaver

  4. Six pillars • NZS • KiwiSaver • Private savings • Home ownership • Employment • Other public services, especially health • Plus family/community support

  5. Strengths of the current system 1. Income support • NZS provides “no frills” income support for 60% of older (66+) New Zealanders • Fair to women 2. Wellbeing • Low levels of poverty among older New Zealanders (dependent on home ownership and complementary services) 3. Longevity risk pooling • New Zealand Superannuation covers this off

  6. Questions for the current system 4. Lifetime consumption smoothing • Increasing expectations of the baby boomers and beyond 5. Voluntary vs compulsory savings • Increasing need for private top-up to meet expectations • Growth in KiwiSaver. What to do with balances? 6. Citizenship dividend • Determined by values • What is fair?

  7. Key issues 7. Fiscal restraint and investment • The fiscal gap • Increases in longevity (where will they stop?) 8. Cohort self-funding • Trend towards transfer of burden and risk • SAYGO vs PAYGO • Transition • Political sustainability

  8. How do we make sure things are fair across generations?

  9. 2013 Review Process • www.cflri.org.nz • Position papers on each of the eight objectives plus one on “sustainability” • Background papers on website from now, by 8 March • Focus groups • Workshop • Written submissions • Response form • Analysis, writing • Report by 30 September