Superannuation in Danger of Extinction
auckland-university
Mon Oct 20 2008 13:00:00 GMT+1300 (New Zealand Daylight Time)
Superannuation in Danger of Extinction
Monday, 20 October 2008, 3:27 pm
Press Release: Auckland University
Superannuation in Danger of Extinction
Private Workplace Superannuation in Danger of Extinction, says Retirement Policy Expert
Private superannuation schemes catering for 290,000 current and retired New Zealand workers with $14.2 billion in assets could soon be extinct as employers start regretting the effort they've put into their workforce's retirement plans.
Leading retirement policy expert Michael Littlewood, co-director of The University of Auckland's Retirement Policy and Research Centre, warns that recent research already shows 75% of large employers operating private superannuation schemes would, in retrospect, not start one again...and that sentiment seems to be increasing.
"It's a real shame, but employers seem to be getting disconnected on the subject," Mr Littlewood says.
"If these results are any reflection of what the future holds, I'm afraid there's a real risk that employers will be turned off altogether. Confidence will be undermined and infrastructure supporting workplace superannuation outside KiwiSaver will disappear.
"If this happens, it could take a minimum of five to ten years before enthusiasm returns, given that a stable economic environment eventually prevails. That is unlikely at the moment, and we could see a completely new superannuation scene in the future – one that may not cater for retirement savers like those currently in existence do now."
Mr Littlewood says employers are starting to tire of the undue clumsiness of KiwiSaver, and the constant changes taking place. He fears that further changes to KiwiSaver under a new or revised government might cause "terrible harm" to employers' confidence in workplace superannuation.
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Political parties should de-politicise superannuation, Mr Littlewood says, as "electoral huckstering" makes for an unfortunate and detrimental slant to a crucial issue.
"Superannuation is one of New Zealand's most important pieces of social and fiscal policy, and in this current climate of uncertainty, the issue has to be considered out of the political limelight in an apolitical and rational way," he says.
"It should not be subjected to electoral huckstering from political parties in any circumstance, and I am fearful for the future if this behaviour continues."
Mr Littlewood says superannuation is peculiarly ill-suited to the kind of politicised treatment it is currently attracting, and New Zealand should have learnt from the "superannuation mess of the 1975-1993 period" in preventing the subject being haggled over to score political points.
"This issue is of vital importance to our country's future, and should be afforded the proper respect it deserves."
Reaction to both Labour's and National's plans for KiwiSaver is confusing, Mr Littlewood says, with National - a 'conservative' political party - proposing to make the overall tax/KiwiSaver system more progressive while the current 'socialist' government wants to keep it more regressive.
"In other words, National wants to help poorer taxpayers who can't afford to join KiwiSaver, and the current government wants to give more to the rich," he says.
"This seems an odd state of affairs. To see trade unions also arguing both for a more regressive overall tax system and a remuneration structure that will eventually benefit richer employees at the expense, in part, of their poorer workmates is another curious sight."
Mr Littlewood fears further changes to KiwiSaver after the election might cause "terrible harm" to employers' confidence in workplace superannuation.
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