Retirement age needs to be dealt with
The retirement entitlement has come up again with 88 percent of respondents to the Herald’s Mood of the Boardroom survey saying the retirement age should be raised.
Unfortunately when the response was put to Bill English he reaffirmed that the Government would not change the age. The argument was essentially because John Key said we wouldn’t – not the best economic justification.
This chart from Treasury’s Briefing to the Incoming Minister after the last election shows how demographic changes will impact our ability to pay superannuation entitlements over the next 50 years.
I recently attended a lecture from Don Brash where he presented figures showing that our government debt is set to blow out by 2050 if current spending commitments are maintained.
His comments are worth a look:
http://www.realeconomy.co.nz/files/WHAT%20IF%20RECENT%20ECONOMIC%20TREND%20WERE%20TO%20CONTINUE.pdf
The superannuation commitments are the largest part of these rising debt levels.
There are a number of approaches to this problem:
1. Lifting the age of entitlement and indexing the age to life expectancy.
2. A higher pension is paid if the retiree works past the entitlement age, as proposed by Peter Dunne.
Restoring growth to the economy is going to require some fundamental changes in economic policy settings.
Creating sacred cows is not a way to get real change happening.
