Alf can see an awful down side to Labour’s plan to raise the retirement age.
His concerns are additional to National’s position, that Labour’s retirement plan is a response to unaffordable promises, including across-the-board tax cuts, exempting fresh fruit and veges from GST, and resuming contributions to the Cullen superannuation fund which it says will leave a $16 billion hole in the books.
Labour leader Phil Goff is reported to be hoping he can outflank National on debt and the national savings debate.
Labour’s plan is two-pronged – compulsory KiwiSaver contributions, coupled with a rise in the age at which workers will become eligible for the universal pension.
Nest eggs will be swollen by a hike in employer contributions, to 7 per cent by 2022, up from 2 per cent currently. Workers will have to contribute 2 per cent. Only beneficiaries, students and the self-employed will be exempt.
Mr Goff said the package was in part a response to international ratings agencies Standard & Poor’s and Fitch downgrading New Zealand’s credit rating because of the size of the national debt. The ratings agencies fingered the failure of Kiwi households to save as the culprit.
“The rating agencies have made it clear: we owe too much,” Mr Goff said. “We don’t save enough. Our population is ageing and we are not prepared for that.”
Stuff describes Labour’s plan as high risk, inviting a backlash among the 2.4 million workers who will have to stay in the workforce longer under Labour’s plan.
Stuff explans what will happen.
Starting at 65 in 2020, the pension eligibility age would go up by two months each year, to 67 in 2033.
Nothing changes for Kiwis aged 57 or over.
But for those between 46 or 56, the move upwards does have an effect.
People aged under 46 would face the 67 age of eligibility.
The awful consequence when all this kicks in will be that Labour MPs who might have stepped down at age 65 will be with us for two more years.
Voters may well have the good sense to toss them out of their electorate seats, but the time-servers are apt to survive by getting nice positions on the party list.
You shouldn’t need any more reason to reject the idea.