[pf] How to fund pensions: the NZ experience.

· Shows
  (i) how things are done under MMP, and
  (ii) one way of planning for the aging of our population.
· NZ Superannuation ~= Social Security, but supplied to _all_ over 65,
whether in the workforce earlier, a housewife, or a bum off the street.
That is, it's a human right, paid-for (eventually) from the income from a
large investment fund, built up from budget surpluses. The previous
government cut tax rates with those surpluses; tax rates have been
partially restored: the income-tax rate for the highest ~20% has been
increased.

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Date: Wed, 4 Oct 2000 13:34:24 +1300
From: Jonathan Hill <jonathan.hill@parliament.govt.nz>

GREENS' SUPPORT FOR SUPERANNUATION PLAN RELIES ON NEGOTIATIONS
  (NZPA)
Wellington, Oct 3 - The Green Party says its support for the Government's
proposals to fund future superannuation demands will depend on the outcome
of negotiations.
  Finance Minister Dr Michael Cullen believes a substantial part of
government surpluses should be put aside now to cater for the day when New
Zealand superannuation payouts will more than double, reaching an estimated
9% of gross domestic product in another 50 years.
  Details of the proposals to pre-fund future demands on superannuation
have been approved by cabinet but will not be unveiled by the Government
until next week.

  Being a minority Government, the Labour-Alliance coalition is looking for
support from the Greens to have its proposals passed by Parliament.
  Green Party co-leader Rod Donald said the Government briefed his party on
the proposals last week.
  He would not release details of the briefing but said he would be
concerned if the Government released only such details next week.
``It didn't tell us a lot.
``It answered some questions but posed many others.
``We are taking independent advice and Michael Cullen is also coming to our
caucus next Tuesday to answer some questions.''
But decisions were still some way away, he said.
``The next stage is one of negotiations and we're not negotiating yet.''
  Mr Donald said one of his party's key concerns was whether the
demographic assumptions and cost projections were robust.
  He also questioned why the Government wouldn't look at repaying its net
Crown debt of $20 billion first. [~7% of GDP - high.]
``Then if you are going to set up a fund, what is going to be your
_investment_strategy_?''
  The Greens were *very concerned* that investments were ethical and helped
rebuild the domestic economy, Mr Donald said.
``By ethical we mean we don't want the money invested in armaments
manufacturing or cigarette companies.
``While we accept some money would have to be invested overseas we are very
concerned about the loss of economic sovereignties as more and more New
Zealand companies fall into overseas ownership.'' [over 60% of the
publicly-traded companies, currently. The biggest: Telecom NZ.]

  Deputy Prime Minister Jim Anderton told Parliament today that an
independent body would make decisions about what the fund would invest in.
``They would obviously be charged with investing in the best interests of
that fund and taking all of the considerations that go with such
investments including ethical ones.
``No minister of the Crown and no politician will exercise any jurisdiction
over this fund.''
  The pre-funding proposal would increase the net worth and the size of the
Crown's balance sheet, enabling the Government to invest in infrastructure,
he said.
``The fund means that we will grow the level of assets that New Zealanders
have paid for and that the Government holds.
``The stronger balance sheet in turn means we can and should keep a higher
level of Crown debt.
``There is absolutely nothing wrong with increasing debt to build our asset
base.''

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sent on to Positive Futures by David.


(David MacClement) davd@ihug.co.nz 
http://www.emucities.com.au/member/davd/index.html
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