18 Jul 2017

Labour pledges to boost Superannuation Fund

6:10 pm on 18 July 2017

The Labour Party has put solid figures on its plan to resume payments to the Superannuation Fund, pledging to immediately invest half a billion dollars if elected to power.

Andrew Lititle speaking at Waitangi, 5 February 2017.

Andrew Little said Labour would immediately invest $500m into the Superannuation Fund. Photo: RNZ / Claire Eastham-Farrelly

In 2009 the National-led government ceased payments to the Fund, which was set up to help pay for the growing numbers of retirees over coming decades.

It does not intend to resume contributions until 2020.

Labour has long said restarting payments would be one of its first priorities if it is elected to government.

In its first year, it would invest $500 million into the Fund, raising it steadily each year to $2.5 billion in 2021/22 financial year.

Labour finance spokesperson Grant Robertson said if payments had continued over the past eight years, at nearly $53b, instead of its current worth of $33b.

"We cannot afford if we want to keep paying Super out to people in a sustainable way, to not be contributing to the Super Fund.

"We can't lump on to future generations the full cost of Super, we need to spread it out."

Mr Robertson said National made the right decision to suspend contributions as New Zealand recovered from the Global Financial Crisis, but the government should have restarted the payments by now.

"Back then National said when once they got into surplus they would restart contributions. They then changed their position to be tagged to an arbitrary debt-ratio. We don't believe that's correct.

Caucus run 21/07/15

Labour finance spokesperson Grant Robertson. Photo: RNZ / Alexander Robertson

"We can see from the past performance of the fund that New Zealanders would be significantly better off had we been making contributions."

New Zealand First said it would go a step further than Labour.

Leader Winston Peters said his party would put an initial $2b into the Fund as soon as it was in a position to do so, and that would be increased each year as a percentage of GDP.

"So as that changes then the contribution would be bigger as well... I assume that the figure would be more in 2024 than it is now in 2017.

New Zealand First Winston Peters 21 June 2017

NZ First leader Winston Peters has said his party would put $2b into the Fund. Photo: VNP / Daniela Maoate-Cox

"The figure we believe it would be right now is about $2 billion which puts totally to bed the National Party's claim of having a surplus."

He said since the National Party "attacked" the Fund in 2009, New Zealand First had opposed the failure to make contributions.

"The contributions should never have been stopped and we'll resume them immediately."

Having contributions suspended for eight years would make it harder to fund the retiring baby boomers, said Mr Peters.

"But then again if we can double our GDP over the next 33 years and increase our productivity then the level of affordability remains the same."

Mr Peters said New Zealand could also make superannuation more affordable by restricting the number of new migrants, and their ability to claim super after being here for a relatively short time.

National knocks Labour's Super plans

Finance Minister Steven Joyce said National had focused on steering the economy through the 2008 financial crisis and the Christchurch and Kaikōura earthquakes.

He wasn't convinced either party's Super Fund plan was affordable.

"They have to say what else they won't be doing because at the moment all the money we've got in surpluses is committed to infrastructure in a growing country.

"Whether it's Labour or New Zealand First or anyone else that says they would rather put money in the Super Fund, are they saying they either they're going to do less of something else, or are they going to borrow more money?" Mr Joyce said.

The Labour Party said it would be able to pay for the Super Fund contributions and will lay out how it plans to do that tomorrow in its alternative budget.

Labour would also keep the retirement age at 65.

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