27 May 2005
Media Statement

Another big tick for the government’s policy approach

Finance Minister Michael Cullen today welcomed a World Bank report on pension provision saying it showed New Zealand, under this government’s leadership, was at the cutting edge in terms of superannuation policy.

The report – Old Age Income Support in the 21st Century – says both developed and developing countries are facing growing demographic and economic pressures on their pension systems and outlines a ‘multi-pillar’ framework for reform.

Dr Cullen said the Labour-led government had a strong record in ensuring security in retirement and that the initiatives it had put in place, including the KiwiSaver scheme announced in the budget, were in line with the multi-faceted approach recommended by the World Bank.

The Bank recommends a basic “social pension” supported by some form of pre-funded or “contributory system” and supplemented at the individual level by “voluntary [saving] arrangements” and at the societal level by such services as access to housing and health care.

“The government has delivered on all these fronts through the restoration of the 65 per cent wage floor for New Zealand Superannuation and through the establishment of the New Zealand Superannuation Fund to partially pre-fund the scheme’s future costs.

"We are encouraging private savings not only through KiwiSaver but also through the State Sector Retirement Savings Scheme set up last year for public sector employees. We have also strengthened investment in public services for the elderly and for other New Zealanders across successive budgets.

“And we are paying down debt and building up assets so that New Zealand is well-placed fiscally to cope with the challenges of an aging population,” Dr Cullen said.

“All of this would be at risk under National’s borrow and hope politics.

“It is saying it would maintain the New Zealand Superannuation Fund but that has to be in doubt given that it would take the country into fiscal meltdown through its $2 billion plus tax cutting programme and its reckless spending promises especially in such areas as transport, defence and justice.

“Similarly, National is saying that it will drop the $1000 upfront government contribution to people saving through a KiwiSaver account which would remove an important incentive for lower income earners,” Dr Cullen said.

EBNDS

The World Bank report can be accessed at www.worldbank.org/pensions/

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