COMMENT: We have more than a highly successful government retirement programme in New Zealand. Sir Robert Muldoon's National Superannuation Scheme is a world leader. NZ Superannuation, as it is now called, provides all New Zealanders with retirement income security and is vastly superior to compulsory or privatised superannuation for these reasons.
Firstly, it has eliminated poverty if not hardship in old age, something the market does not do. Secondly, it insulates all superannuitants against the risks of inflation and stock market downturns or collapses. A future resurgence of inflation can never be ruled out. And capital markets do not always work well.
Thirdly, governments can manage superannuation schemes far more effectively and efficiently the private sector. NZ Super's universality ensures everyone is covered in retirement. Privatised superannuation does not cover those outside the workforce.
Governments through large-scale computerisation are highly efficient in managing superannuation schemes. The private sector, which charges fees, cannot match the low administrative costs - typically below 1 per cent of the budget.
Fourthly, because NZ Super is administered by the Government it is highly responsive to its "clients", the thousands of New Zealanders who depend on it for retirement income. The Government's recent payment to superannuitants for winter heating costs illustrates its responsiveness. Such ameliorative public action is foreign to the market.