Budget 09: NZ Super rates remain the same, despite slashing fund contributions

Paula Bennett. Photo / Supplied

Despite slashing contributions to the New Zealand Superannuation Fund the Government has said it will not cut payments to superannuitants.

Superannuation rates will remain at 66 per cent of the average after tax wage, costing the Government $1.3 million in the next financial year and $17.3m in the following two.

Payments would have fallen to 65 per cent of the average if the Government had not awarded the extra funding, Social Development Minister Paula Bennett said.

"We know that the downturn is hitting older people on fixed incomes especially hard.

"Many have lost savings with the collapse of finance companies and those relying on income from savings have suffered from falling interest rates," she said.

The Government has reprioritised $428m from existing planned spending, although due to increased demand for core service much of it has been has been redistributed in the social development sector.

The $428m came from reduced staff levels, increased productivity and efficiency ($354m) and ending the enterprising communities subsidies ($32.3m).

The Community Response Fund ($40m) and Fresh Start programme for young offenders ($81.5m), both previously announced, were two benefactors of the change.

A number of key services, including the accommodation assistance (up $85m), domestic purposes benefit ($21.5m), employment related training assistance ($4.6m), hardship assistance ($61.9m), independent youth benefit ($2.3m) and the sickness benefit ($45.1m), faced increased demand because of the economic downturn.

Funding to these services was increased because of the "greater than expected number of recipients", the budget said.

"I'm pleased to say that despite these challenges, this budget backs the Government's commitment to social services that work," Ms Bennett said.

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- NZPA