KEY POINTS:
It was not so long ago that one of the greatest anxieties underlying New Zealand politics was how to fund the retirement of the Baby-Boomer generation. It was generally accepted that the country was borrowing and spending too much and not saving enough.
How times have changed. Now,
some are beginning to argue, the pendulum may have swung too far in the other direction. With three methods of funding old age - national superannuation, the Cullen fund and KiwiSaver - the question is whether this is too much of a good thing and whether other needs are being sacrificed unnecessarily on the alter of retirement planning.
National Party finance spokesman Bill English was the first to make this point. He argued that New Zealand's provisions for retirement were now very high by world standards and he questioned how this lined up with other present and pressing government commitments such as health and education.
A Weekend Herald report suggested that, when other countries' second-tier superannuation schemes were taken into account, New Zealand did not rate as high on the OECD tables as Mr English suggested. Nevertheless, his concern for balancing present and future needs is valid and backed up by Michael Littlewood, co-director of the Retirement Policy and Research Centre at the University of Auckland, who argues that KiwiSaver in its present form is unsustainable.
He says that it would give average wage earners higher incomes in retirement than they earned at work and could force a future government to means-test national superannuation, as happens in Australia.
These are not trifling criticisms. There should always be a balance between the pressing demands of the here-and-now and what will be needed in the future. Moreover, the great political challenge is not just how that balance should be struck but how to achieve consensus for these long-term policies.
Unfortunately, since the Muldoon government unpicked a national superannuation fund in the 1970s, striking the right balance and achieving consensus have been among the most elusive goals in New Zealand politics.
It is fair to say that with KiwiSaver we have the best chance yet to lock in a superannuation policy to last a generation or more. Not only is it a highly attractive workplace savings scheme with tax incentives for employers as well as employees, it should also help to persuade people that investing in property is not the only way to prepare for retirement.
It therefore seems likely that, in the public mind at least, the superannuation question has at last been put to rest and any suggestions to change the way the present system works would need to take public reaction into account.
For instance, any move to impose a means test on New Zealand superannuation - as Mr Littlewood predicts - would certainly meet furious opposition from people who have been paying taxes for years on the understanding that it would be there for them, regardless of what other arrangements they had made.
The National Party was obviously alert to the potential political pitfalls of further alterations when it quickly clarified that it had no intention of changing New Zealand superannuation or the Cullen fund, while leaving open the question of what it might do with the extended KiwiSaver scheme announced in the Budget.
Yet this is not to say that retirement policy should be put beyond question.
Policy makers will need to be vigilant to ensure a balance is maintained between present and future needs as well as between savings and necessary spending, and also the political balance between the expectations of the people and what is possible.
