Peters revives compulsory super scheme

New Zealand First relaunched its compulsory superannuation scheme yesterday, with leader Winston Peters saying he would "draw a line in the sand" over the policy in any coalition talks after the election.

It is not clear whether that means that the compulsory, state-guaranteed scheme would be a bottom-line condition of NZ First's agreeing to enter coalition talks, but Mr Peters has already voiced his intention to drive a hard line in any coalition negotiations.

NZ First, despite its low poll ratings, could hold the balance of power between National and Labour after the November 27 election if neither of the main parties can get a majority with the Alliance and Act.

The revival of the NZ First scheme follows the resounding public rejection of compulsory super in a 1997 refer-endum.

The referendum, which centred on a different scheme to the NZ First proposal, was promoted by Mr Peters, the then Prime Minister, Jim Bolger, and others including Act, after NZ First secured it as part of the party's coalition deal with National.

The present Prime Minister, Jenny Shipley, led the opposition to the scheme, which was rejected in the final count by 92 per cent of voters.

But Mr Peters, whose party's success has previously been drawn substantially from the superannuitant vote, said yesterday that the referendum had not voted the problem of super away.

"Our savings crisis can no longer be ignored," he said in a speech to Auckland Grey Power supporters.

New Zealand's national debt and imbalance of payments would not be overcome until the country accepted that national savings were critical to its future economic development.

The NZ First scheme would create a dedicated fund starting at 3 per cent of income and progressively moving to 8 per cent, with simultaneous tax reductions of the same amount so people did not pay extra.

Mr Peters said that would maintain pensions at the rate of 70 per cent of the average national wage. But as an interim measure until the full scheme was phased in, pensions would move from the current 60 per cent of the average weekly wage to 67.5 per cent.

An independent statutory agency called the New Zealand superannuation authority would administer the fund, which would be in the name of each contributor "and therefore free from political tampering," Mr Peters said.

He said the money in the scheme would be invested solely in New Zealand to create more exports, more growth and more jobs.

Under the referendum compulsory scheme, people earning over $5000 a year would have had to put a portion of their income into a private fund which they would have been able to use at the age of 65 to buy a pension "roughly equivalent" to current pension entitlements.

A taxpayer-funded top-up would have been available for those who did not reach the $120,000 savings target. - NZPA