NZ First leader Winston Peters claims Act's policy to change superannuation would disadvantage recipients. Photo / Alex Burton
NZ First leader Winston Peters claims Act's policy to change superannuation would disadvantage recipients. Photo / Alex Burton
Winston Peters is taking aim at Act’s plans to change superannuation by claiming the party will strip billions from the scheme, leading to pensioners receiving thousands of dollars less in their Super in the coming years.
Peters alleges Act’s proposal to link superannuation increases to consumer price index (CPI) inflation as opposed to average wages will mean a single superannuitant living alone will receive about $2500 less by 2027.
The New Zealand First leader’s calculations have been reinforced by the Council of Trade Unions (CTU), which has run its own analysis on Act’s policies of changing Super and main benefits, which indicates recipients of both would be worse off.
“This will rob Grandma Pauline to pay for Millionaire Paul’s Tesla,” Peters told the Herald.
“It breaks a promise to superannuitants made nearly 23 years ago, that Super would be calculated against the net average wage.
“Ironically, the only way for superannuitants to get ahead under this proposal would be a high inflationary environment. The reality is that inflation usually lags behind wages and therefore so will national Super under this change.”
Council of Trade Unions economist Craig Renney believed people should be concerned about Act's policy. Photo / Mark Mitchell
CTU economist Craig Renney believed people should be concerned about the policy, particularly those planning for their retirement.
“If that change were to come about, they will need to save more money to have the kind of pension lifestyle that they wanted,” Renney said.
Act leader David Seymour has rubbished the claims and calculations, which he described as “pure speculation”.
“We’ve actually future-proofed our pension by linking it to inflation,” Seymour said.
“In the past, you’ve had people ending up behind because inflation has outstripped wage growth and that’s why the current Government has indexed it to inflation as well.”
However, Seymour did accept if pensioners did become worse off following his policy being adopted, it would be reversed and Super would be linked back to wages.
In March, Prime Minister Chris Hipkins announced main benefits and superannuation would be increased by 7.22 per cent in line with high levels of inflation.
In 2005, NZ First pushed to legislate that an eligible couple would receive superannuation of at least 66 per cent of average weekly earnings, which were determined by the Treasury.
Act’s alternative budget argued maintaining pensioners’ standard of living was best measured by changes in prices, not wages.
“Switching to CPI indexation will also ensure that the cost of the pension does not continue to grow inexorably as the economy grows.”
Act leader David Seymour defended the policy. Photo / Marty Melville
Act’s budget said the switch would save $1.13 billion across the period to 2026/27. The CTU’s analysis found an additional $1.36b would be saved in the 2027/28 financial year, bringing the total savings to more than $2.8b using revised inflation data.
Renney claimed there was “no great rational or economic reason” for the change.
“If you move to CPI, your income will be protected against what it was at that point in time, but all of the benefits of economic growth, of growing prosperity, of increased quality of life, you miss out on because wages rise traditionally slightly higher than inflation.
“So just to remove it straight away without any enormous consultation... seems to me to run counter to that sort of contract idea of what a pension is for and what pensioners should reasonably be able to expect in terms of their quality of life in their later years.”
Peters believed politicians targeted the “young and the old” when the country was in economic strife.
“Here we [go] again, they’re attacking those who can’t change their outcomes, they can’t change their lifestyle and they can’t change what they’re going to do in the future because they’ve spent their working life already.
“So I’m giving [politicians] all clear notice that we will be doing our utmost to oppose that and see it does not happen.”
Peters, whose party was polling around 4-5 per cent recently, has so far refused to clarify whether he would work with National and Act in government, but had ruled out going with Labour last year.
Winston Peters ruled out working with Chris Hipkins and Labour last year. Photos / Alex Burton
Asked whether the policy would be a deal-breaker for him in any potential co-operation arrangement with National, Peters wasn’t clear in his answer.
“Every pensioner in this country who understands our recent history will know there’s one party and one man who has defended them to the hilt and that’s never going to change.”
Seymour believed Peters was simply launching a political attack and had failed to consider the benefits people would receive through the party’s tax cuts and carbon tax refund.
“The only pensioner that Act is going to leave worse off is Winston Peters himself.
“They are assuming a certain level of inflation and a certain level of wage growth; in reality, even the Labour Government has had to change to Act’s approach because it actually safeguards pensioners’ incomes in times of inflation.”
However, if the switch led to pensioners receiving less through Super alongside his proposed tax cuts and refund, Seymour committed to unwinding the change and re-linking increases to average wages.
“When the facts change, you have to change your policy,” he said.
“That’s what we’d be prepared to do rather than blindly extrapolating forecasts which have almost always been wrong in recent times.”
He made clear the same would apply to the proposed changes to main benefits.
The National Party supported keeping superannuation increases tied to wages but reserved the ability to top it up against inflation, just as the Labour Government did this year, if a global shock saw inflation rise dramatically.
Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.
