Retirement - Cullen eyes 'surplus' to foot super bill

By Arnold Pickmere

In New Zealand, Finance Minister Michael Cullen wants a special fund to help pay our mounting superannuation bill.

The money would come from tax revenue - Dr Cullen prefers the word surplus - over the next 30 years and go into a fund likely to be run as a Crown entity.

If the scheme gets the nod (the Alliance and the Greens have yet to agree), it would start in April 2001 and have $3 billion invested by 2003-04.

After that it would need about $1.5 billion a year, flowing in for about 30 years, before the Government could move to net payouts.

Expectations are that after 25 years it could contain $75 billion.

How this nest egg is invested could be a crucial part of the whole idea.

The Crown entity would seem likely to invest billions in local, and possibly overseas, assets.

Dr Cullen wants the fund protected from "raiding" by future governments, possibly through entrenching it in law through a referendum.

The rising cost of superannuation comes from having more older people. Estimates suggest that while about 10 per cent (over 400,000) of the population was aged 65 and over last year, that figure will approach almost 30 per cent (or almost 1.2 million) by 2059.

Super 2000 Taskforce chairwoman Angela Foulkes puts it another way. Right now we have about 17 people aged between 16 and 64 for every three on the super over 65. By 2050 there will be only seven in the working age group for every three over 65.