New Zealand Association of Gerontology Conference How Much Ageing Can We Afford? 15 th November 2007 University of Waikato Susan St John Retirement Policy and Research Centre
is this a tric k que stion? � What is ageing? � Can individuals afford it? � Can the nation afford it? � What better questions can we ask? � Do our policies prepare us as well as they could? 2 A presentation from the Retirement Policy & Research Centre
Conte xt: T he ba by boom re tire me nt- from 2010- 2050 Coming re a dy or not. Stats NZ 2007 3 A presentation from the Retirement Policy & Research Centre
4 A presentation from the Retirement Policy & Research Centre How ma ny ove r 65?
5 A presentation from the Retirement Policy & Research Centre Me dia n Ag e
6 A presentation from the Retirement Policy & Research Centre De pe nde nc y ra tios
7 A presentation from the Retirement Policy & Research Centre Ba ssine ts a nd c offins
Is the housing stock appropriate 8 How ma ny 65+ more live a lone ? A presentation from the Retirement Policy & Research Centre
9 he re a re more ‘old’ old A presentation from the Retirement Policy & Research Centre T
L ife e xpe c ta nc y g a ins in la st five ye a rs a re most a t olde r a g e s 1995/ 7 to 2000/ 2 1.4 years females 1.7 years male 10 A presentation from the Retirement Policy & Research Centre Stats NZ
11 Stats NZ xpe c ta nc y a t a g e 65- g a p c lose s A presentation from the Retirement Policy & Research Centre ife E L
85+ How low doe s morta lity g o? 12 A presentation from the Retirement Policy & Research Centre
13 Dyson 2002 A presentation from the Retirement Policy & Research Centre He a lth e xpe nditure
Re side ntia l c a re 2006 MSD 2007 14 A presentation from the Retirement Policy & Research Centre
Good ne ws for wome n: more me n a t 85 15 A presentation from the Retirement Policy & Research Centre
T he simple e c onomic s of a g e ing Useful Output from each 5 of working age 2050 2010 1 retired for 5 workers 2 retired for 5 workers 16 A presentation from the Retirement Policy & Research Centre
Will the pie a c tua lly g row? Useful Output from each 5 of working age 2050 2010 1 retired for 5 workers 2 retired for 5 workers 17 A presentation from the Retirement Policy & Research Centre
Will working into old a g e sa ve the da y? Census data 18 A presentation from the Retirement Policy & Research Centre
Wha t a bout our polic ie s? � Dearth of holistic planning for ageing � Retirement incomes policies facilitate a division of the pie � Should retirement incomes policies also make the pie grow? � May be too big an ask 19 A presentation from the Retirement Policy & Research Centre
Dividing the pie We mig ht e xpe c t polic ie s should � Prevent old age poverty � Allow participation and belonging � Facilitate income smoothing � Be fair as between • Workers and retired • Men and women � Not add to growing wealth and income disparity � Be as simple and transparent as possible 20 A presentation from the Retirement Policy & Research Centre
21 MSD 2007 Ha ve polic ie s pre ve nte d pove rty ? A presentation from the Retirement Policy & Research Centre
NZ Supe r a suc c e ss story Living standards by age- 2004 (MSD 2006) 22 A presentation from the Retirement Policy & Research Centre
Do our policies a llow pa rtic ipa tion a nd be long ing � More than poverty prevention � Not good at facilitating income smoothing for middle income retirees • Draw down risks • Home equity release? • Few private pensions Enter 23 A presentation from the Retirement Policy & Research Centre
Are polic ie s fa ir? � NZS : Flat rate same for everyone � No paid contributions needed � Good for women � Taxable � Same age for men and women � No hidden tax incentives • Pro rich • Pro male • costly � NZS equaliser of incomes 24 A presentation from the Retirement Policy & Research Centre
T he simple st a nd most c ost e ffe c tive re tire me nt sc he me in the world? � Public provision � New Zealand Superannuation • New Zealand Superannuation Fund � Private provision � Voluntary unsubsidised • Saving for retirement taxed like saving in a bank 25 A presentation from the Retirement Policy & Research Centre
Ne w Ze a la nd Supe r a nnua tion � 1974 Compulsory scheme � 1976 Universal National Super � 80% average wage couple at age 60 � 1980s surcharge � 1991 Budget attack then reprieve � 1993 Accord � 1997 Compulsion rejected � 2000 Universal 65 at 65 26 A presentation from the Retirement Policy & Research Centre
NZS Afforda ble , fa ir a nd e ffe c tive http://www.retirement.org.nz 27 A presentation from the Retirement Policy & Research Centre
How do we c ompa re � UK system � Tortuously complex � Tax breaks for the rich � Means tested top ups to low level basic pension � Women poorly treated � Australian system � Compulsory private saving � Women far less than men � Means tested old age pension 28 A presentation from the Retirement Policy & Research Centre
F or twe nty ye a rs OE CD wa xe s lyric a l The level playing field “After the radical reforms undertaken in the 1980s, the NZ tax system has long been regarded as one of the most efficient within the OECD.” OECD 2007 29 A presentation from the Retirement Policy & Research Centre
F lie s in the ointme nt? Housing ta x a dva nta g e d • no capital gains tax • no imputed rental tax • traders scot-free Roger did not get the full package 30 A presentation from the Retirement Policy & Research Centre
Wha t ha ve re vie ws sa id? Hard won consensus � Brash Committee 1988 � Task Force 1992 � Accord 1993 � Periodic Report Group 1997 � Super Taskforce 2000 � McLeod Review 2001 � Periodic Report Group 2003 � Retirement Commission Review 2007? 31 A presentation from the Retirement Policy & Research Centre
T he T a x Re vie w 2001 No tax incentives justified, but fix housing “There is little evidence that changes to the tax system will induce higher saving other than by redistributing from those who are less likely to save( typically poorer households) to those who are more likely to save ( typically wealthier households)” McLeod Review 2001 32 A presentation from the Retirement Policy & Research Centre
Wha t did T re a sury ha ve to sa y? Saving Incentives Paper 2002 - Rich will gain most- effect on saving negligible Annua l Ho use ho ld F ina nc ia l Sa ving by Inc o me De c ile - 1997- 98 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1 2 3 4 5 6 7 8 9 10 - $1,000 - $2,000 33 A presentation from the Retirement Policy & Research Centre
L a bour a g re e d � December Economic and Fiscal Update 2002 “The government is not considering upfront tax incentives. These are likely to have to be very large - with fiscal costs running to many hundreds of millions of dollars a year - before they have any desirable effect on overall savings. Their abolition in the mid-1980s represented sensible tax policy on both equity and efficiency grounds.” 34 A presentation from the Retirement Policy & Research Centre
E nte r KiwiSa ve r - 2005 Budg e t � Portable � Extends workplace saving options � $1,000 “sweetener” � Lump sum � Progressive � Limited � Cabinet papers 2006 � Don’t go there with anything else! � The slippery slide begins as advice ignored 35 A presentation from the Retirement Policy & Research Centre
2007 … KiwiSa ve r is be ing e nha nc e d $20 per week per employee $20 per week 4% (phased in) 4% or 8% Cullen, May 2007 36 A presentation from the Retirement Policy & Research Centre
NZ T re a sury Re port 2 Ma y 2007 “ le a st re g re ts a pproa c h” Positive action now justified (1+ Billion pa) BUT … fiscal strains .. are likely to appear in the long term as the New Zealand population ages. If trends do not change, these strains could mean that programmes like NZS may have to become less generous in the future (New Zealand Treasury, 2007). 37 A presentation from the Retirement Policy & Research Centre
Whe re to ne xt? � Pressure for tax break extensions � Problems with wage negotiations � Breakdown in political consensus � Loss of simplicity � Two tier retirement 38 A presentation from the Retirement Policy & Research Centre
Down the Austra lia n pa th we g o “If compulsion was to be introduced we would have to think about income testing New Zealand Super. That was just an awful phase in New Zealand's history." Michael Cullen (NZH, Nov 9 th , 2007) “KiwiSaver is likely to become compulsory if the sign-up rate so far is anything to go by,” Peter Dunne (NZH Oct 27 th 2007) 39 A presentation from the Retirement Policy & Research Centre
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