Speaker: Doing the right thing on retirement
241 Responses
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Sacha, in reply to
Future creative industries will depend on a knowledge base beyond what we currently call science. I'd like to see a more transparent and rational system for allocating public investment now for future prosperity.
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I don't really believe in pre-funding. If 25% of the population are going to be retired, the other 75% will have to produce the goods and services they consume.
A big pile of money doesn't change that. Sure, in theory some things can be imported, and others can switch from working in export industries to service industries, but is that really going to be sustainable? What's more likely is that inflation will balance things out by wiping out the reserves and leaving us back at square one.
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Sacha, in reply to
NOT innovation, NOT tech transfer
but NZ's current indequate performance in those areas is wasting much of our good basic research.
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Sacha, in reply to
If 25% of the population are going to be retired
the flawed assumption in all this is that people's contribution drops to zero.
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Wait – what? You get given a pension automatically when you turn 65 – whether or not you’re still working? I did not know that. How odd.
I’ve been working on the assumption that there won’t be any money in the pot to pay for my pension by the time I retire (assuming I ever do retire!) so I need to be self-sufficient – which means saving money now in order to keep myself in the manner to which I’ve become accustomed later on. I’m very lucky that I can afford to do that – and I think I owe it to the community to pay my way independently if I can – whether or not I’ve “earned” a pension.
Having said that, I’ve got no plans to retire anyway – I love my job and I love working so I think I’ll probably just keep on going as long as I possibly can. And if I am lucky enough to be still working whenever the retirement age happens to be, I won’t be drawing a pension – because I won’t need it.
Personally I’m with Richard Aston on the means-testing thing. I think those of us who can afford to keep ourselves afloat without requiring state help might like to consider doing just that. If there’s not going to be enough money around to help everyone anyway, I’ll be more than happy to put my bit (my pension) back into the communal pot so that it can be given to someone who needs it more than me. It’s good kharma.
It requires a mind-shift away from “I earned it so I’m taking it” to “someone else needs it more than me so they should have it”, but if you look at it from a community-based perspective, IMO it’s the right and proper thing to do.
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Bart Janssen, in reply to
I think Labour’s plank could very well be transformative.
One of the problems I've heard mentioned about that massive pool of money is that there aren't a huge number of places to invest the money in New Zealand and still get a decent return. The managers will be obliged to invest in other countries in order to get the returns expected.
There is a myth that we have lots of great innovative companies in NZ that would succeed if only they had investment money. Starvation of our R&D sector over the last 20 years has dried up most of the sources of such innovation. If you look around the world those small startups are usually clustered around good research communities, discoveries get spun out into small companies, most of which fail, but some succeed.
We do have innovative talented people in NZ but not as many as we need. While some of those kinds of people work their way up from the shop floor, in most places around the world those people come from universities and govt institutes.
Sorry drifting off topic and I better go pollenate my petunias.
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Sacha, in reply to
If you look around the world those small startups are usually clustered around good research communities
True
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Carol Stewart, in reply to
I better go pollenate my petunias
Is that a euphemism? ;-)
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I better go pollenate my petunias.
Is that legal?
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Bart Janssen, in reply to
but NZ’s current indequate performance in those areas is wasting much of our good basic research.
That's a myth Sasha. Around the world most basic research that gets spun out to develop into a product fails. Of 100 ideas maybe 10 will survive 5 years and only 1 might produce a profit ever. Experience around the world has shown that picking the 1 from the 100 is nearly impossible, you just have to try them all.
The myth in NZ is that we have lots of good ideas we just need to develop them better. It just isn't true. We do have good ideas but nowhere near enough.
The other part of the myth is that somehow we in NZ can take 20 ideas and produce 10 productive businesses. We will do this by being smarter and better in our innovation. Of course that ignores the fact that everyone else in the world says the same thing. It's a kind of arrogance.
But you don't need to believe my words because that is exactly the funding and innovation model that we have been using in NZ for the last 20 years. Almost all our money going into developing the vast pool of great ideas we have hiding in the lab already. And we don't need to generate any new ideas.
It has failed. I'd strongly argue that continuing to do something that has failed for the last 20 years is stupid.
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Bart Janssen, in reply to
Is that a euphemism?
No that's really what I am going to do ... right now ...
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stever@cs.waikato.ac.nz, in reply to
Some +s there too.
In my area (prog and spec langs and logics in computer science...sorry!) things that really make a huge difference take (looking at the history) 20, 30, 40 years from the original research to possible fruition. E.g, code contracts turning up in .NET, starting with work of Hoare and suchlike in the mid-sixties----and that's with 15 years or so of MicroSoft behind them, just lately!
Also, again looking at the historical record, we should expect only about 10% of the research we do (and the money we put into it) to have commercial returns (the driving determinant in NZ research bodies for the last few years).
So, trying having to quantify for FRST (or whatever replaces it) and even Marsden how much money you'll make for NZ in three years is totally pointless. In fact, it's beside the point-----it misses the point.....etc.
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Islander, in reply to
I love what I work at, and intend to continue with it for all the time I am capable of
writing BUT – it actually doesnt make enough for me to live on* (and I have a modest lifestyle.)
I look forward to being a beneficiary with considerable anticipation, for it will the first time I will’ve had a regular definite income for over 34 years – and I am very happy to pay tax on whatever additional income I generate from writing…* So, how do I live?By extending my mortgage & utilising my overdraft & creditcard to the meximum. All to be paid off some time soonish, when I sell my home.Thank you for asking.
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Sofie Bribiesca, in reply to
No that’s really what I am going to do … right now …
Yeah and my man was off to work at oh 10.am this morning. Now he's making plans for the Britomart Country Club. :)
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Richard Aston, in reply to
The problem lies in that there has been such a demographic bulge such that there are simply far more baby boomers than there are of other generations. Because of this, over 65s are projected to go from 12% of the population now to over 25% in a few decades, and the ratio of workers:retirees is going to plummet from about 4:1 now to 2:1.
Yes I am aware of those projections - but they partially are based on assumptions that retired people will make no contribution to the economy ie they will be a burden. The people ratios also don't allow for income differences (between retired and working people) and therefore tax take over time . The gap between rich and poor is widening - throughout the spectrum - therefore in decades past those 4:1 were providing less tax per individual than the 2:1 today. Not a major perhaps but ..
In my father's day being over 65 meant you were pretty well useless , burnt out or just buggered. My generation will be capable of earning and paying tax well past 65. Just not perhaps with the same mortgage driven frenzy we did in middle age.
Not denying the problem but I reckon the picture is more complex. -
Sacha, in reply to
And we don't need to generate any new ideas.
You're misrepresenting the investment in new research even though we both agree it's nowhere near enough. As for the other stuff, you're free to believe whatever you want to.
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Sofie Bribiesca, in reply to
(and I have a modest lifestyle.
And how sweet that can be. The juggling of the monies can provide wisdom and skills that so many with so much have yet to learn and these people may be well into their 70's. I guess if we get in life what we came for ,our job is done. I believe in giving, not taking away, and a pension is a grand idea so let's make it last.
As the lyrics go
"Poli Poli Poli Politician Can u make a right decision. For all of us?"
Kora -
Those people over 60 (over 55 really) who are stating that they've paid taxes under a social contract that would repay that universally at retirement are probably quite correct but, with due respect, a red herring to this argument. We are talking about the retirement policies for the boomers currently in their 40s/early 50s here and they have NOT paid that level of taxation sorry. They've operated under an increasingly low tax environment post Rogernomics and therefore are on very thin ground if they now claim they're owed something back - unfortunately even for those who didn't want those policies.
A model that defers a liability against current revenue for an entire generation may have made sense under previous economic policies and demographic changes but not under what we face now. -
BenWilson, in reply to
One of the problems I've heard mentioned about that massive pool of money is that there aren't a huge number of places to invest the money in New Zealand and still get a decent return.
There's plenty of traditional business. Much though I agree that science is a driver of change, it's not what people are mostly doing, nor could they. Most people do far more prosaic things, because other people want those things. Like serving coffee, or milking cows, or working sheet metal, or teaching kids, or selling advertising, etc etc. Some of those funnel into businesses listed on the stock exchange, and more local capital would be highly stimulatory.
I tend to agree that small sized companies invested in large numbers does tend to pay off more. But I also think more money invested in NZ into businesses has to make it easier for the small cap stocks to find their way to capital. That includes science/tech startups.
There should always be base funding straight from tax for scientific education and research.
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Sacha, in reply to
They've operated under an increasingly low tax environment post Rogernomics
Someone pointed out on Twitter that the top tax rate alongside Muldoon's non-means-tested super scheme was 66%. Funnily enough the 1984 government halved the tax but not the retirement package.
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steve black, in reply to
But what about a finer tuning of super – asset testing, income testing or even basic needs testing…
I know many people who are asset rich, have incomes ( investments) and consider getting super a nice little bonus. Surely that just does not make any sense.
…don’t tell me its too complicated to test eligibility, the IRD are masters at in in other domains.
It usually doesn’t make sent to people that Don Brash and John Banks (to pick two random examples) get National Super when clearly they don’t need it. But I’ve been told that the abhorrence of means testing, asset testing, and income testing come from odious use of these things in the last century by Government Departments like Social Welfare. I didn’t come here until early 1975 so I only know what I’ve heard. But I was just in time to watch Muldoon scrap the mandatory super scheme and tell businesses to stop contributing. Interestingly, my legal friends tell me Muldoon was inciting criminal behaviour by employers when he told them to stop contributing before the legislation went through to cancel the scheme.
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Sacha, in reply to
NZ needs more revenue-earning export businesses.
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James Millar, in reply to
Yes I am aware of those projections – but they partially are based on assumptions that retired people will make no contribution to the economy ie they will be a burden. The people ratios also don’t allow for income differences (between retired and working people) and therefore tax take over time . The gap between rich and poor is widening – throughout the spectrum – therefore in decades past those 4:1 were providing less tax per individual than the 2:1 today. Not a major perhaps but ..
In my father’s day being over 65 meant you were pretty well useless , burnt out or just buggered. My generation will be capable of earning and paying tax well past 65. Just not perhaps with the same mortgage driven frenzy we did in middle age.
Not denying the problem but I reckon the picture is more complex.All valid points - the picture certainly is pretty complex. It's great that people reaching retirement age are generally healthier than in past generations, and that fact might slow some of the projected blowout in health costs.
The point with the ratios which I should have elaborated on is mainly a fiscal one: an automatic pension being paid to anyone aged 65+, funded by general taxation by a shrinking workforce (notwithstanding those over 65 still paying tax) is going to put immense strain on government coffers in coming decades.
I just find it duplicitous that a government claiming to be concerned about reducing the welfare bill will take great pains to implement punitive measures on solo mothers and other 'unworthy welfare recipients' whilst ignoring the elephant in the room of automatic pension entitlement - as far as John Key explicitly saying the current pension situation is sustainable and in need of no fix, while his government stands firm on the retirement age, freezes Cullen fund contributions and undermines Kiwisaver.
(FWIW I support a universal basic income and don't desire any cuts in pensions, I just fear we're walking into a huge problem if we don't stop ruling out the solutions available).
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Islander, in reply to
guess if we get in life what we came for ,our job is done. I believe in giving, not taking away, and a pension is a grand idea so let’s make it last.
There's an old Talmudic? saying -which I cannot access at the moment- that says if we have done the most good we can, while doing the least harm to Earth or any being, we can consider our life a bounty and a beauty and a success...
Reguardless of where I read it, it has resonated strongly for the past 50 years.
I especially like some of the suggestions a later commentator had made, "plant a tree, sing a new song, cause the least pain, make a new book"- -
Richard Aston, in reply to
I agree James, getting hard on solo mothers and avoiding the bigger - and voter sensitive - area of pensions is appalling behavior for a government. Those woman are bringing up a part of the next generation and on their own as well - our government should have a lot more respect for basic human dignity and the environment our children are growing up in. And more early child education (day care) is not a solution either, that's getting into Brave New World territory.
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