O'Rourke Denis: New Zealand Superannuation and Retirement Income (Pro Rata Entitlement) Amendment Bill — First ReadingText is incorporated into the Bound VolumeO'Rourke Denis: New Zealand Superannuation and Retirement Income (Pro Rata Entitlement) Amendment Bill — First Reading[Sitting date: 16 September 2015. Volume:708;Page:6722. Text is incorporated into the Bound Volume.]DENIS O’ROURKE (NZ First): I move That the New Zealand Superannuation and Retirement Income (Pro Rata Entitlement) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. Superannuation is a matter of great concern for all New Zealanders especially those looking forward to retirement. The current pay-as-you-go scheme is entrenched in the Kiwi psyche and this bill will have no effect on the great majority of people who have resided here for all or most of their lives. It would not alter the age of eligibility from 65 years its freedom from means testing or the universal entitlement but it does seek to alter the amount of the entitlement based exclusively on residence between the ages of 20 and 65 years. It would abolish the much-reviled section 70 of the Social Security Act 1964.Superannuation must never again become a political football. New Zealand First wishes to participate in a debate to attempt to achieve consensus with other parties so that people can plan ahead for their retirement with a high degree of certainty. Many young people are already saying that they do not expect New Zealand superannuation to be around when they retire so it is high time that the debate took place. This bill is New Zealand First’s contribution to that debate and this bill is a platform upon which the debate can be had. I ask all parties to see it in that light and therefore to vote for it at least at its first reading so that the debate can then take place through the select committee process.I want to make one thing very clear. This bill is not about New Zealand First policy; it is about superannuation in the long term. It is about certainty for future retirees. It is about fiscal responsibility and mostly it is about fairness—fairness to retirees who have lived here all their lives to immigrants to returning expatriates and to present and future taxpayers. No one has all the answers to the many problems with the current system and of course its costs. So in this bill it is entirely negotiable as to whether pro rata entitlement is the best way forward and if so it is still entirely negotiable as to its detail. Every party can promote its views on the future of New Zealand superannuation if they vote for the bill to go to the select committee.A bill of this importance is not a matter just for political parties. There are over 70000 people affected by the hated section 70 of the Social Security Act 1964. There are academics who have been pressing for change for many years. The Retirement Commissioner has long been seeking to have the issues debated and there are many others asking for a chance to be heard at the select committee.I turn to the bill itself. The pro rata system is not complex. It is already used by the Government to calculate the amount of New Zealand superannuation for a recipient who goes overseas to live. They get New Zealand superannuation pro rata for their period of residence in New Zealand. So pro rata is already in the Government system. New Zealand superannuation does need change not because there is anything wrong with eligibility at age 65 years not because there is any problem with universality and not because there is anything wrong with having no means testing but because of three major factors that are priming a time bomb for the future.The first one is high levels of net migration. This bill is not about discouraging that—it is not about discouraging that—but it is a big factor in the cost of future superannuation. In the last 15 years there were 79000 immigrants over 50 years of age. These people qualify for New Zealand superannuation after only 10 years’ residence—the same as people who have lived in New Zealand all their lives. This is by far the most generous pension system for immigrants anywhere on earth. This is neither necessary nor fair considering that a person who reaches the age of 65 then has a life expectancy of 20 years representing $450000 in superannuation payments per person.Another factor is the distinct possibility of a tsunami of returning expatriates coming home to retire—and they are welcome home but on fair terms for superannuation. A person can leave New Zealand at age 25 work overseas for say 35 years return at 60 and retire on 100 percent New Zealand superannuation at age 65 probably after having paid taxes to an overseas economy and having almost certainly earned an overseas pension or some form of retirement savings. There are about 600000 Kiwis in Australia and another 600000 in the UK Europe and North America. That is the size of the issue. As overseas Governments raise their retirement age and generally restrict access to pensions a tsunami can be expected to build and build with huge implications for the New Zealand economy.The third issue is the direct deduction policy of overseas pensions from the New Zealand superannuation scheme under section 70 of the Social Security Act 1964 and associated with that are the outdated reciprocal pension agreements that New Zealand has with some but not many overseas countries. There are many anomalies with the direct deduction policy and there are many cases of gross unfairness resulting from it. One is that a spouse’s overseas pension will be deducted from the superannuation of a Kiwi who has lived here all of their life. There are also huge issues around which overseas pensions are deductible and which are not. The scope for avoidance and for fraud is huge. The Government spends tens of millions of dollars trying to catch and prosecute these people. This bill would end all of that by abolishing the awful section 70. What people earn overseas for retirement is no business of the New Zealand Government but abolition means a new residence-based regime is needed so that people with overseas pensions also do not get full New Zealand superannuation. That would be double-dipping. This bill provides a fair alternative.Pro rata entitlement means that every resident would get New Zealand superannuation on reaching age 65 just as they do now but the amount would be based entirely on their period of residence between the ages of 20 and 65 a period of 45 years or 540 months. A number of months of residence is used to calculate the amount of New Zealand superannuation on a pro rata basis. Periods of absence of up to 2 months per year would be disregarded allowing for an overseas holiday and such like—and in addition an aggregate of up to 5 years would be exempt allowing for a young person on their big OE postgraduate study or whatever without affecting New Zealand superannuation retirement.So the real question then is not so much whether this bill is the best solution to current and potential problems with New Zealand superannuation but whether we together—political parties and others—are now willing to get together to solve them. Now is the time.