Dunne Peter: General Debate 
Text is incorporated into the Bound Volume 
Dunne Peter: General Debate 
[Sitting date: 20 June 2012. Volume:681;Page:3146. Text is incorporated into the Bound Volume.] 
Hon PETER DUNNE (Leader—United Future) 
: 
 At the weekend a very significant report was released that will have a huge impact on the life of just about every New Zealander moving forward. I refer to the Financial Services Council’s report about future superannuation provision. There were two very chilling statistics amongst the plethora of statistics in that report that we should all focus on. Firstly 52 percent of girls born last year and 44 percent of boys can expect a life expectancy of 100 years or more. Secondly a 25-year-old in New Zealand today commencing a working career compared with a 25-year-old in Australia commencing a working career can through the combination of a State-provided pension in the form of New Zealand superannuation and KiwiSaver expect in comparison with the Australian schemes to be on average about two and a half times worse off by the time they retire. 
The question that we need to focus on is what our situation in this country is going to be with superannuation policy moving forward. The one certainty that everyone knows is that the record of politicians in this area over the last 30 years has simply been to create more uncertainty than they set out to establish in the beginning. What we have to do is put some pillars in the ground about where future superannuation policy should go and work towards achieving those. I want to set out some from my perspective this afternoon. 
This is not a debate about whether the age should be 65 or 67. That with respect is a very trivial issue. I favour retaining a core age of 65. What is important is the incentives that are created around that to enable people to plan their retirement with some certainty and some dignity. 
That is why a flexible approach to superannuation whereby the person has the choice of taking a reduced rate of superannuation if they choose to retire between 60 and 65 or an enhanced rate if they choose to defer their retirement post-65 has considerable appeal for two reasons. Firstly it will defray cost and secondly it means that the choice about when people leave the workforce is theirs not the Government’s. Effectively by establishing a superannuation entitlement age when we no longer have a retirement age the Government is simply saying: “You will retire at this point in time even though we do not have a retirement age to statutorily enforce.” 
Flexible superannuation restores the choice to the individual. For a number of groups in our population—I think of Maori I think of Pasifika and I think of manual workers who do not traditionally have long post-retirement life expectancies—the opportunity to take a reduced rate of superannuation from the age of 60 would give them some dignity in retirement and some choice that they currently do not have. But it needs to be buttressed by a couple of other factors. The first is that KiwiSaver now with around 1.8 million or 1.9 million members ought to be made a compulsory savings scheme and still paying out at the age of 65 so that those who are entering the workforce now can invest in their future with some certainty know what they will get at 65 and have the choice about a New Zealand superannuation scheme that they can take at the reduced rate of 60 or defer to 70 if they choose—but again they will have the choices. 
Now comes the next issue which is simply in the too-hard basket but which a number of actuaries and others are starting to draw attention to. Over the next few years we are going to start to see people collect their KiwiSaver payments. In these first few years it is not going to be that significant because the amount that they will collect will not be that great but the time will come when people are collecting substantial KiwiSaver payments. What we need to be putting in place now is an annuities programme to enable them to reinvest those proceeds in a way that will pay them a sustainable income through the remainder of their lives. 
The very worst thing we could tolerate is a situation where people get a large KiwiSaver payout at 65 and effectively blow it and all of the good work of their lifetime in terms of their saving and all of the good work in terms of the way we have sought to give people some comfort and some security in their retirement will be completely wasted. So in addition to a flexible approach to superannuation and in addition to a compulsory savings scheme in the form of KiwiSaver we also need to start to bring in a comprehensive policy on annuities. That is the way we will give New Zealanders certainty and security for their futures.