Compulsory. Super?

by Fiscally Conservative Kiwi on August 23, 2010

Don Brash writes in today’s Granny Her­ald that mak­ing super­an­nu­a­tion scheme KiwiSaver com­pul­sory won’t nec­es­sar­ily deliver the ben­e­fits pro­po­nents of com­pul­sion claim. He’s right. It’s actu­ally about incentives.

The part Dr Brash misses is we actu­ally already have com­pul­sory super­an­nu­a­tion, in the form of national super, which was imposed with the some­what ironic iconog­ra­phy of danc­ing cos­sacks. National super is funded from com­pul­sory taxes on you and I, irre­spec­tive of whether we’ll be around to claim for it. Dr Brash, him­self 69, cor­rectly argues New Zealan­ders should face up to the real­ity that this scheme can’t work for­ever, or (more likely given the atti­tudes of this gov­ern­ment) we’ll have to mort­gage the coun­try fur­ther to pay for it.

We have to raise the age of eli­gi­bil­ity inline with other OECD nations. Actu­ally, I think eli­gi­bil­ity should be updated twice a decade at life expectancy minus 10 years (cur­rent life expectancy in New Zealand is 80 years, mean­ing we would have a retire­ment age of 70 under this sce­nario). Not only does that ensure it will remain sus­tain­able, it also makes sure fur­ther gains in life expectancy are account for.

Increas­ing the eli­gi­bil­ity age also cre­ates incen­tives for work­ers to save and invest for their retire­ment: those still want­ing to retire at 65 are able to do so, so long as they pay for it. KiwiSaver pay­ments could start from national super eli­gi­bil­ity minus 5 years, which under the cur­rent life expectancy would be 65. That means any­one want­ing to retire early would have an excel­lent incen­tive to save.

And as well know, incen­tives work much bet­ter than compulsion.

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Friday Link-o-rama: Friday 13th edition

by Fiscally Conservative Kiwi on August 13, 2010

Actu­ally, I think super­sti­tion is stu­pid. It’s still Fri­day people:

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One area where we beat Australia

August 11, 2010

We’ve got faster porno access:

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Charts of the day

August 9, 2010

Will de Cleene and the Dim Post have all the impor­tant charts from the Wel­fare Work­ing Group Report:

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Sometimes, it takes a crisis

August 8, 2010

It took a major cur­rency and then con­sti­tu­tional cri­sis to wake New Zealan­ders from the post-war slum­ber. For too long we’d held on to a wel­fare state that had become unaf­ford­able, state indus­tries that had become inef­fi­cient feather-beds, and moun­tains of reg­u­la­tions that served lit­tle pur­pose but to employ pub­lic ser­vants in Welling­ton. I get […]

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Friday Link-o-rama

August 6, 2010

Don’t worry about it, it’s cool: Lazy blog­ging it be: We sure could do with those min­ing jobs now; and also youth wage rates to get young Maori and Pacific Islanders into jobs; The Chief Jus­tice is screwed; (Good on the NBR for not putting this behind their pay­wall) Warn­ing fail. Lamebook’s news from down under.

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II">The Fastest Growing Tax II

July 14, 2010

Yes­ter­day I wrote about a major upward swing (+27%) in rev­enue from tobacco excise in the Treasury’s 11 months to May finan­cial report. It seems I might’ve been a lit­tle bit pre­ma­ture – the asso­ciate Min­is­ter of Health has just announced that 7,925 smok­ers were recorded as quit­ting in the month of May, com­pared to […]

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The fastest growing tax…

July 13, 2010

I admit it, I’m the sort of per­son who reads the government’s finan­cial accounts, the lat­est set for the 11 months to may make for inter­est­ing read­ing. There’s plenty of good analy­sis else­where, and the usual calls for more spend­ing from the left, but one line item did catch my eye: a 27% gap between […]

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On the top of education

July 11, 2010

Since I’m on the top of edu­ca­tion, Tol­ley had a good inter­view on The Nation this morn­ing. How reveal­ing is it that there are schools that aren’t report­ing at all on stu­dents progress: …schools have been say­ing you know lit­tle Johnnie’s a delight to have in class, you know he’s hav­ing some dif­fi­cul­ties but look […]

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Sleepwalking into the Asian Century

July 11, 2010

Every so often some­one on the left gets it. Danyl is one such per­son. New Zealand is sleep­walk­ing into the Asian cen­tury – and our Prime Min­is­ter knows it, yet doesn’t appear to have a plan. This is my under­ly­ing prob­lem with Key’s Gov­ern­ment – they can iden­tify New Zealand’s prob­lems, and know the solutions, […]

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