Pensions for millionaires

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Sat, 10 Dec 2011 6:07p.m.

Gareth Morgan thinks our current superannuation system is absurd

Gareth Morgan thinks our current superannuation system is absurd

By Brooke Sabin

A 3 News investigation into the country's superannuation scheme has revealed hundreds of millionaires are claiming the pension, something economists say is absurd.

The current  superannuation scheme is universal for those over 65 regardless of your income or assets.

Figures requested by 3 News show that most pensioners earn less than $50,000, accounting for around half a million people.

In the income bracket $50,000 to $250,000 there are 52,000 pensioners.

There are a further 1,100 pensioners in the income bracket $250,000 to $500,000 and around 200 earning up to a million dollars.

100 pensioners earn more than a million dollars a year.

New Zealand is the only country in the OECD which operates a universal pension without any form of means testing.

“If you don’t test it, it’ll either keep costing taxpayers more and they’ll end up going to Australia. Or they’ll just have to keep dropping the amount of the super,” says Gareth Morgan.

But the Retirement Commissioner is against any form of income testing.

The concerns about means testing is you have to pick an amount people are allowed to have and then what happens is that people who are close around that start to try and hide their money as they get up to it,” says Retirement Commissioner, Diana Crossan.

Changes to the system are not on the Prime Minister’s agenda but economists warn our superannuation scheme may be in for an early retirement -- unless some changes are made.

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Comments

16 Mar 2012 04:08p.m.

Christopher wrote:

I don't see why people are saying it isn't peoples right to collect the pension once they are over 65 if they earn so much.

The law says anyone over 65 is entitled to the pension. Law is law.

15 Dec 2011 05:52p.m.

RobertM wrote:

A GMI for those over 28 would be better-but watch the youtube video of British Chancellor, George Osborne, being questioned over him taking family support . Osborne replied, of course I do, ( and by implication what do you think I am). The 1985 Douglas surtax outraged many of the rich old. My mother got word when see went to a private businessmen's seminar with Roger in Timaru. She had intended to go the public meeting but when the Douglas minders saw in her Blue power suit from George in Melbourne- they ushered her into a private meeting Roger. Her response when she returned to our residence was to suggest I hope along to the Labour office, claim a benefit and effectively reclaim the surplus.

14 Dec 2011 04:30p.m.

steve b wrote:

So the problem is that someone earning $1m and paying $300k in tax is reciving a pension of $15k. Major issue. Thank goodness it has been uncovered.

Do I have this wrong?

Counter proposal is that the people recieving a net gain of $285k write a thank you note.

Steve

14 Dec 2011 04:25p.m.

hacker-at-heart wrote:

I find it hard living on a student loan I get less then $200 a week, but when I pass my diploma in IT then I will be making alot of money. I envy the rich that just get richer by corprate crime-like John Key and National. People that have worked from age 15 to 65, that have saved millions ONLY BY THE FRUITS OF THERE LABOR I say well done, I'll be there one day.

14 Dec 2011 03:15p.m.

Susan St John wrote:

if the tax rate on some earning $1,000,000 was raised just 1.5% they would pay an extra $15,000 back in tax- and that would pay for their pension.
Universal pensions are fine if we have sufficiently progressive taxation. We dont, and they are therefore not justified. In Muldoon's day the top tax rate reached 66%. Today the top rate is 33% - far too low for a universal pension

13 Dec 2011 08:00p.m.

JD wrote:

These millionaire's have all paid there fair share of taxes over the years, what makes them less deserving of a pension. Garth should just keep his ideals of a socialist nation to himself.

13 Dec 2011 10:12a.m.

chris wrote:

if one of those 100 pensioners in the $1 million income bracket decided they were fed up, and moved offshore, the economy would lose maybe $300,000 in tax, for the sake of a $14,500 pension. That's 20 pensions down the gurgler. We should be thinking the complete opposite way, encourage the wealthy to come and stay.

12 Dec 2011 04:55p.m.

J Cate wrote:

Read between the lines; there is 1% of NZ's pensioners with income in excess of $50,000 p.a income. That tells me that very few effectively saved for their retirement in the past and if they have, they are still paying a lot of tax on it.
The gap between rich and poor is pure mathematics: If you were poor in 2005 and had zero assets and you were rich with $50,000 and both saved nothing. The poor will still have Zero and the rich will have $63,265.95 as a result of 4% compounded for 6 years. They will still have to pay TAX on this income. Regular Savings are the key.

12 Dec 2011 02:32p.m.

RJ wrote:

I agree with Chris 100% every incentive must be made to encourage industry and investment in business because business creates the jobs and wellbeing of the country, yours and my standard of living spin off that. The income and wealth that some get from this is the reward for effort and risk they take in the investment of putting everything on the line in their business endeavors, just rewards I say, but a carrot to people of getting a tax paid pension is not a carrot to encourage growth, investment or personal wealth the petty pension is of little value, to me it is there as a support mechanism for those that need it- a type of social welfare benefit really, indeed to some knowing that state will give them a pension can act as incentive to be lazy and not plan for their future. As to whether people should be means tested for it – I think not – the means test is if they are mean enough to claim it if they don’t need it.

12 Dec 2011 02:28p.m.

Someone wrote:

Wait we're fussing over 1,300 pensioners getting the pension. Well clearly if we stop that rort the govt will start running a surplus again. I mean it might break even over the compliance cost to the govt......