Retirement policies falling under the radar screen


It is very strange that we are getting drip fed some important changes to NZ Super with little fanfare or discussion.  Even stranger, given this is the year that the Retirement Commissioner has a statutory duty to review all retirement incomes policy.

The MSD kept very quiet about the abolition of the spousal deduction, yet it will go ahead next April 2020. The fight for this has gone on for over a decade including a hearing in the HRRT 18 months ago for which there has been no decision yet. Weirdly, no one from Labour or NZ first has fronted this momentous decision.

Alongside this policy, the government will abolish the non-qualified partner pension.  Maybe they are keeping this one quiet because it will be contentious and possibly hurt couples in the future where the younger under pension age spouse, usually female is his caregiver?  Removal also saves quite a bit of money. Packaging it with the spousal deduction removal helps disguise the cost of the latter which is miniscule, and that the delay in abolition of such an unjust policy has been a disgrace.

The seven background papers for these two changes to NZ Super policies have  just been released on MSD’s website . They make interesting reading. Clearly, there is more than just the abolition of the spousal deduction and the non-qualifying partner pension at stake.  Details of most of these other policy proposals are redacted so the new ideas are not being disclosed.

There is one that escaped the black pen and raises alarm bells. The government is proposing an opt out regime for NZ Super. It is very hard to understand why, without any discussion, the government is contemplating this.

Currently there is no concern about people missing out on NZ Super as coverage is pretty close to complete for those who qualify.  So the additional people who will automatically get super under an opt-out policy are only those who are wealthy enough not to need it and wouldn’t have applied for it on principle.  Granted there doesn’t seem to be many of these, but why discourage them from saving the state money? Opting out is hard work.

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One of the worst ways to make policy is to pull it out of the hat and implement it without proper public scrutiny and wide debate. There are too many recent examples of this.

The Winter Energy Payment is a case in point.  It goes automatically to all of the 750,000 superannuitants who get NZ Super on the expectation that if they don’t need it, they will opt out. Of those who get it and don’t need it the MSD has said only a tiny number, around 2000, opted out last year.  At the very outside, probably only 100,000 actually need it so about $300m is sprayed about unnecessarily.

It has other design flaws such as paying significantly more to two single people sharing accommodation ($900) than to two people that the MSD deem to be in a relationship ($750).   The implicit, quaintly old-fashioned assumption seems to be that married and de facto couples would never have separate bedrooms.

Consultation on all policy decisions on NZ Super must be open and transparent.   If we must have universal payments like NZ Super and the Winter Energy Payment, then opt in policies are much more cost effective than opt out. But is opt out a fait accompli? What else is the government contemplating under its black marker pen?



  1. You are wrong in fact and usefulness on the Winter Energy Payment.

    Most people on Super have little other income. So your assessment, that only 100,000 need this is way off base.

    And if you do not see why making it universal is politically astute, as in making it difficult for National to remove it … . National will not even contest an election with a policy to means test the Winter Energy Payment – given the principle of it will offend their own voters and make NZF’s day.

    Thus the 400-500,000 who really do need it are safe, thanks to their approach, rather than your own.

    • SPC I am not asking it to be means tested– just made into an opt in no questions asked.

      A small fraction of superannuitants are in fuel poverty.

      • Why make it more difificult for the majority who need it by requiring anything of them?

        Next you will be wanting free health care for children to be opt in because not all people need help afford it.

        • Opting out maximizes the efficiency of the superannuation programme. So if you wanted to work in retirement then you’d be getting your taxes back in super payments which kind of defeats the purpose of saving for your own retirement.

  2. I was surprised to learn recently that people who turn 60 and have a wife or husband over 65, are entitled to the retirement pension, not in full but a percentage of the amount that people over 65 get. I can’t really see the rationale in that. Seems a bit unfair to everyone else who has to wait till they are 65.

    The only reason I can think that this situation exists is that when the retirement pension age was lifted from 60, but up to 65, it was a way to not lose too many votes a the next election. But that is just a wild guess.

    • The younger partner qualifying was from the era when many wives did not work and were supported off their partners income.

      • I hear this bullshit argument all the time that the welfare state atomised the nuclear family by taking resources away from the parents to give to kids who shouldn’t be having children which is complete bullshit.

        Television since the 50’s have been bringing up kids trying to sell GI Joe war machines to boys and homemaking to girls. That’s one part of the global debt narrative that pushes the ideology of indebtedness and mortgages.

  3. The page here shows the rationale for the changes is individual entitlement – which will make signing up easier.

    The savings forecast will be to that charged to Super. However where the younger spouse is not working they will be able to claim unemployment benefit. In cases where the age qualifying partner has little other income apart from super, then there will be a net cost to the government. Where the person over 65 has other income (from work or savings) a lower net cost.

    Largely the real savings to government occur where either or both the qualifying partner and younger spouse are working.

    The greatest cost would occur where they begin to pay the younger spouse as a carer for their older partner.

    • Treasury> government sponsored work programmes> taxes.

      The total amount of money circulating in the economy doesn’t change because parliament gaurentees the kiwi dollar. But if the government quits pumping money into the economy through work programmes the national income will drop.

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