Treasury have just brought put their latest long term report and it contains several hoary old annuals – one of which is National Superannuation. As Treasury rightly say the cost is going up all the time as we have more older people – I think they are suggesting a trippleing of real costs over 40 years.
The trouble with reports or forecasts like this is that we humans are very bad at forecasting the future – for good reason – it is impossible to know what’s around the corner although you can speculate. So the most you can say about the Treasury numbers is that “based on our assumptions – and here they are – this would be the outcome”. Different assumptions might produce very different outcomes.
At the moment it is all a bit theoretical as John Key has made it clear that ‘there will no change while I am Prime Minister”. However John Key will not be the Prime Minister for ever and the issue is certainly not going away. In the meantime he is not really doing the rest of us any favours.
There is reasonable unanimity on what we would do if we did anything. I have not heard anyone really advocate changes to the basic rates or measures like means testing. It would be sensible to deal with the problem by progressively raising the age of eligibility. This would have to take account of people in physical jobs that may be physically unable to keep working past a certain age.
The key underlying issue is that of certainty. If there is going to be a change people, need to know in detail when it will be and what the details are. Given this people can then do their own retirement planning with reasonable certainty. The changes would also have to be signalled well in advance – and I think we are talking decades not years. The political process is not geared up to handle those types of decisions at all well.
I would be most surprised if anything happens in the near future, Treasury Report or not, but I think that inexorably we are approaching the point where it will be politically possible to make a decision and a decision will need to be made.
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This is another of Bas Walker’s posts on GrownUps. Please look out for his articles, containing his Beachside Ponderings.