In 10 years as Retirement Commissioner, Diana Crossan hasn't been backward about saying what she thinks. Not that the politicians have always listened. Chris Barton reports.
Diana Crossan must have the patience of a saint. We're sitting in her modest offices on The Terrace in Wellington, discussing nearly a decade of having her recommendations ignored by successive governments. New Zealand's Retirement Commissioner must surely be feeling a little frustrated, jaded even.
"It's frustrating in one sense and exciting and challenging in another," says Crossan diplomatically. "I feel proud of what we've done in the 10 years."
Constantly being sidelined by politicians - the latest being Prime Minister John Key, with his refusal to entertain her recommendation to gradually raise the age of entitlement to New Zealand Superannuation from 65 to 67, starting in 2020 - is certainly not why she's moving on. No, she says. "Nothing to do with it all."
However she acknowledges the frustrations have been there since she took the job in 2003 and come with the territory.
"Ten years is long enough. I think it is someone else's turn." Crossan, who aims to step down in January next year, says she made the announcement now so people wouldn't get the wrong idea. In fact, she had decided to go on her ten year anniversary when she discussed renewing her contract two-and-a-half years ago.
By her own admission she's "a cup half full person" who sees the commissioner's role as one of having "influence without power", as she told this year's Australia and New Zealand School of Government conference: "I have faith in democracy and the intelligent will of the people. I believe that our system is capable of making provision for unpleasant inevitabilities and for the most part it does."
Crossan is happy enough because, despite John Key's "not on my watch" stance, the issues she has raised are being publicly discussed, and judging by recent opinion polls, a majority of New Zealanders agree with her.
"If I were a 30-40 year-old now, I think I would have heard that New Zealand Superannuation may not be available to me at 65." To which Crossan is quick to add that doesn't mean it won't in fact be available for 30-40 year-olds when they retire. "If we plan ahead New Zealand could afford it," she says, noting that neither the Prime Minister nor anyone else has said the government won't find the extra money necessary to pay for the scheme as more and more of the baby boomer generation enter retirement. "Nobody has said that we won't have New Zealand Super."
Crossan would like all New Zealanders to see the country's universal superannuation scheme as "a national treasure" - something that we should hold on to dearly. "We are very lucky to have it and it's one of the best in the world."
Among the reasons is the scheme's simplicity, says Crossan. It is available to all New Zealanders from the age of 65 as long as they have been resident for at least 10 years after age 20, including at least 5 years after age 50. "We have very little administration around it." Running costs are also low because it's not means tested. "The incentives to hide your money are not there."
Crossan acknowledges that what the scheme provides - 66 per cent of the net national average wage for a couple (currently $536.80 a week) and about 47 per cent for a single person living alone (currently $348.92 a week) - is not riches, but it works. "It deals with elder poverty. It doesn't give you a great life, but it gives you a life. What we are doing is holding a whole lot of New Zealanders just above the poverty line. That's what we should be doing."
She marshals statistics to prove the point - the low proportion of New Zealanders over 65 in hardship and that the elderly and retired rate "happiest" in surveys such as the Happiness of New Zealand report.
Her recommendation to raise the age of entitlement is about affordability - due to the extra superannuation, not to mention health, costs of a bulging population aged 65 and over, who are also living longer. Currently, the gross cost of New Zealand Super is about 4 per cent of GDP. But by 2050 that's going to double, according to Treasury's 2009 projections, to about 8 per cent, with the net cost at about 6.7 per cent of GDP.
Gradually raising the age of entitlement seemed a logical way out, but when Crossan's report came out in 2010 Key was unmoved. The normally calm Crossan waited and waited for an explanation. When none was forthcoming she went on the attack. "Politicians appear to have their heads in the sand about the issue of raising the age of eligibility," she said last year.
Crossan says while Key has disagreed with her, saying New Zealand can afford the increasing costs, he hasn't said how. "He has made a decision in 2008 that he is now sticking with and that's his prerogative, he's the Prime Minister," she says. "He has said we don't need to do it. But he hasn't been specific about it. If he was utterly specific about that, I probably would have shut up and gone away."
Crossan continues in her calm, measured, slightly weary way. "If he had said we are going to find uranium off the coast, or the economic growth will cover it, or whatever, then that's a different issue." Does that make her feel ... frustrated? "He's a politician. I don't take it as a personal blow. If he wants his party to be elected next time, he has to have answers as to why he hasn't done it."
Auckland University Retirement Policy and Research Centre co-director Michael Littlewood says Crossan has done a great job within the constraints of the role. "She has shifted the focus away from just issues associated with retirement incomes and more towards the wider issues of financial literacy," he says. "One of her major constraints is she really can't tell politicians what she thinks of them." Littlewood says he would like to see the commission's role expanded to allow it to challenge governments of the day and to lead a proper national debate.
"Diana's been extremely personable, she's always had a smile, regardless of how badly she has been treated," he says. "It must have been frustrating and I'm sure it was, but because of her role she had to take that on the chin and good on her. I wouldn't have had the patience."
Has she ever felt the commission's independence challenged - experienced any push-back from government? "I've been ready to resign since the day I started," says Crossan. "If you take this role on and you are not ready to resign you might as well give it away."
Yes, she would make a fuss if her independence was challenged. "I haven't had to. We have a good, friendly relationship," she says of her dealings with the Prime Minister. "I visited him regularly when he was in opposition. I try to visit the opposition parties regularly, because it's important I have ideas from lots of places."
On occasion the odd politician has asked her to back off. "One of the politicians said to me, 'We sorted this out in 1990. Why don't you leave it alone?' Hello, we are in 2012."
Has she heard calls for the commission to be scrapped? "I don't now. I did when I first started. That's why in a way I became more vocal," says Crossan. "There was a review of some aspects of the role in 2003 and there was very clear support from academia, the private sector and other government departments that the role is important."
As Crossan sees it, the issue is one of how to deal with long-term issues in a short-term political system and having a commission to research, look ahead and advise is an obvious answer.
The missing retirement savings ingredient when she first started, she says, was a transferable savings product through the workplace. "We had clunky old-fashioned 1960s kind of products. They were good while you were in that workplace and the idea in the past was you stayed there until you got your gold watch and left." She was on the product working group that presided over the introduction of KiwiSaver in 2007 and sees it as a significant step forward - in particular the scheme's auto-enrolment, because of the way it fits with the research on the psychology of savings.
As for calls from some in the industry for compulsory savings, she says: "I don't think we need to, but I'm torn quite frankly." Crossan is frequently told stories of people being forced into saving schemes when they were young, and glad they were because they would never have done it themselves. "On the other hand I look at Australia and find that the finance sector and legal sector in Australia have made huge amounts of money - the administration of it is hugely costly."
With KiwiSaver nearing 2 million customers, Crossan wonders who the compulsion would be targeting. "I would guess they are the group that is on such low income that they can't afford to join," she says. "If that's the case and we make it compulsory, what really worries me is what happens to those people."
Financial Services Council chief executive Peter Neilson sees Crossan's role in the introduction of KiwiSaver as significant. "No voluntary system in the world has been that successful. She was part of making that happen," he says. "I think her own advocacy and energy was very important in actually getting that broadly acceptable and bedded down."
Neilson singles out the development of the commission's website - sorted.org.nz - and its effectiveness in communicating financial information. Looking forward, he sees lifting the standard of pensions as the next challenge.
Crossan changed the name of her office to the Commission for Financial Literacy and Retirement Income about a year ago, to better reflect what it does. "People thought we were about looking after old people and thought we were about health and wellbeing." Her biggest frustration is that she has been unable to get financial education into every school in the country. "I dreamed of that in my first year in this job," she says. "The progress has been slower than I would have hoped."
She would also like KiwiSaver providers to report in a better, more consistent way so that customers can properly compare KiwiSaver products. She also wants to hear a voice for the consumer in decision making - in particular for "passive investors" who have joined a default provider scheme. "The passive investor doesn't have a voice. My concern is that the industry is quite loud," she says, referring to industry calls for a life stages default scheme - one that automatically changes the investment mix according to the investor's age - but no voice representing consumers on the issue.
It would be helpful too, she says, if the word 'disclosure' was thrown out in favour of customer information - "what does the customer need to know" - rather than the "lawyer gobbledegook" of compliance with regulations.
Massey University Centre for Banking Studies senior lecturer Claire Matthews says Crossan's ability to publicly raise retirement issues has built up a good profile for the commission. "It's important that profile is maintained," says Matthews. "She has done a lot to build up a community of practice within New Zealand, making sure people working in the area of financial literacy and retirement income get together so we are not all operating in isolation."
As to her own future, Crossan, now 62, is open-minded. "I don't know what I'm going to do. I'm looking for another job." She doesn't necessarily want a full time job, but she wants something with national reach and that is strategic. "I want one where I can make a difference."
She works long days and works all the time - "it doesn't matter if it's the weekend to me." Her partner of 20 years, Neale Pitches, a former school principal now running an education publishing business, leaves home around 6.45am. Crossan is usually not far behind, beginning her workday early, and is often the last to leave. But she insists she doesn't work too hard and has found work-life balance. "I think I learned that when I was a probation officer. I wouldn't have survived otherwise," she says. "It is a gruelling kind of work, so I found ways of having holidays that I enjoyed, spending time with friends, going to movies, walking, tennis, swimming ... things I like to do and I've kept that up.
"I don't have children. I fit the male model," says Crossan, referring to her traditional career path of "university to work, back to university, to work".
It was at the Probation Service, where she worked for 13 years, that Crossan first experienced the glass ceiling for working women and perhaps learned the art of patience. She has since broken through that barrier many times, even to the last bastion of male dominance - serving on public company boards. But she notes that with women accounting for an "utterly pathetic" 9 per cent of listed company board members, there is still far to go.
"I have had experiences throughout my life where I have been treated as if I'm completely thick or wouldn't have any contribution to make," she says. "Scratch the surface and there are lots of parts of New Zealand that are pretty misogynist." Having recently been on the board of Mighty River Power, Crossan says she wouldn't mind picking some further board work, but not a portfolio of boards.
As for personal things - travel, spending more time with friends and family, voluntary work - or looking to her own retirement, Crossan sees that happening but further out, in about five years time. "I'm not quite there yet. I've got another job to do before that."
Born and raised: Central Otago and South Canterbury
Lives in: Wellington, with partner, educationalist Neale Pitches
First degree: BA in geography, University of Otago
Early experience 1972-80: Worked as a probation officer in Christchurch, Tokoroa and Taupo, moving to Wellington and teaching social work students until 1985
Public sector 1985-1996: Management roles in Labour Department, State Services Commission, Ministry of Eucation, Department of Justice, the Electricity SOE Development Group and Contact Energy
Commercial world 1997-2001: Worked for AMP, developing its agency network, alliances and distribution channels, and led a national distribution strategy project for the company in London
On the board: Past board memberships include Mighty River Power, Refugee Services, NZ Post, Relationship Services, AMP Services (NZ)
Good works: Chairs Refugees in Business, which helps refugees develop their own businesses; Whai Rawa Management, which manages a Ngai Tahu savings scheme; and the Orangi Kaupapa trust, a business-sponsored charity making grants to people who work for social change. Previously chaired the JR McKenzie Trust, a major charity.