Shelley Hanna: KiwiSaver dishes out the jam on top

Q You very kindly answered a query I had regarding KiwiSaver back in November. In your reply, you mentioned that Bill English had not answered the question you put to him regarding asset testing for NZ Superannuation in the future, although David Cunliffe had. I was wondering if you ever did hear back from Bill; if not, I would still be interested to hear National's stance on this matter.

A. I re-sent my question and received the following reply from a spokesman for the Finance Minister: "As we've clearly stated many times before, the Government has no plans to change the age of eligibility for New Zealand Superannuation or the way rates of Super are calculated."

So why are so many people concerned about the possibility of income or asset testing for NZ Super some time in the future? If we build up a large KiwiSaver balance will we get less NZ Super in 10 or 20 years?

We have all been told about the looming demographic bulge as the "baby boomers" retire over the next 20 years - increasing the cost of NZ Super as a percentage of GDP. Can our country afford NZ Super?

The 2010 Review of Retirement Income Policy by the newly named Commission for Financial Literacy & Retirement Income (formerly the Retirement Commission) recommended that the age of eligibility for NZ Superannuation be gradually increased from 65 years to 67 years from 2020 to 2033.

The Commission for Financial Literacy & Retirement Income is an autonomous Crown entity. Does the Government take their recommendations seriously?

Time to put speculation aside and get the real oil on the issue. Who better to talk to about current Government policy than Minister of Commerce and local MP Craig Foss?

Having lived overseas, it never ceases to amaze me how accessible our Government ministers and MPs are in New Zealand. All it took to organise a meeting with Craig Foss was a quick email.

"The people of New Zealand don't want changes to NZ Super," he told me. He went on to say that keeping their election promises was very important to National and "trust in the Government is crucial". One of National's election promises was that there would be no change to NZ Super eligibility or minimum payment rates, which are included in all of the Government's long-term budget forecasts.

He added that NZ Super is intended to provide a basic standard of living to all eligible New Zealanders over the age of 65. We have up to 45 years (for a 20-year-old) to accumulate retirement savings (such as KiwiSaver) and other assets to provide extra comfort over and above NZ Super.

So it appears the Government has no hidden agenda with respect to NZ Super and KiwiSaver. NZ Super is there to provide for the "bread and butter" basics for those over 65 while extra savings like KiwiSaver will pay for the jam on top.

Of course we go to the polls every three years, so these promises are only good while National is in power. Labour proposes gradually increasing the age of entitlement to 67 "over 20 years" - not too harsh a proposal compared with income or asset testing.

Living, as we seem to be, in a time of earthquakes and other epic disasters, our entitlement to NZ Super appears to be something we can still bank on.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.