Pensioners promised Super bonus

National's tax cuts will have a modest bonus for superannuitants, lifting the pension for a married couple by about $10 a week above what they would get under Labour.

The increase left superannuitants confused when it was announced by National leader Don Brash on Monday.

"We anticipate that the annual net payment for a married couple receiving NZ Superannuation will increase by about $320 in April next year," Dr Brash said.

Grey Power president Graham Stairmand said that was less than the increase of about $600 a year ($12 a week) which would be due next April anyway through the normal inflation adjustment.

In a comment posted on the Herald's election blog site on Sunday, Mr Stairmand predicted that the elderly population "has no prospect of any benefit from tax cuts."

But yesterday he had to eat his words after a spokesman for Dr Brash confirmed that the $320, and further increases in the subsequent two years, would be on top of the usual inflation adjustment.

"If it's additional, we would say yes, it's very nice," Mr Stairmand said. "It is a recognition that the elderly do play a part in the strategy of the National Party and yes, thank you."

Under the last National Government, the law was changed to cut the allowable "floor" for the married rate of super from 65 per cent to 60 per cent of the after-tax average wage.

Labour restored the 65 per cent floor, giving pensioners $21.82 a week extra in 2000. The current net married rate is $393.56 a week.

National's proposed tax cuts will force it to lift the pension by more than the normal inflationary increase, because the tax cuts will increase the average after-tax wage.

But the legal formula results in a one-year lag, as the pension rate rises each April in line with the net average wage the previous December. This means the effect of tax cuts in April would not normally flow through into the pension rate until April 2007.

Dr Brash's extra $320 a year in April will give pensioners their increase at the same time that everybody else gets the tax cuts. This will lift the married pension to around $410.06 a week.

Dr Brash's spokesman said the pension would then revert to the current formula.

By contrast, the rate would rise to only around $425.30 a week by 2008 under Labour - $10.53 below National.

Social Development Minister Steve Maharey said National would need to find "an additional $1 billion" over the next four years to pay for these increases.

Superannuation is budgeted to cost $6.4 billion this year, rising to $7.5 billion in 2008-09, under Labour policies. National's tax cuts would add about 2.5 per cent, or around an extra $175 million a year.