Ryan Bridge: Is paying tax through your working life really worth the pension?

Providing I make it to 65, and you don't count your blessings, but assuming for a second that I do, I don't expect I'll be receiving the full pension. 

And you know what? I'd rather receive less, at a later age, than pay more taxes through my working life.

In 2006, the number of Kiwis aged 65+ was 495,000.

It's increasing by about 80 people a day and is likely to reach 1 million by 2028.

By 2050? 1.5 million. 

Compared to the OECD, we have the highest basic pension paid from general taxes.

With fewer young people working to support it, Treasury has long forecast a cost blowout and the need for much higher taxes to afford this system. 

Personally, I'd like to take a pass on that. 

With about another 30 years on the clock before reaching this magical age, how much extra tax must I pay? 

Which colour government will be in charge when the inevitable happens? 

Why can't I instead invest my own money, and with the help of compounding returns, hopefully set myself up for my own retirement?

Whatever measly amount I might get, I don't expect to get at 65. The UK, Australia, Denmark, US, Germany France and the Netherlands have all increased the age threshold. We will of course do the same at some point. 

Like most Kiwis, I hope, and again, you don't count your blessings, will have invested wisely and saved adequately to feed and house myself. 

If that changes, then a means tested system should always be a safety net. 

But at some point, it'll have to move from Think Big, to think Smaller. NZ Super will have to go on a diet. 

Crash dieting is never a sustainable way to trim the fat. Smaller, incremental changes over a long period of time afford best results. 

The same is true of NZ Super. And if the choice is higher taxes for 20 or 30 years instead of me investing that money myself. I'd back myself over the State any day. 

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Episode Transcript

Speaker 1 (00:00):
Right now, providing I make it to sixty five, and
you don't want to count your blessings, do you? But
providing I make it there, assuming for a second that
I do, I don't expect that I'll be receiving the
full pension. And you know what, I would rather receive
less at a later age than pay more taxes through
my working life. Guess what the number of people over

(00:22):
sixty five was in this country in two thousand and six,
four hundred and ninety five thousand, about half a million.
It's increasing by eighty a day. It will reach one
million by twenty twenty eight in a couple of years,
by twenty fifty one and a half million. You can
see where this is going compared to the OECD. We
have the highest basic pension paid from general taxes in

(00:45):
the OECD, and of course we've got fewer young people
working to support it. Treasury says this will blow out,
we will need to increase taxes personally, No thanks. With
another about thirty years on the clock before I get
to this magic age. How much extra tax must I pay?
Which color government will be in charge when the inevitable happens?

(01:07):
Why can't I instead invest my own money, with the
help of compounding returns, hopefully set myself up for my
own retirement. Like most kiwis, I hope, and again you
don't count your blessings. I hope I will have invested
wisely and saved adequately to feed and house myself. If
that changes, then a means tested system should always be

(01:27):
a safety net. But at some point we have to
move on from think big on NZ's Super to something smaller.
We need to put this thing on a diet. For
more from early edition with Ryan Bridge, listen live to
News Talk Set B from five am weekdays, or follow
the podcast on iHeartRadio