John MacDonald: Our view of the pension needs to change

Life’s all about choices. And we need to make some.

Outgoing Treasury boss Dr Caralee McLiesh says cutting costs here and there, like the Government is doing at the moment, isn’t going to be enough to really get the country's finances in order.

And she reckons one of the things we need to do is make changes to the government superannuation scheme.

I agree with her. Because we are dreaming if we reckon we can just keep on keeping on, paying out the pension to people just because they reach a certain age.

Which is where we get to the choice we need to make. Because doing nothing isn’t an option.

The two options we do have is, either, raising the retirement age; or means-testing for the pension.

I’m no doubt that, at some stage, we have to start means-testing for the pension.

I’ll tell you why I’m in favour of means testing and why I’m not in favour of raising the retirement age.

The fact is, no matter how active we think we are or how active we try to be, age catches up with every one of us. It happens to everyone.

And some people have careers and they work in jobs that can be almost impossible to do by the age of 65. Some people even struggle by the time they’re 60. Painters. Builders. Most tradies, really.

Others might have jobs that aren’t all that physical, but age still catches up with them and the idea of working beyond 65 is just not on their radar.

What I’m saying is that everyone ages and expecting everyone to work past 65 just isn’t realistic. Because age catches up with all of us. There’s no variable.

What is variable, though, are our financial positions. Some people are loaded. Some people are hard up. Some people are somewhere in between. So it’s crazy that, when it comes to the pension, we treat everyone the same.

The loaded people get the pension, and it’s beer money. The hard up people get the pension, and it’s their lifeline. So their lives are completely different, in terms of what they can and can’t afford, but we pay them all the pension.

And we can’t keep doing that.

The other strong argument in favour of means-testing the government pension arrives in our letterbox at home on a semi-regular basis.

Our kids are all at university in Dunedin and Wellington but a lot of their mail still turns up at home, some from their Kiwisaver providers.

So, here they are - not all that long out of school in the grand scheme of things - and they’ve got Kiwisaver accounts.

Maybe some of that money will get chewed up on home deposits down the track. But, the point is, thanks to Kiwisaver they are saving for retirement at an age when most of us probably never even thought about it.

And these are the generations who, I reckon, won’t even have an expectation that anything other than what they save themselves and what their employers contribute through Kiwisaver, will be what they will have by the time they get to retirement age.

But, if you're already in your 60s, chances are you’re of the thinking that you’ve paid your taxes, you’ve done your bit, and that you deserve every cent of the pension. Which is an argument I struggle with. Because we all pay our taxes but we don’t necessarily use all the services that our tax money goes into.

But, somehow, the pension is different. And there is this sense of entitlement that, even if you don’t need it, you should still get it.

Which needs to stop. Because we can’t afford it anymore.

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Morning's Podcast with John McDonald
from News Talk ZB.

Speaker 2 (00:13):
Life's all about choices, Ah, and there was a choice
I need you to make today because the outgoing Boss
Treasury Dr Coralline McLeish, she's saying today that cutting costs
here and there like the government's doing at the moment,
even though it seems harsh, she says it's still not

(00:35):
going to be enough to really get the country's finances
in order. And she's taken a longer term view here,
beyond the usual three year election cycle, and she reckons
one of the things we need to do is make
changes to the government superannuation scheme the pension. And I
agree with her one hundred percent because we are dreaming

(01:00):
if we think we can just keep on keeping on
and paying out the pension to people just because they
reach a certain age, just for that reason, Which is
where we get to the choice that I want you
to make, because doing nothing isn't an option, and the
two options we do have is either raising the retirement

(01:22):
age or means testing for the pension. I'm in no
doubt that at some stage we have to start means testing.
That's where I'm at and I'll tell you why I'm
in favor of means testing and why I'm not in
favor of raising the retirement age. The fact is, no
matter how active we think we are, or how active

(01:44):
we try to be in life, age captures up with
every one of us. Happens to everybody. I can't tell
you when when you first start noticing it, but it happens.
And some people have careers and they work in jobs
they can actually almost be impossible to do by the

(02:04):
time they reach six time. Some people even struggle by
the time they're sixty. You might have been through that.
You might be in that boat right now. Painters, builders,
probably most trade is actually and others might have jobs
that aren't all that physical, but age still catches up
with them. And the idea of working beyond sixty five

(02:26):
is just not on the radar.

Speaker 1 (02:28):
You see.

Speaker 2 (02:29):
What I'm saying is that everybody ages, and expecting everybody
to work past sixty five just isn't realistic because age
captures up with all of us. There's no variable. What
is variable, though, is our financial position. Some people are loaded,
some people are hard up, some people are somewhere in between.

(02:50):
So it's crazy that when it comes to the pension,
we treat everybody as if they're the same, isn't it.
The loaded people get the pension, it's just the beer money.
The hard up people get the pension. It's their lifeline.
Their lives are completely different terms of what they can
and Cardifford. But we pay them all the pension, and

(03:12):
we pay them all the same amount. And we can't
keep on doing that. The boss at Treasure is spot on,
spot on saying today that we can't keep doing the
things the way we do at the moment. The other
strong argument in favor of means testing the pension arrives
in our letterbox at home on a pretty much semi
regular basis. You see, our kids are all at university

(03:35):
in Dunedin and Wellington, but a lot of their mail
still turns up at home. These are the twin boys
have going on who are nineteen going on twenty, and
our daughter who's twenty one. And some of the mail
that keeps arriving for them at our place is from
their key we saver providers see here. They are, I
mean not all that long out of school in the
grand scheme of things, and they've got key. We saver

(03:56):
accounts with money in them. Maybe some of that money
will get chewed up on home deposits down the track.
Her knows. But the point is thanks to KEYI Saver,
they are they're saving for retirement at an age when
most of us probably never even thought about it. Well
I didn't at their age, And these are the generations
who I reckon wmon't even have an expectation that anything

(04:19):
other than what they save themselves and what their employers
contribute through chemisafer will be what they will have by
the time they get to retirement age. But if you're
already in the sixties, chances are you're of the thinking
that you've paid your taxes. If you've done you bet
you deserve every cent of the pension, which is actually
an argument I struggle with because we all pay our taxes,

(04:41):
but we don't necessarily use all the services that our
tax money goes into, do we? But somehow the pension's
different sacrisanct, and there is this sense of entitlement that
even if you don't need it, you should still get it. Well,
that attitude needs to stop, because we can't afford it anymore,

(05:02):
and if we're going to do something about it, then
give me means testing the pension any over the other option,
which is to raise the retirement age.

Speaker 1 (05:11):
For more from Category Mornings with John McDonald. Listen live
to news talks It'd be Christchurch from nine am weekdays,
or follow the podcast on iHeartRadio