Jonathan Eriksen: Superannuation expert on the Government making it's first ever Super Fund withdrawal

New Zealand will pass an economic milestone in 2028, with the Government making it's first ever Super Fund withdrawal.

The Finance Minister revealed yesterday they'll begin offset superannuation costs by withdrawing $32 million from the New Zealand Super Fund.

From 2031, withdrawals are expected annually. 

Superannuation expert Jonathan Eriksen told Ryan Bridge it's exactly what the Superfund was set up to do.

He says it's up to $80 billion currently and is generating returns of 10% per annum, with 1% of that being $80 million.

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Episode Transcript

Speaker 1 (00:00):
Ryan.

Speaker 2 (00:01):
So we've heard from Nichola Willis in the pre budget
speech and she has hinted there's something that might be
coming to help with our Keiwi savers. The government will
also make its first ever withdrawal from the New Zealand
super Fun in twenty twenty eight. A couple of months ago,
I asked Nicola Willis about a potential boost because you
need to get our savings rates up. I think we're
at about one hundred or just over one hundred billion

(00:21):
dollars in Keywi saver assets at the moment, but you
look at Australia and it's something like forty trillion or
something massive. So anyway, I asked her about this a
couple of months ago.

Speaker 3 (00:30):
There are a range of other ways in which we
could help ki savers improve their balances, including the rates
of contributions and other things. So we're working through that.
But I think it's really important that more Kiwi's have
more financial security in their retirement and I'm prepared to
make changes to deliver that.

Speaker 2 (00:46):
Jonathan Erickson's a superannuation and super fun to expect with
me this morning. Jonathan, Good morning.

Speaker 1 (00:51):
Good morning Ryan.

Speaker 2 (00:52):
How do you think they might go about doing this.

Speaker 1 (00:56):
Well, there's two are very easy or austral forward ways.
One is to cut the rate of interest on our
savings so you get texts on your retirement income while
it's rolling up. And if you reduce the rate like
they do in Australia to fifteen percent tax on the
investment income, whereas a lot of New Zealanders pay seventeen

(01:19):
and a half or twenty eight, well, that would make
a huge difference to the compounding interest effect of our
growing savings. The other one would be to remove the ASCT,
the withholding tax on the employer's contributions and put that
in tax free, which is something that the Labor government introduced.

(01:40):
When can we say that started that the National Party
took off when they were empower under bilinguish.

Speaker 2 (01:46):
Now those are obviously not going to be cost neutral.
They're going to cost the government something. What about an
option that wouldn't cost them anything? I putting up the
employer contribution and doing it that way, Well, that.

Speaker 1 (01:58):
Would cut the employers And whilst politicians don't know it,
I run a small business and I can assure you
that employers still have a vote.

Speaker 2 (02:09):
Yeah, the good point, and they voted for this party,
didn't they? What about the super fund? You know, the
fact that we're going to start pulling out of the
super fund early? Is that a worry or should we
reach out about this?

Speaker 1 (02:19):
We should be thrilled. This is what the super fund
is for. It's up to eighty billion, which is just
a teed under one hundred billion in ken We say
is right. And the point is that this super fund
is generating returns of about ten percent perannum, and one
percent of that would be eighty million. So paying thirty

(02:45):
two million towards our New Zealand super and reducing the
tax burden on the government or allowing that thirty two
million to be spent on health or education or pay
parity or whatever would actually benefit the government in terms
of its fiscal position, but wouldn't damage the super fund

(03:07):
at all. And as I say, that's exactly what this
fund was set up to do, to reduce the cost
of New Zealand Super. As our population ages and we
live no longer.

Speaker 2 (03:19):
Okay, interesting, I'm thirty years away, I make calculating from
retirement age. By the time I get there, will New
Zealand Super exist? Do you think so?

Speaker 1 (03:31):
Our question, because of this fund and because of the
system we've got now, one of the key issues is
whether they put the age up to seventy, make you
wait another five years. You've got to work for other
five right, But in atual fact, now with the health
costs and the changing population that we've got with mor
Mari Pacifica, we think that the age of retirement should

(03:54):
stay at sixty five. So the less moving of the
goldpost they do, the better, but the less texts they
take out during the accumulation phase the better too.

Speaker 2 (04:05):
Jonathan Erickson, Superannuation and Super Fun Expert.

Speaker 3 (04:08):
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