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Too early to lock in compulsory super - Key

Contributor:
Fuseworks Media
Fuseworks Media
John Key
John Key

Wellington, Aug 16 NZPA - It was too early to say whether the Government would support compulsory retirement savings, Prime Minister John Key says.

Finance Minister Bill English has asked the tax working group to organise a savings working group.

The group would look at how to increase private savings, including compulsory retirement savings, the Cullen fund, KiwiSaver and tax breaks for savings.

A 1997 referendum rejected a compulsory savings scheme proposed by New Zealand First leader Winston Peters.

Mr Key said he was happy with how New Zealand's superannuation scheme worked and it was, essentially, compulsory.

"That's a very elegant system, it works well, and we're not going to change it -- either age of entitlement or the amount that you get," he told TV One's Breakfast show.

However, 90 percent of New Zealand's debt was owned offshore, he said.

"Lifting our national savings rate would be really good, the question is how you do that."

Individuals lived longer after retirement now and were more active so needed more money to fund their retirement, Mr Key said.

Mr Key said the Government was aware of the problems and was looking into solutions but it was too early to say whether it would adopt compulsory KiwiSaver.

Last Wednesday Mr English bemoaned New Zealand's debt problem, saying that in 2000 the country's debt to the rest of the world was about $100 billion but now it was close to $180b, and forecast to hit $250b by 2014.

"So we have a big task to turn this economy around and rebalance it towards savings and growth," he said.

Labour finance spokesman David Cunliffe said he did not have a problem with the Government seeking advice from outside experts but found it surprising that National did not already have a plan for retirement savings.

"Outsourcing the problem to a savings working group is tantamount to an admission that any effects from tax changes have been minimal, and National has nowhere else to go," he said.

Speaking on TV3 political show The Nation, Labour leader Phil Goff indicated his party was working on a policy for super savings and did not rule out a compulsory model.

"We absolutely have to increase our savings as a country," he said.

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