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Australia vs NZ: Who’s doing retirement income better?

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Do New Zealanders or Australians get a better deal in retirement?

Commentators say it depends who you’re asking.

A number of people who contact RNZ with questions about their financial lives want to know about NZ Super if they’ve been in Australia or [https://www.rnz.co.nz/news/business/579686/we-re-in-australia-can-we-come-back-and-get-nz-super-ask-susan their entitlements to a pension in Australia if they’ve been living here.

But how do the two systems compare?

Superannuation savings

Australians probably get a better deal out of their superannuation savings than New Zealanders do from KiwiSaver.

From July last year, the contribution rate has been set at 12 percent – and this is contributed by the employer. Contributions are generally taxed at 15 percent but tax is charged on withdrawals when they are made from income before tax was paid on it such as contributions from an employer or salary sacrifice.

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In New Zealand, our current default rate of 6 percent is split between the employer and employee. It comes from taxed income and returns made by the fund are taxed. Withdrawals are not taxed.

Tim Jenkins, superannuation consulting leader at Mercer, said the contributions were a key difference. “In Australia, no one needs to pay a contribution… if you’re an employee, it’s 12 percent regardless of whether you pay or not.”

The compulsory nature of the scheme meant that anyone who was employed was developing savings for retirement, whereas in New Zealand people could opt out of the scheme, or stop contributing.

He said it was notable that New Zealand had next to no tax concession for savings.

“In Australia there are substantial tax concessions particularly for the higher end of town and that makes a big difference on incentives and what people choose to do.”

Jenkins said another difference was that Australian superannuation schemes had life insurance built in, whereas in New Zealand people have to arrange and pay for this cover separately

People can also access their superannuation in Australia when they are 60 if they have left work. In New Zealand, access is tied to the age of eligibility for NZ Super.

“That’s quite important because you have a number of people who cannot continue working to 65 because of the physical jobs, or whatever is going on, or they’re unemployed,” Jenkins said. “This helps with that transition to retirement phase.”

New Zealand’s pension costs about 5.1 percent of GDP, roughly twice what Australia’s costs. It is projected to rise to 8 percent by 2065, compared to a projected drop to 2 percent for Australia by 2060.

Pension

But it’s on the pension that New Zealand comes into its own.

In Australia, you need to be 67 to qualify. To receive the full pension amount, you can only earn up to $218 a fortnight as a single person, or $380 as a couple.

The cut-off point for a single person to receive anything is $2575.40 a fortnight, and for a couple it is $3934.

A single homeowner also cannot have assets more than $321,500 to receive a full pension.

In New Zealand, NZ Super is available to anyone over 65 who meets the residency requirement, with no income or means testing.

To generate the amount that a single person gets in NZ Super, you’d need to have about $600,000 saved, at a drawdown rate of 4 percent a year. At the moment, the average balance of Australians nearing retirement is about A$400,000.

Jenkins said Australian super was replacing the pension for middle Australia, whereas all residents and citizens in New Zealand could access it.

Simplicity chief economist Shamubeel Eaqub said, from an individual perspective, New Zealand had a really good system. “Everybody just gets free cash… Who would say no to free cash? The problem, of course, is that the overall pension system doesn’t make sense.

“It’s literally free money. Essentially working New Zealanders are subsidising the superannuation system. It’s working as we designed it to and it’s doing exactly what we thought it would. The question is, is it fair?”

The cost of the current system was projected to keep rising in an unsustainable way, he said.

“If you look at the Treasury long-term briefing, there’s a really nice chart of New Zealand versus Australia, comparing the total superannuation cost including the subsidies for their savings scheme.

“Ours goes up forever, and theirs gradually trends down over the next several decades. That’s the difference. We have it good for now but it’s not going to last.

“They have it good for those who need it but not so much for those who don’t. They have a system that encourages people to save out of their income … it’s really around collective versus individual. I think the lens really matters but also generational, so for people who are getting it now this current system in New Zealand is fantastic and it’s absolutely terrible for the young people of New Zealand.”

Pie Funds chief executive Ana-Marie Lockyer agreed there were clear differences.

“I would say Australia is more generous at the front end through compulsory employer contributions and tax breaks. New Zealand is more generous at the back end by guaranteeing a universal pension. They’re fundamentally different philosophies rather than one clearly being more generous overall, and different cohorts will benefit from one over the other.”

Australia’s pension is generally tax-free and more generous than New Zealand’s, which is also taxed as income.

Other differences

Jenkins said another difference was that Australia had given more thought to helping people spend their superannuation savings.

“We’re starting to get decumulation options and a focus on how to spend in retirement using your super as opposed to New Zealand, which is really a savings system at this stage… every system has its strengths and its weaknesses and it’s the combination of the KiwiSaver or super guarantee alongside the age pension that makes the difference. You’ve got to look at both together. And then think about not just accumulation but how does decumulation work?”

What if you live in one country and want to retire in another?

New Zealand has a reciprocal social security agreement with Australia and you can use residence in either country to meet the residency test for the pension in the other.

Ministry of Social Development general manager international, disability and generational policy Harry Fenton said if someone relied on time spent in Australia to meet the residency requirements, they would not be able to qualify for NZ Super until they reach the age of entitlement for Australian Age Pension, which is age 67.

~RNZ

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Police say person who fired gun at officers still at large

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Police say a person who fired a gun at officers in Napier is still at large.

Eastern District Commander Superintendent Joel Lamb said Police tried to stop a vehicle in the Pirimai Area at about 10pm on Tuesday.

He said someone in the back seat pointed what was presumed to be a firearm at officers pursuing the vehicle.

“Staff have then heard two distinct gunshots as the firearm was discharged.

“Fortunately, neither of our officers were injured, and the patrol vehicle did not sustain any damage.”

He said hours later, the vehicle was seen travelling north on the Waikato Expressway towards Auckland.

Police seized the vehicle at an address in Manurewa, but they had not found the alleged offender.

Lamb said people who lived at the Manurewa address were engaging with Police.

He said Eastern District and Counties Manukau Police were making enquiries.

“Presenting a firearm at a Police officer is a serious escalation that puts our staff and the wider community at risk. This behaviour is entirely unacceptable.

“We are taking this incident extremely seriously and will be pursuing all lines of enquiry to locate the offender and hold them accountable.”

Police asked anyone who witnessed the incident to contact Police on 105 or online using the reference number 261111/3764.

Information could also be provided anonymously via Crime Stoppers on 0800 555 111.

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New Zealand sides named for RLWC finals

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The players tasked with ending Australia’s Rugby League World Cup dominance have been named.

The Kiwis and Kiwi Ferns have announced their squads for this Sunday’s World Cup finals in Brisbane.

Both sides are chasing their first titles since 2008, and both are looking to end their opponents run of three crowns in a row.

“Our Kiwi Ferns have been so dominant in years gone by, and we want to bring dominance back to this jersey, so I think it will be a case of who wants it more,” said co-captain Georgia Hale of the impending clash.

The Kiwis get a major boost for the final as they welcome back Ronaldo Mulitalo after he served a one-match ban for a high tackle against Fiji Bati.

Mulitalo replaces Charnze Nicoll-Klokstad, who moves to the six-man bench, which again includes utility Te Maire Martin, middle forwards Naufahu Whyte, Erin Clark and Xavier Willison plus fullback Keano Kini.

Loose forward Joseph Tapine will make his 30th Test appearance in a familiar pack again, including second-rowers Isaiah Papali’i and Briton Nikora, and props James Fisher-Harris and Moses Leota.

Winger Jamayne Isaako is on the cusp of claiming the New Zealand record for most Test points.

His five goals against Tonga lifted his career points tally to 225 – level with Shaun Johnson – while centre Casey McLean goes into the final with 16 tries in just eight Tests.

Fisher-Harris will again captain the team.

Fullback Ponga said the goal of the group was clear.

“We have high expectations around what we want to achieve, and obviously winning a world Cup is one of them.”

Meanwhile, Ricky Henry has selected a settled side to take on the Jillaroos, led by their lethal centre combination of Stacey Waaka and Mele Hufanga.

Veteran Apii Nicholls takes the number one jersey, Leianne Tufuga and Mackenzie Wiki on the wings.

Henry has stuck with his halves pairing of Chantay Kiria-Ratu and Raecene McGregor with Alexis Tauaneai, Georgia Hale and Otesa Pule up front.

Rounding out the starting pack is Shaniece Monschau, Kaiyah Atai, and Angelina Teakaraanga-Katoa.

“We have been building well throughout the tournament; we understand the Jillaroos side, and will give it our all to make New Zealand proud this weekend,” said Henry.

RLWC Finals:

Kiwi Ferns vs Jillaroos- 6.10pm

Kiwis vs Kangaroos – 9.35pm

Sunday November 15

Suncorp Stadium, Brisbane

Live blog updates on RNZ

Kiwi Ferns:

1. Apii Nicholls 2. Leianne Tufuga 3. Mele Hufanga 4. Stacey Waaka 5. Mackenzie Wiki 6. Chantay Kiria-Ratu 7. Raecene McGregor 8. Alexis Tauaneai 9. Georgia Hale 10. Otesa Pule 11. Shaniece Monschau 12. Kaiyah Atai 13. Angelina Teakaraanga-Katoa.

Interchange: 14. Ashleigh Quinlan 15. Annessa Biddle 16. Shannon Mato 17. Ivana Lauitiiti.

Reserves: 18. Brooke Anderson 19. Zahara Temara 20. Brianna Clark 21. Abigail Roache 22. Tenika Willison.

Kiwis:

1. Kalyn Ponga, 2. Jamayne Isaako, 3. Dane Gagai, 4. Casey McLean, 5. Ronaldo Mulitalo, 6. Kodi Nikorima, 7. Jahrome Hughes, 8. James Fisher-Harris (c), 9. Jeremy Marshall-King, 10. Moses Leota, 11. Isaiah Papali’i, 12. Briton Nikora, 13. Joseph Tapine (v/c).

Interchange: 14. Te Maire Martin, 15. Naufahu Whyte, 16. Erin Clark, 17. Xavier Willison.

Reserves: 18. Keano Kini, 19. Phoenix Crossland, 20. Charnze Nicoll-Klokstad, 21. Scott Sorensen, 22. Leo Thompson.

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Parliamentary Service working on extra chairs and offices for increased number of MPs

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The chief executive of the Parliamentary Service is confident there will be enough room to accommodate the increased number of MPs and their staff coming into Parliament.

On current numbers, up to 131 MPs could be sitting in the Chamber following the election, brought on by a record overhang result.

Clerk of the House of Representatives Dr David Wilson told the Spinoff that currently the debating chamber had enough chairs to seat 124 MPs – including the Speaker of the House – and work was being done to accommodate more by altering the seating arrangement.

In a statement, Parliamentary Service chief executive Rafael Gonzalez-Montero said planning for a larger Parliament had been going for “some time”.

“Now that the election results have confirmed an increase to the number of members we are looking at several options.

“We are confident we will be able to accommodate all members within the Chamber.”

Chief Executive of the Parliamentary Service Rafael Gonzalez-Montero appears before select committee.
Parliamentary Service chief executive Rafael Gonzalez-Montero.

VNP / Phil Smith

Gonzalez-Montero said office accommodation for members and their staff would be “stretched” for a short time, but the new Members’ Building was only a few months away from “practical completion”.

That building – located behind Parliament – was due to be ready to occupy in April next year and had capacity to accommodate around 30 backbench MPs.

“All members should be in fit-for-purpose accommodation from that point,” Gonzalez-Montero said.

Following the 2023 election, 123 MPs sat in the Chamber – a record number at the time. That decreased to 122 following the resignation of National MP Judith Collins.

Collins held the seat of Papakura and stepped down in May and Parliament voted against holding a by-election because it was too close to the election.

The election result also meant high-ranking National Party MPs like Chris Bishop, Paul Goldsmith, Nicola Willis and Gerry Brownlee – Speaker of the House and an MP for 30 years – would likely not make it back into Parliament.

Only resigning or retiring MPs were permitted to give a valedictory speech meaning none of them would get the chance to give a valedictory statement.

Asked if their would be special allowances for valedictories, Wilson said in a statement that normally only MPs were allowed to speak in the House but the House could suspend its own rules or temporarily alter them.

“It could do so to allow former members to address the House.”

Wilson said no such arrangements could be made until the next Parliament opened and members sworn in.

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