Tuesday, April 30, 2013

Superannuation

Yesterday there was a bit of flutter on Twitter about a pensioner in the Hutt Valley who was now being made to pay back his student loan - which he took out in 1999 for study - because the recent increase in the pension has meant he's crossed the threshold for repayments.  He complained about this being unjust, and got called a 'cry baby' in some places, as well as being reviled on Twitter.   I think the 'cry baby' post was perhaps a little over the top, but I guess that paying back the loan was always a possibility.  (It's a very small amount, though see below.)

However, what I found unpleasant on Twitter - and on the site where he was called a cry-baby - were the sarcastic and aggressive comments of younger people who have yet to experience what it's like to live on a pension, and nothing but a pension.  This is the pension where, if you're married, you actually get less each than if you're single.  Yes, I know there are ways for two people to economise, but why should they be treated as some double act financially just because they're married?

This is the pension that has been paid for in advance by years of taxation.  I worked for nearly fifty years.  I paid tax throughout that time.  I paid for that superannuation over the fifty years I worked.  Younger people go on about how they're paying for superannuitants.  No, they're not.  Superannuitants have basically paid for their pensions through their tax, just as those now working are paying for their own future pension. 

This is the pension that is about half of what I was earning before I retired. The figure I earned in my last three years of work was possibly the highest I'd ever received, and it wasn't anything like NZ's mean income.  I'd often worked for incomes that were considerably less than that.  Earning that kind of money makes it very hard to put anything away for your retirement, so in the end you're forced to rely on the superannuation.

I'm grateful for the pension, make no bones about it.  However, what many younger people won't be aware of is this little catch.  My wife isn't yet 65, but no longer has a job.  Because I'm on a pension, thankfully she is able to receive a 'supplementary' pension.  As a result, until she's reaches the age of 65, my superannuation figure goes down somewhat from the normal payment, and her payment equals mine.  So we get less than many married pensioners.  During the year she was able to pick up some work.  However, between us, we're only able to earn $100 a week over and above our pensions - until she reaches 65.  (The $100 a week, is of course, taxed, as is the pension itself - something many people don't think is the case, including Michael Laws.) The part-time, casual work she did in the last Work and Income year caused us to go over that threshold figure.  Every dollar she earned over that $100 a week, is taxed at the end of the income year at 70%.  This is not a typo.  You have to make up your mind whether you think it's worth working and having some cash in hand, or whether it's not and thus avoiding the additional tax you incur (it's worked out at the end of the W&I year). 

Perhaps I would at one time have thought superannuitants had it easy (although I was aware what my retired mother was receiving for many years, and it was never much).  But in fact many superannuitants in the country are much worse off than we are, and we don't exactly consider ourselves flush for cash.  So before you start criticising those over 65, think about what they may really be earning.  Once they've paid for the essentials each week (if they can afford to do that) there's next to nothing left.  Not much to show for years of giving your life to your country. 

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