Labour’s Andrew Little has pledged not to lift the pension age from 65, and his budget strategy to pay for it has been revealed by 1 NEWS.
If elected, Labour would unfreeze Government contributions to the Super Fund from next year.
In the first year of their term, a Labour Government would inject $500 million to the Super Fund, rising to $1 billion, and then $1.5 billion the following year.
Over five years that would take Government Super Fund contributions to around $8 billion.
The Super Fund is the country’s pension nest egg and was created by Labour’s Michael Cullen in 2001.
It is often colloquially referred to as the Cullen Fund.
But the National Party froze contributions to the fund 2009 as New Zealand rode out the global financial crisis.
National says it will resume contributions to the Super Fund in 2020, and has also pledged to lift the retirement age to 67 by 2040.
Mr Little told 1 NEWS: “If you are doing hard physical labour you won't have to work, year after year after 65, we want the fund to be there for you. That's why we're making these contributions now .”
At the end of last year, the Super Fund stood at $32.7 billion.
Under Labour’s plan, with interest and assuming the fund performed as expected, the pot would be just over $63 billion within five years.
Across the same period, a National Government would put in $4.7 billion, which would grow the fund to $58 billion.
National has said paying off Government debt is their priority.
“We are not looking at tax cuts in the commitments that we are making, we think that there are bigger priorities when it comes to put money into health, into schools, into getting young people into work and to getting people into housing,” Mr Little said.
NZIER principal economist Derek Gill says re-starting Super Fund contributions is a sensible idea because the fund has performed strongly over the last five years.
But he says the pension age will eventually have to go up.
“The numbers just don't stack up,” Mr Gill said.
“We have got a massive structural problem coming down the track.
“There are going to be a lot more boomers like me who are retiring - there are going to be a lot more of us relative to the working population.”
Labour also revealed today how it plans to raise more revenue by cracking down on foreign multi-national companies that don’t pay their fair share of tax.
It will lay out more details of its alternative budget and spending plans tomorrow.