Black Monday

[Jaa]

Muldoon saw dancing Communist Cossacks at the mention of a super scheme so we did not have as earlier a start to a super scheme as the Aussies. Then Labour’s socialist Cullen was instrumental in setting the KiwiSaver terms. I think he was reluctant to give too many tax advantages lest it would be seen as middle-class welfare. So we got a watered-down scheme, and many continued to use investor real estate as their main way to grow a tax-advantageous nest egg.

At least Cullen took the problem seriously and did something.

It was John Key's government that stripped back many of the tax advantages that KiwiSaver did have.

[moka]

The super age was established at 65 in 1945. Only a select few lived that long.

Now every man and his dog gets it as spare pocket money regardless of their income or health. Since there's three year elections it becomes a problem for someone else. Most politicians here think about their future knighthood and board position rather than the future of NZ.

My research shows that the age for Universal Superannuation was 65 from 1940. This was for those who were not entitled to the Age Benefit previously called old Age Pension. The age was lowered to 60 in 1977 when New Zealand Superannuation scheme was introduced.

From 1940 to 1974 the structure of state pensions - the Tier 1 age pension (means-tested from age 60) and universal superannuation (taxable from age 65).

The Social Security Act 1938 installed a two-tier public pension system that was also to last for nearly four decades.
The main feature of the 1938 scheme for pensioners was an enhanced, non-taxed but means tested pension called the Age Benefit. This came into effect in 1939 and was largely the Old Age Pension under a new name. However, the age of entitlement was lowered from 65 to 60.

At age 65 those not entitled to the Age Benefit received a small universal superannuation payment of £10 a year effective from 1940, plus the promise that this payment would gradually be increased to match the Age Benefit. However, it was not until 1960 that this point was actually reached.
Before that from 1898 an Old Age Pension was introduced, for which those aged 65-plus could apply subject to a rigorous means test that covered both income and assets. The Old-age Pensions Act gave a small means-tested pension to elderly men and women with few assets who were ‘of good moral character’ and had been leading a ‘sober and reputable life’ for at least the previous five years.

In 1976, following the 1975 election, the Tier 2 New Zealand Superannuation Scheme was disbanded and in 1977 the universal Tier 1 “National Superannuation” for all from age 60 was introduced.
The Government announced a revised National Superannuation scheme for a taxable universal pension at age 60, effective from 1977.

The age of entitlement was lifted from 60 to 61 effective from 1992, with a further phase up to 65 programmed for the period 1993 to 2001.

In 1985 the recently elected Labour government attempted to refocus Superannuation on those in greatest need by introducing a surtax on other income earned by Superannuitants.

In the first year of the surcharge about 10 percent of superannuitants paid the equivalent of their full superannuation back in surcharge payments, and about 13 percent repaid a partial amount. This total of 23 percent affected by the surcharge compares with the two-thirds excluded under the original 1898 means test on the Old Age Pension. However, the surcharge was highly unpopular with superannuitants. The New Zealand Superannuation surcharge was abolished in 1998.

https://www.goodreturns.co.nz/articl...t-changes.html
https://www.goodreturns.co.nz/articl...em-unique.html
https://www.beehive.govt.nz/speech/s...re-new-zealand

[Ferg]

Thanks moka. I recently did a straw poll with a number of OAPs and I asked the question: "should NZ super be means tested based on income?".

Of the 5 OAPs in attendance 4 said categorically 'yes' (no quibbles, no exceptions, no qualifications) and 1 was 'it depends'. Mix of voter base, mix of working status and former careers. The 1 fence sitter was likely the one with the highest wealth and income.

In light of the income available to some OAPs and the dire state of the books of NZ Inc....maybe the super being income means tested might not be as unpopular as we think. From memory the pension is the single largest line of expenditure for the NZ Government.

The other straw poll was: "should income tax be based on family income"? 'Family' being yourself + your partner. 7 of 7 said yes.

[moka]

Thanks moka. I recently did a straw poll with a number of OAPs and I asked the question: "should NZ super be means tested based on income?".

Of the 5 OAPs in attendance 4 said categorically 'yes' (no quibbles, no exceptions, no qualifications) and 1 was 'it depends'. Mix of voter base, mix of working status and former careers. The 1 fence sitter was likely the one with the highest wealth and income.

In light of the income available to some OAPs and the dire state of the books of NZ Inc....maybe the super being income means tested might not be as unpopular as we think. From memory the pension is the single largest line of expenditure for the NZ Government.

The other straw poll was: "should income tax be based on family income"? 'Family' being yourself + your partner. 7 of 7 said yes.

The problem with means testing of NZS or any other financial assistance from the government such as Residential Care Subsidy is that people arrange their affairs to qualify e.g. as the article said millionaires qualify for Community Services Card.

https://www.goodreturns.co.nz/articl...surcharge.html
April 5th 1998. The removal of the surcharge.

Philip Macalister looks to the future and he looks at what strategy investors should take now the tax is gone.
The first thing is that many taxpayers who potentially fell into the grasp of the surcharge rearranged their affairs to minimise its effect.
Good Returns has heard of cases where millionaires have rearranged their affairs to the extent that they qualify for a Community Services Card.
Notwithstanding though there are thousands of New Zealanders who have been impacted by this tax that pushed some superannuitants onto a tax rate of 58 per cent.
Its introduction fuelled growth in product classes such as insurance bonds, and these are now feeling the pinch. (The irony of this is that people are told not to make investment decisions based on tax reasons, yet life offices and fund managers offered products which are designed to do just that).
Managers have become sensitive about the negative sentiments about the insurance bond sector, and not many are prepared to openly discuss the issue.
The evidence of what is happening is clear in fund flow figures. Investors have been avoiding insurance bonds for some time now and managers are winding down these products.

Equity Research principal Phil Briggs says people need to be cognisant of how such a switch will impact on their Community Services Card as the income they receive from their investments will be regarded as part of their total taxable income.
Eligibility for a card is related to taxable income levels and in some cases an investor may exceed these limits and lose their card.
Perhaps the most compelling reason for being cautious about switching out of tax paid products comes back to the track record of politicians.
Sure the surcharge has gone, but it is not forgotten.

The Todd Group is unequivocal in its view that there should be some form of means testing to integrate private and public provision - a surcharge but by a different name.
It wasn't the surcharge which investors despised, rather it was the fact that it had come to symbolise broken Government promises.

[causecelebre]

Nasdaq ATH overnight. NVDA report overnight Wednesday our time. Street is bullish. Options market pricing in 8% rise after earnings. Currently NVDA up 91% ‘24 alone and 203% in last 12 months

[Daytr]

Interesting comments from Jamie Dimon

https://www.cnbc.com/2024/05/20/jami...expensive.html

[SailorRob]

Interesting comments from Jamie Dimon

https://www.cnbc.com/2024/05/20/jami...expensive.html

What a legend, you don't hear that from many CEO's. Warren only other one I know of.

[winner69]

Is the FED keeping an eye on the Phillips Curve

[Bobdn]

The NZ50C is now three years and 5 months since an all time high.

Does anyone know what the record is ie how long between all time highs? I'm guessing from the GFC, 2007, to 2013?

I don't have any fancy chart software and the NZ media mostly don't care about such things. So I can't find anything on it.

Anyway, thanks in advance.

[Bjauck]

The NZ50C is now three years and 5 months since an all time high.

Does anyone know what the record is ie how long between all time highs? I'm guessing from the GFC, 2007, to 2013?

I don't have any fancy chart software and the NZ media mostly don't care about such things. So I can't find anything on it.

Anyway, thanks in advance.

Most charts I have seen in the past relate to the gross index. NZ is “special”!

Investing on the NZ stock exchange is definitely a minority activity in NZ. Even KiwiSaver funds overwhelmingly invest on overseas exchanges. It is bearly noticed by most.

However price blips for residential housing garner hyperbolic reactions.