It's always a bit sad to be patronised by someone who has no idea what they are talking about, isn't it?
How else would you feel reading the editorial from the Herald about the NZ Super Fund that reads, in part, this:
"It is important to stress that this whole question is about payments into the fund, not payments out. It is highly irresponsible of the Labour Party leader to suggest that the level of pensions might be at risk, now or in the future. This fund, as Phil Goff well knows, will do no more than partially fund future pensions when the bulk of the baby-boom moves into retirement."[Emphasis added]
So the Herald has discovered a new type of investment fund where payments in bear no relation to payments out? Goodness. Can I please have some of that? I can invest whatever I like, and the return is unaffected! Wow! Sounds almost, well too good to be true! because it is too good to be true. The amount you invest obviously critically affects how much you earn. basic, basic basic.
The giveaway that this editorial has been written by someone who doesn't begin to understand is the line about partially funding the future cost of pensions. It's true, it will only partly fund the future cost. But that point is a complete red herring.
The issue is, will the capacity of the Fund to help meet the future cost of superannuation be reduced or not?
Let us pretend I hold a jar with $10 in it to pay your next week's wages. I then reduce the amount in the jar to $5. Now, whether it is $10 or $5 it is only a small proportion of next week's wages. But if it is reduced - then IT IS STILL REDUCED by $5. See?
By the same logic, if John Key reduces the jar holding the fund that will pay some of the future cost of superannuation, then the future ability of the Fund to contribute is reduced if he doesn't put as much money in the jar - regardless of the proportion of the future fund it contributes, it is reduced in absolute terms. Therefore, either a future taxpayer will have to pay more - or the future superanuitant will have their super cut. There is no other option.
The Herald could have made a complex point about the government increasing its future capability to pay the remainder of the cost beyond the Fund's contribution, by not having as much government debt. But it didn't make that dubious point at all.
The Herald really ought to have its head around these basic issues before it begins to patronise others in its editorials.
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