Head of School seminar: Spending the savings of an ageing population: why do we care? Event as iCalendar

27 November 2013

12:30 - 1:30pm

Venue: Function Room 730-220, Building 730, Tāmaki Innovation Campus

Population ageing has major implications for the way in which programmes designed to support older people are funded. While social security and means-tested social assistance programmes for long-term care protect the living standards of the poorest in New Zealand, middle-income groups face under-appreciated risks, such as outliving their capital or needing expensive long-term care.  New Zealand has paid almost no attention to the decumulation phase of retirement saving since the reforms of the late 1980s to the taxation of saving. As is to be expected in a country where there has been no direct government intervention of any kind in the annuities market, the opportunity for realistic annuitisation of accumulated wealth has all but disappeared.

This paper argues for a less than actuarially pure social insurance scheme to cover the risks of ageing which combines a life-time annuity with long-term care insurance. This funding approach encourages intra-generational cost sharing and thus may lessen potential intergenerational conflict. Because of the 1980s tax reforms to the accumulation phase of retirement saving, New Zealand may be in a unique position to design new policies and products of this type which better share the costs of an ageing population.

Presented by: Associate Professor Susan St John Department of Economics, University of Auckland Business School

Susan St John is an Associate Professor and Co-director of the Retirement Policy and Research Centre in the Department of Economics at the University of Auckland Business School.  To find out more about Susan’s research interests and policy contributions, visit http://homes.eco.auckland.ac.nz/sstj003/ .

References and Background papers

Papers at the Decumulation Forum Auckland 29 November 2012: Spending the savings

http:// docs.business.auckland.ac.nz/Doc/2012-Proceedings-Spending-the-Savings-Symposium.pdf also St John S, Dale C, and Ashton T (2012) A New Approach to Funding the Costs of New Zealand’s Ageing Population, NZ Population Review Vol 38 (2012).

For more information, please contact: Evie Kinane Email: e.kinane@auckland.ac.nz