Policy Area: Superannuation

Statement of General Direction:

Recognising the need to plan for an ageing population so intergenerational affordability problems are minimised, the Parties agree to place a proposal fora compulsory superannuation scheme before the New Zealand public to endorse or reject.

Key Initiatives of Policy:

1. To begin the immediate design work fora compulsory savings scheme suitable forNew Zealand, drawing on the superannuation policy announced by Ne w Zealand First and the principles outlined by the Todd Taskforce on Private Provision for Retirement.
2. To engage the best possible independent advice from the public and private sectors in designing the scheme.
3. To conduct a Referendum on the compulsory savings scheme, once the design of the scheme is complete, for implementation on 1 July 1998. All aspects relating to the design of the superannuation scheme must be mutually agreed by the Coalition partners, including:
• Preparation
• Membership of the Review Team
• Design
• Terms of Reference
• Public information
• Campaign costs
• Timing of Referendum.
4. Notwithstanding the Coalition Government's commitment to ensure the best scheme is designed for the Referendum, it is acknowledged that individual Members of Parliament of the Coalition caucuses will have the right to argue for or against the Referendum question in the public debate over the compulsory savings scheme. All Coalition Members of Parliament are bound to implement a Referendum result that is positive.
5. The Parties agree to defer the implementation date for the 1997/98 tax cuts from 1 July 1997 to 1 July 1998, except for the Independent Family Tax Credit and Family Support proposals which will apply from 1 July 1997.
6. Should the compulsory superannuation scheme proceed, it is agreed the contribution rates will be:

1998/99	3%
1999/2000	5%
2000/01	7%
2002/03	8%

Subject to the continued availability of adequate surpluses in the Coalition Government's accounts, there will be an equitable programme of tax cuts to broadly match the increase in the compulsory superannuation contribution rates set out above.

Fiscal Implications of this Policy Agreement:

Deferral of Tax Cuts - $1 billion savings (not including cost of the Independent Family Tax Credit and Family Support, which cost $105 million perannum).

(All funding proposals subject to being considered within the agreed spending policy parameters.)

Legislative Implications of this Policy Agreement:

Income TaxAct - change of date to defer tax cuts.

Compulsory Superannuation Savings (Referendum) Act.