Baby boomers have been the major beneficiaries of rising housing prices over the decades. That does not necessarily mean it’s a good investment decision for them to buy residential property as they near or begin retirement.
A tight labour market and sticky inflation suggests that the Reserve Bank is not about to cut the cash rate. Indeed, it’s more likely the bank will lift it again – good news for those with cash and term deposits.
The trials and tribulations of a Retirement Commissioner
Diane Maxwell had a tough time when she was New Zealand’s Retirement Commissioner. She had set herself an unarguably noble goal, but her efforts to reach it made her more enemies than friends.
Her ambitious goal was: “To build the financial capability of New Zealanders of all ages, with an emphasis on low income and vulnerable groups, as well as an increased focus on young people.”
However one would go about doing that, there was bound to be some ruffled feathers. It would likely require some redistribution effect on wealth and/or income. There would be some relative losers mixed in with the absolute winners. And Maxwell understood women were over-represented among low income and vulnerable groups.
Maxwell, who was born in NZ, moved to the UK when she was 10. After graduating from Kent University with degrees in philosophy and film study, she worked in London in media and marketing before returning to NZ for lifestyle reasons and took up a senior role with the global advertising agency Saatchi & Saatchi in Auckland.
Roles at the Government’s Financial Markets Authority followed before she got the job as Commissioner at what was then called the Commission for Retirement and Financial Literacy in 2013. Best known for advising the Government on the management of retirement villages and broader retirement issues, the Commissioner reported directly to the Government – without a board.
From the outset, Maxwell challenged the status quo. Realising the retirement system was too expensive, she wanted to encourage people to take more control over their financial futures. For instance, having everyone in Kiwi Saver (NZ’s voluntary retirement system) seemed a no-brainer to her.
She also said the retirement age should be raised from 65 to 67, which remains a contentious issue in New Zealand, and said it should be made more difficult for recent migrants to access a government pension. Closer to home for her, she streamlined and improved the efficiency of the Commission, making some positions redundant and closing the Wellington office.
A name change, to Commission for Financial Capability, was approved but towards the end of her second term, in late 2018, Maxwell was hit with allegations of “serial bullying” of some staff and former staff. An inquiry into the allegations was announced and she stepped back from the role for a full six months so as not to hinder the process while the inquiry took place.
The inquiry was conducted by Maria Dew QC for the State Services Committee on behalf of 16 anonymous complainants. Maxwell was exonerated of the allegations in Dew’s report, but it was critical of aspects of her management style. She returned to work in May 2019 and served the final two months of her fixed term.
Maxwell told Stuff, NZ’s Nine-owned media outlet, after she had left the organisation: “Over a period of five-and-a-half years I did some really unpopular things. I closed the Wellington office. I did redundancies. I did restructures. When needed, I did performance management. When needed I did a number of misconduct processes.” But Dew did not accept that these were the motivations for the complainants, who were mostly women.
A new Retirement Commissioner was appointed, Jane Wrightson, who reinstated the word ‘retirement’ in the Commission’s name, now known as: ‘Te Ara Ahunga Ora Retirement Commission’.
The commission’s goals are still to advise on policies to enhance retirement outcomes as well as monitoring the retirement villages market and legal issues. Its staffing has crept back up to about 40 during the past four years, as it had been before Maxwell’s restructuring.
But under the new Coalition Government of Prime Minister Christopher Luxon (the National Party is the dominant partner) and Minister for Finance Nicola Willis, the cost of NZ’s universal government pension system and any related expenditures are once more a focus.
Unlike Australia, all NZ citizens of more than 10 years are eligible for a government pension at 65, paid out of the NZ Superannuation Fund, irrespective of income or assets. The progressive income tax table is the only redistributive instrument in the country’s retirement system. And the NZ per-person pension is slightly more generous than Australia’s.
Work on ‘financial capability’ continues as one of the programs run by the Commission, with several hundred partner organisations. But the commission has recommended to the Government that it keeps the retirement age at 65, rather than increase it to 67, as Australia did slowly, in stages, following the initial announcement in 2009.
One suspects NZ’s new Government would prefer to be working with the old commissioner.
