Agony Aunt: Supergold card fails to deliver
Dear Janine,
We are recently retired and have received our Supergold Card.
I keep getting told the Government is going to reduce the benefits of free public transport. Is this true? I can't see why else this card is of any use - we don't seem to get any tax advantages like governments offer in other countries and the discounts offered by firms seem a bit ho-hum. Don't you think pensioners should be entitled to a bit more as interest rates are so low and it's impossible to get a decent income off your savings.
ANSWER:
To be honest, I think the Goldcard is a pretty big grey-vote-winner. In the interests of responsible governance, politicians need to be seen to be "reviewing" it, but they'd be mad to cut the benefits.
Other reviews have simply passed more of the costs back to local councils and the operators. They've also prevented new transport companies from being added to the list of those able to make the free off- peak offer. So let's hope the latest review for the 2013 budget will just be more wrangling behind the scenes, rather than any direct hit to pensioners' benefits.
When you look at the breakdown of costings, there are some figures that make you scratch your head. They spend $1.5 million of freebies for Aucklanders going on the ferry to Waiheke Island. Maybe that has a tourism spinoff, but to my mind, taxpayer money should be used to prevent pensioners becoming housebound by high transport costs. Free jollys to Waiheke seems excessive. The benefit could be restricted to residents on the island - mind you, they wouldn't be short of a bob living in that location.
Auckland's pensioners gobbled up half the budget last year; far more than their share. Wellingtonians have upped their use 20 per cent, while retired Cantabrians seem to be staying home with a 20 per cent fall. That will be earthquake related, as no one wants to be reliant on a bus when a quake strikes.
Average cost of $35 a year per pensioner
There are 600,000 pensioners in New Zealand and it costs $21 million for the free off-peak public transport offered by the Supergold Card. That's a pensioners perk of $35 a year each. For such small-change it hardly seems worth the hassle of a review. The problem is that 60,000 new Goldcard holders join each year and with an ageing population there are more joining than dropping off the other end. So costs are on the rise.
Some will moan that we shouldn't be funding wealthy retirees with free bus- passes, but the reality is the wealthy haven't seen the inside of a bus since they were students and aren't using it. Giving it to them costs us nothing. Restricting it to Community Service Card holders would trim the bill. But New Zealand retirees are quite perk-poor compared to other countries, so it just seems plain mean given the wider perspective.
Discounts for goldcard holders
Looking at the Supergold Card website, the level of discounts given to pensioners does look a bit average. It would be nice to see retailers provide much better deals, even if they were one-offs and not continuous.
Looking at this website, it's fairly obvious the Government hasn't paid for the top marketing gurus in the land to run it. It's an opportunity gone wanting. If the website itself could be run with the nous of Trade Me, Groupon and Flybuys we might see much better value for the grey-dollar. After all, the marketeers would have access to a growing population of retirees, who once captured, remain more loyal to businesses than the younger generation.
Perk-poor pensioners
It's correct that our pensioners don't seem to get much from the Government. If we look at the UK, you'll find a whole host of goodies.
If you're over 65 in Britain you'll get a winter fuel allowance of [PndStlg]200 ($400) even if you're a millionaire. The Brits can be daft bats at the best of times, so it's no surprise to hear they still pay the fuel money to over 400,000 expats living overseas and that's costing them the equivalent of NZ$200 million a year. The anomaly is due to European Law, so they're bringing in a temperature test to stop those living on the Spanish beaches getting the cash. Ludicrously, the test could see someone in Cornwall miss out and an expat in Frankfurt still get the money.
The British also have an additional cold weather payment, where they monitor the daily temperature in every city. If there are seven days of zero degrees you get [PndStlg]25 ($46) added to your pension. I bet it made for a good press release at the time, but for goodness sake, it's gimmicky. It's a bit like holding a weather-lotto each week.
They have the pleasure of an ad-free BBC and those over 75 get a free telly licence. Singles get a 25 per cent council tax discount and over 65s are allowed to earn [PndStlg]9940 a year tax-free ($18,500). Then there's a host of tax-free saving plans called Individual Savings Accounts, which are available to all, but especially useful in retirement. The pension payout model itself is layer after layer of mess.
Bits and pieces of the British system are good. But there's plenty of evidence of how the best laid plans can end up in a big complicated tangle, with money being paid to thousands who should not get it.
We might be a bit "perk-less" in New Zealand, but we've got a clean and simple superannuation system, which is gimmick free.
Yes it would be nice to see a few tweaks, (tax-free savings accounts for over-65s with a limit on the amount invested, would be top of my list) but anything new needs to be targeted to those in need and not cost a fortune to administer.
Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.