You're Being Seen Off!!
The following has been received from one of our youthful members Peter Smith. Thanks Pete for the contribution.
Those among us who retired before 1990 may have forgotten that our pensions were made “tax free” by being reduced by 30%. Since 1990, the cumulative effect of tax reductions applied since 1996 have been to seriously undermine the value of your pension, known as your GSF annuity. In fact a recent actuarial review of the 1990 “reduction factor” calculated it as being lowered from the original 30% to 25% if a tax rate of 28% was used instead of the 33% assumed in the 1996 calculation.
A practicable remedy would be to lower this annuity reduction factor by 15%. This would exactly match the Government’s 2011 lowering of the tax on investment earnings from 33% tin 1990 to 28% in 2011.
Retirees who feel the amounts involved are “too small to worry about” should remember that GST was 10% back in 1990, and is now 15%. Most benefits were increased as compensation for the GST increase but pre-1990 retirees are still paying the original higher tax rates as well as the increased GST.
Back in November 2011, the Revenue Minister, Peter Dunne acknowledged that the reduction factor was originally intended to have been reviewed within 2-3 years of its introduction but he reiterated that the National Government had no plans to review the decisions made in 1990. Almost all the other political parties in the house (excluding Act, Progressive and National) are sympathetic to the removal of this discriminatory anomaly. As late as the 27th of March, 2012, I received a written commitment from the Rt Hon Winston Peters who wrote “With regard to (your GST annuity being taxed at the rate prescribed in 1990, New Zealand First policy is to tax GSF at the existing rate in any given year.
Am I the only one angered at this continuing rip-off? If not, the only possible solution is to make your local MP know how we feel.