What Means Testing Really Means

There seems to be a lot of commentary around the future affordability of superannuation in New Zealand recently.   I am not saying it's perfect,  but there's a lot to like.    For one thing, there's no "means testing".   You get to 65 and it is paid.

Means Testing is the catch-all cure-all that many people suggest.   After all, it seems unfair that everyone gets NZ Super, no matter what.   Perhaps only those who need it should get it?  

We could introduce a threshhold so that only people with assets less than (say) $500,000 will receive NZ Super.   But you know what will happen next.   The more well-off  people will arrange things in such a way that their declared assets will be exactly $499,999.  

And it will be that blatant.   There were some extreme tax breaks for superannuation some years ago and - oh yes - many of the Great and the Good marched through that loophole, twirling batons as they went.   It's called "means testing" because "mean" people "test" the boundaries. 

So...to solve that problem, in a means tested world, we would put in rules to make sure that kind of thing can't happen, right?  Yes we would.  And employ people and systems to ensure that each superannuitant doesn't have too many assets hidden away?  Absolutely.   We should also penalise those that try to rort the system?  Too right!  

So we now enter a world where senior citizens declare their assets on a regular basis to an agency like WINZ to qualify for their state pension.   

Can't we give it - and them - a rest?

Stupid Brain

For most of us, Sunday is a time for taking things a little more slowly and this allows the mind to reflect, ponder and take stock.   How relaxing.    

Or is it?   The brain's default setting often seems to be "what's going to become of me?...what am I gonna do?".   And then the brain races around trying to find something to worry about.   Stupid brain.

The brain is so stupid that, even though you are in the top 1% of the richest people that have ever lived, it seems like it will find something, anything, to make you worry.   

As a teenager, we worry about very silly things.   When we grow up, we gather information that kicks most of those worries into touch.   Wouldn't we all love to be 15 again for a day - back at school, with a confident, adult brain firing on all cylinders?    Such fun!  

So - the enemy of worry is information.  Sharks are immediately scary because they have big teeth and everything. 

But in terms of danger to you - you should be more afraid of a toaster!   If you get information,  - the worry goes away.

Money is the among the easiest things to worry about because you can quantify it.   Therefore, everyone worries about money, because the brain finds it so easy to do.  

And when we worry about money, we think about how much money we have.   Niggling doubts about whether we are being paid enough...because if we get paid a bit more these worries disappear, right?  

No.  This is the brain being stupid again.   People get promoted and get pay rises - but often they are still unhappy and they still leave.   Only for the pattern to reoccur again and again.  

So employers can help their people (and themselves) by giving their people information about money.   Particularly if they are in a spot of bother with debt.    Helping people by giving them information,  gives them the message that their employer is on their side - and not part of the problem.     
 

  

Independence Day

I feel duty-bound to write something today.    For today is July 4th, Independence Day.   It is also the day my company, Truly Independent Financial Advice NZ Ltd starts operating.   

The theme is Financial Health and Safety.

I offer fun and engaging sessions at the workplace that give people good information on how to spot financial hazards.   

I can also offer the excellent Sorted presentations.   I am accredited by (deep breath...)  the Commission for Financial Literacy and Retirement Income to present these sessions.

Have a look at my website.   I am proud to say my nephew did it.

Employers pay me for these sessions.   So there's no selling of products, no commissions and no pressure.   No, really. 

Come along with me, why don't you?