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?