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The future of NZ Superannuation

Interest.co.nz ran a very interesting series of articles by Andrew Coleman around NZ’s superannuation system. He takes readers through the history of NZ super, how it differs from most overseas pension schemes, different ways schemes can be taxed and more. In particular, I though his bathtub metaphor was an excellent illustration of the difference between pay-as-you-go and save-as-you-go schemes.

Coleman advocates for a revamp of NZ’s superannuations scheme, including a compulsory savings scheme he dubs KiwiSaver 2.1. He makes the point that NZ super was designed so long ago it may not be fit for purpose for kiwis today and going forward into the future. He argues that New Zealanders under the age of 45 (those who were too young to vote in the 1997 referendum) should consider a fundamental restructure of the NZ government’s retirement income scheme.

All in all, a very interesting, easy-to-understand read – check it out if you haven’t already. Andrew Coleman joins The NZ Tax Podcast to talk more about KiwiSaver 2.1 here, if you prefer to listen.

Retirement, tax and preferences: Understanding New Zealand’s most intractable problem | interest.co.nz

A history of New Zealand’s retirement policy | interest.co.nz

Could NZ change from pay-as-you-go funded pensions to save-as-you-go funded pensions? | interest.co.nz

How much tax you pay versus what to expect to receive in pensions, and why when you were born matters | interest.co.nz

Making the transition from PAYGO to SAYGO | interest.co.nz

Death, taxes, and wealth inequality | interest.co.nz

New Zealand Superannuation, behavioural economics, and investment choices | interest.co.nz

New Zealand’s unusual tax system | interest.co.nz

New Zealand’s odd taxation of retirement savings is bad for the country | interest.co.nz

Taxes and the housing market | interest.co.nz

Survey evidence on what New Zealanders want from retirement policy | interest.co.nz

KiwiSaver 2.1: why compulsory savings would be great for young New Zealanders | interest.co.nz

New Zealand's retirement income policy time warp | interest.co.nz

How health innovations have increased life expectancy - and could continue to do so

I am a big fan of health innovations. I owe my life, and the lives of my wife and three children, to excellent modern health care systems. I am going to link to an excellent post about new treatments that are emerging at the end of this piece. This is a good news post to focus on what is going well, and some optimism for improvements.

Before I do that, I want to highlight some of the innovations of the last 100 years that have had the most dramatic effect on life expectancy. The early part of the 20th century - from 1900 to roughly the end of the second world war, saw a series of catastrophes. The first world war, the Spanish ‘flu pandemic, the depression, the Holodomor, and then the second world war, including The Holocaust. Life expectancy took a beating - google charts of life expectancy for Western Europe - you will see the dips especially in France. In some places you see long periods where there is an absence of data, which perhaps tells an even more horrific story. But over the last 100 years there have been some incredible innovations which has enabled a dramatic improvement in the life expectancy across developed nations - and substantial improvements in virtually all nations, some developing nations, and even in many that remain desperately poor.

Historical Context: Top Interventions of the Last 100 Years

Sanitation and Clean Water (Early to Mid-20th Century) - Municipal water treatment and widespread adoption of sanitation systems dramatically reduced deaths from waterborne illnesses like cholera and typhoid.

Antibiotics and Infection Control (1940s onward) - The discovery of penicillin and subsequent antibiotics revolutionized the treatment of bacterial infections, which were major causes of mortality in the early 20th century. Advances in surgical antisepsis and sterile techniques further reduced infection-related deaths.

Vaccines (20th Century onwards ) - Immunization programs virtually eradicated diseases like smallpox and drastically reduced others, including polio, measles, and tetanus. Widespread childhood vaccination campaigns have saved millions of lives, particularly in developing nations. It is a shame that vaccination rates in this country have been falling for some time – bringing a resurgence in diseases such as whooping cough.

Improvements in Cardiovascular Health (Mid-20th Century onwards) -Advances in understanding heart disease and hypertension led to effective treatments, such as statins, beta-blockers, and minimally invasive surgeries like angioplasty. Lifestyle interventions and public health campaigns reduced smoking, significantly decreasing cardiovascular deaths. If only we could push on and work on our obesity epidemic, we could continue to make rapid progress in this area. Some of the new weight loss medicines (see below) offer some help in the battle of the bulge – which has a huge effect on cardiovascular health, and cancer rates.

Cancer Screening and Treatment (Late 20th Century onward)
The development of chemotherapy, radiation, and surgical techniques, combined with early detection through screening, significantly improved cancer survival rates. Now we have a whole new suite of cancer medicines which look set to dramatically improve survival rates once again. But more on those later.

Advances in Maternal and Neonatal Care (20th century)
The introduction of prenatal care, safe delivery practices, and neonatal medicine has dramatically improved survival rates for mothers and infants, contributing to longer average lifespans globally. A nod should be given to safety improvements in care of children here too, which has helped not only in the first year of life, but also in the first five years.

It is hard to say exactly how much – as combinations of factors (positive and negative) have created the great outcomes we have today. In aggregate, the shift has been incredible - expectations for life expectancy at birth in the UK were about 48 for males and about 52 for females in 1900. Today they are about 82 years, about a 78% improvement. In New Zealand, the shift has been similar. I haven’t event talked about quality of life yet. Estimates vary, but the big ones have been estimated, in the UK, to have had the following contribution ranges in impact (estimates are as a percentage of the total gain in mortality).

·       Sanitation and Hygiene: 20–25%

·       Cardiovascular Disease Treatments: 15–20%

·       Antibiotics: 10–15%

·       Vaccination Programs: 10–12%

·       Maternal and Neonatal Care: 8–10%

Can the rate of gains continue?

Absolutely, yes. We did a piece of work in 2023 estimating how many deaths, annually, could be saved by bringing our health system performance up to either a) the OECD average or b) the OECD leader. The gains are substantial, and are not just about later life treatments – but saving hundreds of deaths, for example, of women in their 30s, 40s, and 50s, from breast cancer.

Plus, there are so many great new innovations. For that, I want to link to this external article, which details some incredible new discoveries, which are worth reading about:

(1) Five medical breakthroughs in 2024 - by Saloni Dattani

If you would like to read the biography for Saloni Dattani, you can find a brief one here: Saloni Dattani - Our World in Data

Overall, for most people, life has become longer, better, and wealthier. At the same time, it remains true that there is much more to be done. Even just improving access

Antimicrobial resistance poses major global health threat

The World Health Organisation (WHO) categorises antimicrobial resistance (AMR) as one of the top global public health threats. Antimicrobials (that is antibiotics, antivirals, antifungals and antiparasitics) being overprescribed and misused is contributing to the development of drug-resistant pathogens. AMR happens over time as pathogens (including bacteria, viruses, fungi and parasites) mutate – those resistant to the antimicrobials they were previously susceptible to survive, multiply and spread. The more microbes are exposed to pharmaceuticals, the more likely they are to adapt and develop resistance. This happens in all areas and at all income levels and has global ramifications. Infections become harder to treat, surgeries become riskier and more people die. Modern medicines that were once able to quickly and effectively treat a raft of ailments from tuberculosis to urinary tract infections become progressively more ineffective. In 2019, AMR was estimated to be directly responsible for 1.27 million deaths and a contributing factor in 4.95 million deaths.

Paul Murray, CEO Life & Health Reinsurance at Swiss Re, has written about this ‘silent pandemic’. He calls out the overprescription of antibiotics during the other pandemic, with a reported 75% of patients hospitalised for Covid-19 being treated with antibiotics despite only 8% having bacterial co-infections. He highlights that the impacts are unequally distributed, with those in more vulnerable regions being disproportionally affected, with death rates in sub-Saharan Africa double those of developed countries. Climate change and its accompanying extreme weather, climate-driven migration and warfare are all  vectors expected to intensify exposure to drug-resistant pathogens.

In addition to health impacts, AMR is increasingly causing significant financial impacts. In the US, the Centers for Disease Control and Prevention (CDC), has calculated antibiotic resistance can add as much as $1,400 to hospital bills for patients with bacterial infections. When standard treatments regiments for infections don’t work any longer, complex, often costly, treatment regimens need to be explored. Last resort antibiotics tend to be particularly expensive.

If you want to read more, Swiss Re has published ‘Antimicrobial resistance: a silent threat to our future’, available here.

Thoughts from advisers

We reached out to some advisers and other experts in the industry for their thoughts and opinions on the job, advice they’d give to people looking to get into the financial services industry, what they’re looking forward to and steps people can take to set themselves on the best financial path at different stages.

Wilhelmina Eveleens, Financial Adviser – Risk at InsuranceBASE

What is the most rewarding part of your job?

Supporting clients to make better financial decisions.

If you could give one piece of advice to someone looking to get into the financial services industry, what would it be?

Align yourself with the best people in the industry (and sign up to QuoteMonster!). 

What is something you are looking forward to about the industry over the next 10 years?

Seeing the quality of advisers and advice improve.

What steps can people take to set themselves on the best financial path in their 20s, 30s, 40s, 50s, and 60s?

Save, save, save … and make sure your KiwiSaver is appropriately invested.

What’s the last book you read?

Stolen Focus - Johann Hari.

Updated Health / Medical insurance price comparison database

We have created an updated Medical Comparison database V114. Institutional subscribers have copies in their shared folders / FTP sites. Advisers quoting on Quotemonster already have the new rates showing in their quotes.  Changes are detailed below.

Changes in V114:

Updated nib rates effective 1/1/25

Updated AIA Policy Fee ($7.80) effective 1/1/25

Product comparison database upgrade

The research team worked tirelessly through the holidays—there is always more research work to do. Some highlights from their busy summer, while you were on break, include:

• Library Expansion:
  We now have over 4,000 policy documents in our library. We are confident that no one else has such a comprehensive collection. In addition, we have identified more than 300 old in-force policy types that are no longer sold, which we plan to incorporate into the library.

• Legacy Contracts:
  Before Christmas, we had rated 202 legacy contracts. While that might seem modest compared to the more than 4,000 documents in the library, let us explain: we prioritize legacy contracts with the largest number of existing members. For instance, a 50-year-old Temperance and General Mutual Assurance Society whole-of-life policy might have a few dozen current members, whereas older plans from major insurers such as BNZ Life or Westpac often have tens of thousands—sometimes over 100,000—members. Our carefully curated library now supports about 95% of the existing business research inquiries we receive. Additionally, over the last three weeks, we’ve added two dozen new legacy research evaluations.

• Dynamic Updates:
  A key advantage of our approach to legacy research is that we update ratings whenever there is a weighting change or product upgrade. Some services only provide the rating applicable when the product was last actively researched while on sale. This can lead to outdated insights, especially given the recent trend of blanket upgrades in existing business—particularly by medical insurers and specialist bancassurers acquired by mainstream life insurers.

• On-Sale Research Updates: version 16.3 now live
  We have upgraded our on-sale research database to version 16_3, which includes the following enhancements:

  • Trauma: Minor sub-item reviews for Major Organ Transplant, Early Onset Osteoporosis, Stroke, Coma, Aplastic Anaemia, Trauma Buyback, and Permanent Loss of Hearing.

  • Mortgage: Minor sub-item review for Offsets.

  • Life: Minor sub-item review for Inflation Adjustment.

  • Specific Injury: Minor sub-item review for Loss of Hearing.

  • Medical: Minor amount score review for GP Minor Surgery and Pregnancy.

If you’d like to learn more about the recent changes to our research ratings, please join us at our forthcoming research deep dive meeting. Details will be posted here on the blog as well as via a pop-up on the site.

Thoughts from advisers - Jeremy Bernstein

We reached out to some advisers and other experts in the industry for their thoughts and opinions on the job, advice they’d give to people looking to get into the financial services industry, what they’re looking forward to and steps people can take to set themselves on the best financial path at different stages.

Thoughts from Jeremy Bernstein, Senior Adviser - Life & Health at Gallagher

What is the most rewarding part of your job?

I get huge satisfaction from writing insurance for people that are not otherwise insured, new policies for new clients, creating financially resilient families & businesses and growing the insurance market.

If you could give one piece of advice to someone looking to get into the financial services industry, what would it be?

Find ways to enjoy continuous learning. Over time, aim to understand every corner of detail of how these policies work - understand that attention to detail is absolutely vital in this industry.

What is something you are looking forward to about the industry over the next 10 years?

I look forward to the industry maturing into regulation and contributing to higher standards of ethics and professionalism. 

What steps can people take to set themselves on the best financial path in their 20s, 30s, 40s, 50s, and 60s?

20’s: Find a career they love and one where you are not simply renumerated by wages alone i.e. share in profits through professional partnership or business ownership or a role that offers bonuses if sales targets are achieved. Contribute to KiwiSaver with high growth asset allocation with low fee investments. If not already insured, apply for Private Medical Cover with Partners Life, apply for Loss of Earnings Income Protection with Level Premium until age 70 with Asteron Life.

30’s: Buy a home and review insurance to ensure Life Cover is sufficient.

40’s: Work hard to achieve career goals and find ways to enjoy continuous education. Stay healthy and try hard to keep relationships intact i.e. divorce is a massive financial setback.

50’s: Apply for higher professional roles and actively seek opportunities for business growth and increased income, repay mortgage and step up investment.

60’s: Stay married, stay happy, stay healthy, stay professionally relevant and stay working!

What’s the last book you read?

How Star Wars Conquered the Universe - Chris Taylor.

What do you want us to write about?

We’d love to find out what you’d like to read more of this year on the blog. Local industry news? Global insurance news? Health news? Insurtech? Let us know here.

Happy New Year!

We hope you had a lovely break, got to enjoy some sunshine and had a chance to relax. The Chatswood and QPR teams are back in the office and looking forward to everything we have planned this year.

Things you may want to check out again now you’re back:

1. Research: If you come across legacy products, then dive into our Standalone Head-to-Head feature, designed to make product comparisons more precise and efficient. This tool lets you compare two products side by side in detail, highlighting key differences across benefits, features, and ratings.

2. Insurer updates: A range of new insurer benefits and features were launched late last year – have you seen…

   o   Chubb Life – Continuous trauma

   o   Fidelity Life – Specific Injury benefit

   o   AIA – Accidental Injury benefit

3. Advicemonster: If you’re not already using Advicemonster to create better, faster, and more robust SOAs, we’ve added even more reasons to make the switch. Have you tried our new AI features?

4. Businessmonster: New Year, New Business!? Whether you are experienced or new to giving advice on business insurance we offer you the best online business insurance statement of advice assistance tool you can find. It includes access to the companies office API and AI services to help get you the data you need faster and even help with drafting parts of the SOA. If you have Advicemonster you can check it our for free. If not, request a trial so you can check it out by clicking here.

5. Security: Your FAP has requirements to meet certain standards. Want to take another look at what we do to help you? Check out our Outsource Provider Statement and information security bulletins for extra peace of mind.

6. If you haven’t already, check out Kiwimonster - compare over 30 KiwiSaver schemes and 300+ funds with ease at www.kiwimonster.co.nz or by clicking on the new icon at the top of the screen when you login to www.quotemonster.co.nz.

7. You’ve read this far. Not many people have. Email Russell to ask about a super special offer (but hurry, the rest of the staff will get in and stop him by the 16th of January – so you must email before then).

Hit us up with any questions you have. And if you have any thoughts on training you would find useful, please let us know here or here.