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In addition ACT social policy provides a third top-up component designed specifically to assist low-income families. They are, under ACT, guaranteed after health, education and retirement saving costs, an income level of at least $2,600 a year - $50 a week- more than they receive today.

In short, a direct incentive to escape from dependency on the State and its associated poverty traps, by moving up into the full-time workforce. That outcome is achieved by direct Government top-up of their cash-in-hand income by means of an improved guaranteed minimum family income.

The family we saw earlier, on $25,000 with two children at primary school and two at high school, for example, on top of its education and health top-ups, gets an additional $4500 in GMFI. As a result of these three top-ups, the effective income of the family on $25,000 rises by $26,280 to $51,437 under ACT. The effective income for the family on $33,000 rises by $26,910 to $55,551.

That is, in short, ACT's answer to those blinkered people who say low-income families can't afford choice in education, health insurance and retirement.

Security of income in retirement should not be a luxury for the few. It's a fundamental goal we will aspire to. New Zealand will not deserve to be called a civilised country if it leaves old people to struggle after a lifetime of hard work, in wretchedness, poverty and debt.

In New Zealand today, survey research shows people of every age feel a universal sense of betrayal when they look at our present superannuation system. Older people now see their assets, as well as their income, under threat. Younger people know the scheme is doomed, they expect it to fail them in their own old age.

Everyone knows the politicians are responsible for the mess we all face and nobody trusts them to fix the mess fairly. Teams of bureaucrats have studied the system. Teams of economists have reviewed it and here is their unanimous conclusion:

It's a system typical of the worst political thinking. No planning, no reserves, no security. For the individual, there is, in fact, only one sustainable remedy, save some money, in your own name, then let interest boost those savings.

Apologists for State provision have always said that's impossible. "The poor" the say, "need money or food and housing. They can't afford to save for their old age". ACT says that argument is nonsense. The poor can save just as well as the rich if the Government chooses to help them save. And that is precisely what ACT undertakes to do.

ACT will require every New Zealander with income to open a personal retirement savings account. 7% of your earnings go into that fund. Unlike tax, the money remains yours and it earns a commercial rate of return.

Saving is compulsory for everyone with income until the amount saved is sufficient, with interest, to reach $155,000 by age 65, enough at that stage to purchase an annuity giving you $10,000 a year for life. And in addition, to purchase your own health insurance contract providing health care from age 65, for the rest of your life.

Higher income people will make those savings based on reductions in income tax, paid into their personal retirement fund. Low and middle income people, to the extent that they pay income tax will be funded exactly the same way, assisted as necessary by an ACT Government top-up.

Here's how it works for very low-income people and for everyone without sufficient working lifetime left for their fund to reach $155,000 by retirement. In that case, at 65, under ACT the Government steps in and tops your account up for you to $155,000. Immediately therefore, you are funded up-front to buy your own annuity worth $10,000 a year for life, plus health insurance cover for the rest of your life.

It's yours by right, certain, inalienable. No Government can ever take it from you and no Government can reduce it.

Think about it for a moment. You know what interest does to your mortgage. It costs you a fortune over 25 years. Here's a case where ACT will turn that round and make interest work for you, not against you.

The gains are massive over a working lifetime, even for people on quite modest incomes. Those gains utterly transform retirement security and will vastly enhance the enjoyment of old age.

If a savings-based retirement income system can deliver such extraordinary benefits, I hear you ask then why hasn't anyone adopted it? Where's the catch? Yes, there is a catch - a problem no one has ever, to date, been able to solve to make a savings system work.

People already in retirement or close to it no longer have any capacity to save enough; they're out of the workforce living in many cases, on low, fixed incomes. They depend for support on the taxes of those aged 18-64 who are still in the workforce.

And the burden they impose on people in the workforce is so large, the tax bill so steep, that it entirely deprives a very large number of working people of any practical opportunity of saving money for themselves, for their own retirement later.

That's the rock that wrecked every past attempt to design a satisfactory savings-based system for New Zealand.

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