Retirement age in Aotearoa

An interesting article from earlier this year explored what type of country we want to have for those of us who need to retire when we get to 65 (Murray, 2024).

While coalition partner New Zealand First is against raising the superannuation age, National and ACT both want to consider it. The considerations for raising the age we become eligible for a pension includes (a) will it be equitable to raise the eligibility age; and (b) who will be adversely affected by an age increase? Deciding to raise the bar without considering the knock-on effects for all New Zealanders would be imprudent; instead we need to consider what type of country we want to create for older Kiwis.

The retirement commissioner, Jane Wrightson, says that raising the retirement age appears to “hurt[...] women, Māori, Pasifika, and manual workers, all for different reasons, and not because any of them are stupid or feckless. We just have different economic lives. [Enacting a blanket...] decision just to raise or not to raise [the superannuation age] becomes unhelpful” (Murray, 2024). Instead we need to “consider[...] how [a range of New Zealanders] might be treated to get a more equitable outcome" Wrightson says, asking “Do we want to have pension poverty like some countries do?” (Murray, 2024).

After a retirement review, the summary report was released in February by Te Ara Ahunga Ora. It found the following: our national superannuation scheme "needs to be fair, stable, and affordable" (2024, p. 5), but we need to realise that "NZ Super is the eighth least expensive pension in the OECD as a proportion of GDP, and our expenditure would continue to be well below the OECD average in 40 years without any change to the age of eligibility" (p. 5). Now that is a surprise! I thought that our super scheme was hugely unaffordable. Apparently not.

Our "current age of eligibility for NZ Super is not low relative to other OECD countries, with 70% currently having a pension age of 65 or below" (Te Ara Ahunga Ora, 2024, p. 5). So we currently retire LATER than our OECD partners. Granted, the eligibility elsewhere is to drop "to 53% by the 2060s" (p. 5), but that would still leave us in the mid-range of our OECD partners. 

But the kicker is that pushing the eligibility age up will "disproportionately disadvantage manual workers, carers and those they care for, and those with poor health, due to differences in savings, wealth and ability to remain in paid work after the age of 65" (p. 5). This will hit "women, Māori, and Pacific Peoples" more than other groups (p. 5). What extra support would be available which remains available to support those populations through successive governments? Excuse my cynicism, but people who have retired tend to become invisible, and worse, they usually are unable to access additional funding. They are trapped in paying inflated rates for goods and services.

This is a wicked problem.... but perhaps we should turn this idea around. We could raise the age bar for those of us who are NOT doing manual work; who are not carers; who are not ill; but keep it at 65 for those who are manual workers, who are carers and who are ill.

That seems more equitable to me.  

Sam

References:

Murray, A. (2024, March 18). Is 65 still the magic number? What to know about NZ's superannuation debate. TVNZ. https://www.1news.co.nz/2024/03/18/is-65-still-the-magic-number-what-to-know-about-nzs-superannuation-debate/

Te Ara Ahunga Ora. (2024). New Zealand Super: Issues and Options [report]. Retirement Commission. https://assets.retirement.govt.nz/public/Uploads/Policy/TAAO-RRIP-NZ-Super-issues-paper.pdf