NZ Super and our rapidly ageing population

It’s February already. As you get older time seems to go faster, which means we feel like we are ageing more rapidly. One way to combat this is to watch all speeches in Parliament (replays if the House isn’t in session), so that time slows down to a long drag.

But this is a diversion from what this post is about. Read this instead:

Dr M. Claire Dale (Newsroom): Time to address our rapidly ageing population

The Retirement Commissioner has a statutory obligation to produce a report on retirement income policies every three years. This year’s review has had little fanfare so far and the terms of reference have only just been released. The report is expected by December 2019, which allows little time to properly examine the pressing issue of suitable policies for our rapidly ageing population.

In line with this Government’s emphasis on wellbeing and sustainability, the terms of reference stress that the review must assess “the effectiveness of current retirement policies for financially vulnerable and low-income groups, and recommendations for any policies that could improve their retirement outcomes”.

With respect to retirement income policies – the crux of the review – an Official Information Act request to the Ministry of Social Development revealed that more than 41,000 of people receiving New Zealand Superannuation also need the Accommodation Supplement to pay their private rental costs. They join with the other 249,000 people receiving the supplement, costing the Government more than $27 million a week. This suggests both that NZS is inadequate and private rents are too high.

We have been encouraged to save for our retirements to supplement NZ Super for a long time.

Critically important topics include the impact of current retirement income policies on current and future generations, and the fiscal sustainability of current NZS settings. An ageing population means a shrinking number of working-age people to support a growing number of old and increasingly frail people, which imposes obvious fiscal challenges.

And political challenges.

National under John Key and Bill English refused to address the age of eligibility of NZ Super.

Labour proposed Super changes leading into the 2014 election but were hammered from the left so dropped them by 2017.

NZ First secured a ‘no change’ clause in their coalition agreement with Labour.

The international environment needs to be brought into any discussion of these topics, as many countries, including Australia, have already increased their qualifying age for the pension above 65 and are in the process of increasing it further. Any discussion of this needs to recognise that not all sectors of the population have the option or ability to work past 65.

Or in some cases up to 65. United Future secured an agreement from National to look in to ‘flexi-super’ where you could choose the age you started receiving Super, but that turned out to be a farce as National had no intention of actually changing anything.

The hope is that this time the review is substantial, its recommendations are debated widely, and the Government has the courage to introduce policies appropriate for a rapidly ageing population.

I doubt that will happen. Winston Peters is likely to stand fast opposing any change unless it is for more Super for his voters. And Labour is likely to keep it in it’s ‘not a priority’ basket (or under their ‘ignore’ carpet).