Monday, 9 May 2022

Time to face reality on Super Age


“It’s time to face reality on the superannuation age, and gradually increase the age of eligibility starting now instead of waiting ‘til it’s harder,” says ACT Leader David Seymour.

“New Zealand has become an outlier on superannuation where Australia, the U.K., the U.S., Germany, Ireland, Italy, the Netherlands, Norway, Spain among many other countries have, or are, raising their retirement ages.

“If New Zealand was richer than those countries, or had some other advantage, then perhaps we could afford to ignore reality longer than them. The truth is we can’t and the reality is this: People are living over ten years longer than they were two generations ago, and they are having fewer children to pay taxes for superannuation. That means our current approach is not fair or sustainable.

“We would take the sensible approach of gradually increasing the superannuation age to 67, at a rate of two months per year from 2023. Once the age reached 67, it would be indexed to life expectancy, ensuring that each generation was entitled to same period on the pension as previous generations.

“Someone who is currently retired would see no difference from this policy. Someone who is currently 64 would be eligible for superannuation two months later than currently planned. Someone who is currently 61 would be eligible for superannuation at 65 years and eight months instead of 65. Someone who is currently 51 would be eligible to retire in 16 years’ time instead of 14. In that time, life expectancy will have increased by approximately two years.

“This ensures the sustainability of the pension over time, as New Zealanders live longer and healthier lives.

“Altogether, this change will save the New Zealand taxpayer $16.02 billion over the next 12 financial years, and that’s before accounting for interest. This represents an approximate 12 per cent reduction in debt in 2034.

“In tandem with this change, ACT would also de-link the KiwiSaver withdrawal age from the superannuation age. KiwiSaver participants would still be entitled to withdraw their funds at 65, no matter what changes were made to superannuation.

“Other political parties aren’t brave enough to make this change. It is good public policy and the right thing to do to ensure superannuation is sustainable for our children and grandchildren.”

ACT's Real Change Budget can be found here.