PM rules out Super age increase

Tuesday 7th December 2010 2 Comments

The Retirement Commission has recommended the age of superannuation eligibility increase gradually so that it reaches the age of 67 by 2033 but Prime Minister John Key says there will be no change on his watch.

Retirement Commissioner Diana Crossan made the recommendation in a report released today, saying it was needed to keep superannuation affordable over the long term. Left as it is, superannuation would cost nearly 8% of GDP when the bulk of the baby boomers retired - up from about 4% currently.

"We know that there's a huge number of baby boomer superannuitants coming, and we can't keep on ignoring this issue until it's too late," she said.

The age of eligibility for New Zealand Superannuation should rise by two months a year from 2020, reaching 67 in 2033, Crossan said.

The National Party pledged not to raise the age of eligibility in the 2008 general election and Mr Key today said that stood.

"We're going to continue to pay New Zealand Super at 66% of the average wage for New Zealanders who are 65 and above," he said.

He disagreed with the assertion the current age had to rise.

"For a variety of reasons but in my view, New Zealand super is sustainable at age 65," he said.

The report, the second three-yearly review of New Zealand's retirement income policies, makes 17 recommendations, the key one being the age increase.

However, it also recommends introducing a means-tested benefit for those who can no longer physically work beyond 65, such as labourers, to tide them over until they reach 67.

As well, superannuation should be calculated differently; instead of being a percentage of the average annual wage, it should be based on the mid-point between the increase in the consumer price index and average weekly earnings.

The review also aimed to iron out current discrepancies in fairness by equalising the unpartnered and partnered sharing rates; different rates apply for people sharing accommodation with their partner and those sharing with a friend.

As well, the deduction of a person's foreign pension from their partner's New Zealand Superannuation should be abolished, it recommends.

"New Zealand Super is the entitlement of every qualifying New Zealander regardless of their income or partnership status," Crossan said.

NZPA

Comments from our readers

On 7 December 2010 at 5:40 pm Christopher said:

Don't know why these people keep on rattling this can (aside from justifying their positions/pay) when the all that counts is the policy that the government of the day has made clear.

On 8 December 2010 at 10:01 am Nick said:

Because its a massive issue. Our peer countries are all taking steps to address the baby boomer / people living longer impact on Super. Every independant analysis suggests we need to take steps but obviously JK doesn't want to upset his boomer voting block. The longer we take to acknowledge the elephant in the room, the more painful the adjustment will be.