Maxwell calls for super changes

Retirement Commissioner Diane Maxwell is to formally recommend the pension age is raised - but it does not seem likely the Government will listen.

Wednesday, October 26th 2016, 2:02PM

by Susan Edmunds

Diane Maxwell

The Commission for Financial Capability is carrying out a review of retirement income policies, after which it will make recommendations to the Government.

Feedback and input has been sought from members of the public around New Zealand, as well as the industry.

Maxwell told TV3 she wanted the age of eligibility for New Zealand Super to be slowly increased.

She said she was looking at three scenarios, one of which would affect people who are 55 now.

The age would go up three months a year over a period of 10 years, to a final age of 67.

She said super was not affordable and needed to be tackled.

“The number of 65-plus will double in the next 20 years. The cost of super will triple in the next 20 years. As importantly, our dependency ratios, which is the number of people of working age to retirees will go from 4.4 to 2.4 people of working age to every one retiree.”

She said raising the age to 67 would save $1.6 billion, which could then be used to help people who were struggling to continue working due to health problems.

She also said she was considering recommending the number of years that people were required to be in New Zealand before qualifying for the pension be increased from the current 10 years.

A spokeswoman for the CFFC said that was not yet a final recommendation.

“We are still crunching the numbers to see whether, for example, the residency criteria should go up to 25 years or something in between 10 and 25.”

Rather than a final report to Government, the CFFC will produce seven digitally-interactive videos including the details behind its recommendations, she said.

“They are very different to anything we’ve done before, so the style of the videos is likely to attract plenty of comment and, hopefully, public interest, as well as the content.”

But Commerce Minister Paul Goldsmith downplayed the likelihood of any change to the super scheme.

He said he did not agree the current regime was unsustainable.

“We basically spend about 5% of GDP at the moment looking after our older citizens, and that's absolutely right. They should have a decent standard of living and comfort when they're old. The projections are that by 2045, so 30 years from now, that will have increased to 7% of GDP. Now, the world's not going to come to an end. We can afford that and it's important that we do.”

Tags: retirement