Govt could cut NZ Super fiscal impact to 5% of GDP by 2065: consultants
A new paper on New Zealand Superannuation says that the government could reduce the fiscal impact to 5% of GDP by 2065 by both raising the age of eligibility and by linking payments to the consumers price index (CPI).
Wednesday, February 25th 2026, 6:16AM
by Jenny Ruth
The paper by consulting firm Heuser Whittington says that NZ Super is becoming unsustainable and is projected to reach about 8% of GDP by 2065, with the total fiscal cost rising from $25 billion this year to $151 billion by 2065, unless changes are made.
Currently, NZ Super payments are set at the higher of 66% of the average ordinary time wage for couples and 40% for singles, or the CPI, but in practice, wages tend to grow at a faster rate than the CPI.
The paper’s analysis shows that changing the link to the CPI only would have the same fiscal impact as raising the eligibility age to 67 years nine months from the current 65 years.
“Only CPI-linking breaks the structural link to wages, preserving purchasing power while the payment-to-wage ratio falls over time,” the paper says.
One advantage of a CPI-only link is that the fiscal adjustment would be spread across all 923,000 existing recipients, not just new entrants, it says.
If just the eligibility age is raised, then that would affect only future 65-year-olds.
If only the eligibility age was raised to 67.8 years, that would reduce the fiscal cost of NZ Super to 6.8% of GDP by 2065.
If the only change was to a CPI-only link, that would reduce the fiscal cost by a greater amount to 5.7% of GDP by 2065.
Doing both would reduce the fiscal cost to 5% of GDP by 2065.
The firm estimates that NZ Super is currently worth $591,000 to the average 65-year-old but that there are large differences between different groups in society which are driven by expected lifetimes.
For example, Maori men tend to die younger than both Maori women and other races and so they estimate the mean value of NZ Super to the average Maori man is $495,000 but that Asian women, who tend to outlive everyone else, the mean value is $683.000.
Adopting a CPI-only link would have the least impact on Maori men – an estimated benefit value loss of $41,000 – and the most impact on Asian women – estimated loss of $80,000.
But raising the eligibility age alone would have the impact of lowering the value to Maori men by $87,000 and lowering the value to Asian women by just $3,000 more to $90,000.
“Both reforms reduce the value of NZ Super by about $63,000 per person from the same $591,000 baseline,” the paper says, but that CPI linking has a much more variable impact, meaning that those who live longest lose the most value.
Andreas Heuser and Phil Whittington are both former Treasury officials while Heuser was most recently the head of the Asia–Pacific practice of Castalia, a global economic and financial consultancy and Whittington was Inland Revenue’s chief economist.
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