Long life for NZ Super – with some changes
‘‘Cheer up, it never happen!’’
There are fewer more annoying things to say to someone looking a bit down in the mouth.
But it’s the right message for youth about NZ Super.
Many of those aged 30 and under appear convinced that NZ Super, the universal state pension that forms the bedrock of New Zealand retirement system, won’t exist by the time they retire.
Faced with their userpays world of student loans, healthcare bills and high mortgages, they are a generation who has come to think that there just isn’t the money about to pay for state help in their lives.
Hey, if free education and healthcare is gone, won’t the same happen to NZ Super?
It’s an argument that has a surface logic to it but I think the logic is wrong.
Retirement Commissioner Diane Maxwell has just published her three-yearly review of NZ Super and concludes rightly that it is the envy of the world.
The trouble is we are an ageing country, not so fast as some, but we are ageing.
That puts a strain on
might government finances because a lot more will have to be spent on NZ Super.
This will, the commissioner says, mean some necessary changes to the pension scheme as the number of over65s heads up to a peak of 1.5 million by 2060.
It is suggesting linking the age of eligibility for NZ Super to longevity and maybe limiting the amount it increases by each year, though not by less than the rate of inflation.
But nobody, and I mean nobody, is suggesting an end to universal NZ Super because it is cheap, inclusive and provides a return on a lifetime of being a New Zealander.
Sure, it’s not really enough to live on comfortably, though 40 per cent of current recipients are forced to solely rely on it, but it does mean almost noone over 65 is in poverty.
It’s paid to everyone regardless of wealth, so you know every $1 you save equates to $1 in retirement to help generate extra income.
And whatever the financial services industry tells you, pay-asyou-go, with individuals supplementing their incomes through their own savings, makes sense.
For me, it means 25-year-olds are justified in thinking they will have to save more than their grandparents.
But as the electorate ages, politicians will have to become more mindful of our elders, not less. All this to me argues that NZ Super is here to stay.
So, I feel pretty confident in saying to youth: You will live longer.
You will retire later (and don’t imagine it will be at age 90). And the NZ Super you get maybe a generous.
But equally, I’d say, it can’t be very much less or we’d have cohorts of impoverished elderly people.
If you are of a particularly gloomy nature, live your life and save/build assets as though NZ Super will be worth half what it is now, and plan your working lives a bit longer.
That’s no great hardship. A fifth of over-65s work already.
Just carry on doing the things that will make you successful, and don’t buy into the shrill doomsday rhetoric some spout about an ageing population, and don’t buy into anyone’s attempts to stir intergenerational hatred.
If your elders did get more help and faced lower house prices, they had war, prejudice and shorter lives, and you’ll get to buy their assets on the cheap in a couple of decades when they are all trying to turn them into cash to live off.