SUPER AGE RISE
What it means for you
Prime Minister Bill English’s proposal to lift the retirement age to 67 may not survive past the election after National’s likely coalition partners and rivals roundly rejected it.
The major policy shift by National is not scheduled to take place until 2037. It will affect every New Zealander under 45.
It is also set down to pass into law next year, meaning its progress will hinge on the general election result in September.
Labour said it would not raise the age if it came into power at the election — a position backed by its campaigning partner, the Greens.
New Zealand First, which could hold the balance of power after the election, is firmly against lifting the eligibility age. However, leader Winston Peters praised a separate proposal to require immigrants to live in New Zealand for twice as long — 20 years — to get access to NZ Super.
National’s support partners United Future and the Maori Party are also against lifting the age to 67.
The only supporter of the idea was the Act Party, but it wanted the threshold lifted immediately. English was “taking the proverbial” by leaving it to 2037, leader David Seymour said.
Even if National was able to form a Government after the election, English conceded he could leave the age at 65 if that was a bottom line of National’s coalition partners.
Labour leader Andrew Little said National had “stumbled into” the announcement, and there was no case for raising the age of eligibility.
“Life expectancy may have changed, but bodies wear out pretty much at the same rate as they always have done,” Little said.
But he thought the proposal to double the residency requirements for NZ Super was “about right”.
Greens co-leader James Shaw said any changes needed cross-party consensus if they were to survive the 20 years until the policy kicked in.
English had undermined any consensus by making the announcement in election year and turning it into a “political hot potato”, he said.
The Maori Party wanted the Super age lowered for Maori and Pacific Islanders because their life expectancy was lower than non-Maori.
English ruled that out yesterday, saying the life expectancy gap could well have closed in 20 years’ time.
He also rejected suggestions the proposed changes to superannuation would dent National’s re-election chances, saying they would instead “enhance” them.
The proposals were made possible by National’s change of leadership. Former Prime Minister John Key pledged he would resign before tightening Super’s eligibility rules.
English said he discussed the issue with Key on Sunday, and joked that the former Prime Minister supported all decisions made by the new leader.
Personal finance commentator Mary Holm said the policy was “a big improvement on [John] Key’s absolute refusal to even consider it”.
Many people aged under 45 would not expect NZ Super to be as generous as it now was at the point they turned 65, so the decision to make the change in 20 years’ time could be smart politically, Holm said.
It would be important to address the problem of people in manual jobs being unable to work beyond 65.
“But, then again, by the time we go 20 years down the track there are probably not going to be people doing physical work. Fewer and fewer are doing it now.”
English justified the changes by saying the scheme was forecast to become unaffordable, and because Kiwis now lived and worked longer.
NZ Super was relatively affordable now, he said, but was expected to rise from 5 per cent of GDP to 8.4 per cent by 60 years from now. The proposed changes would save the Government $4 billion a year, or 0.6 per cent of GDP, once fully phased in.
The Retirement Commissioner had wanted the age lifted in 2027 and the residency rule lifted to 25 years.