Pension picture has room for improvement

New Zealand’s pension system is the eighth best in the world, but there is still work to be done.

The Melbourne Mercer Global Pension Index has given New Zealand’s pension fund a ‘‘B’’, placing us in line with Chile, Finland, Norway, Singapore and others.

But the current system won’t be sustainable as boomers age and KiwiSaver contributions stay the same, the report found.

Mercer New Zealand chief executive Martin Lewington said the results needed to be taken in context with what the country was trying to achieve. ‘‘A ‘B’ is a pretty good outcome but if we aspire to an ‘A’ there are things that need to be worked on.’’

Areas of possible improvement included changing the age of eligibility for the pension,

increasing the participation of older workers in the workforce, increasing KiwiSaver contributions and household savings and reducing levels of debt.

One global trend highlighted by the report was the relationship between pension assets and household debt.

As people saved more money, they also increased their levels of debt with things like additional property.

The lack of buffer between savings and debt could be a source of stress further down the track, Lewington said.

If nothing changed in terms of personal and policy approaches to retirement and superannuation, the pension picture will deteriorate, he said. ‘‘However, offsetting that, it’s good to see the number of New Zealanders who remain in the workforce as they age.’’

Total funds in KiwiSaver for the 2019 period were just over $57 billion, up 17 per cent from last year, the Financial Markets Authority said in its annual report on the saving scheme. The number of KiwiSaver members has risen to more than 2.9 million, up 3 per cent.

Lewington said there were steps people could take to shore up their level of comfort when they reached retirement age. ‘‘You really want to make sure you have a diversified pool of assets that is going to produce you the level of income you aspire to.’’

Public submissions on retirement policy were currently being sought by the Commission for Financial Capability (CFFC).