Pension must change over home status
NZ Super might need to be reviewed as more New Zealanders approach retirement without their own homes, commentators say.
University of Otago research shows non-homeowners are in a worse position at retirement, and recommends action before the problem grows.
‘‘We’re staring down the barrel of future generations of nonhomeowners being less able to achieve acceptable standards of living when they retire because of the critical factor of home ownership,’’ said Helen Roberts, of the university’s accountancy department.
The research team of PhD student Jelita Noviarini and supervisors Andrew Coleman, Roberts and Ros Whiting said the results showed a need for the New Zealand government to address the lack of suitable public housing, rising housing and rental prices, and mandate compulsory contributory retirement savings plans.
‘‘New Zealand Superannuation is based on the assumption that recipients are homeowners. It’s clear through statistics and the current attention on housing affordability that this is becoming less of a reality for many New Zealanders. The longer policy makers take to address this issue, the worse it will be for many New Zealanders,’’ Noviarini said.
Financial adviser Liz Koh said NZ Super needed a thorough review to see whether it was doing the job it was meant to – ‘‘which is to provide a basic standard of living for all retirees’’.
She said where people were in New Zealand also made a big difference to how well they could live on the pension.
‘‘We know that for people who live in urban areas the cost of living is higher and there is a bigger gap between the pension and living expenses. I have always thought too that the inflation index for retirees is different than for people who are still working and that possibly the rate of increase in the pension is not high enough.’’
Coleman said the research showed that selling up and living with family was the best retirement option.
‘‘[But] outcome is less achievable as families become more individualistic and less communitarian. Single females are exposed to large drops in adequacy if they choose or are forced to sell and rent.’’
The study also found that Ma¯ori, renters and individuals living in multi-dwelling occupancies have much lower levels of financial adequacy. Individuals of Pa¯keha¯ or Asian ethnicity, homeowners and those living alone benefited more from imputed rent derived through home ownership.