Pensions forecast ‘doesn’t look good’: Bagrie
The former chief economist of ANZ says raising the retirement age is ‘‘inevitable’’, as he pledges to push issues of public policy in his new career.
Cameron Bagrie, who stepped down from the role he had held at New Zealand’s largest bank for 11 years at the end of 2017, has launched a new consultancy, Bagrie Economics.
The new career will come, he says, with more freedom to debate issues and the possibility of commenting on the banking and financial services sector.
Bagrie was already one of the more outspoken in his field. He warned in 2016 that when the Reserve Bank cut interest rates, banks would pass only some of the lower costs on to customers on floatingrate mortgages.
The warning proved to be correct, prompting criticism for the sector from politicians and central bankers.
Now he says he will be in a position to be even more independent.
One of the first issues he is set to raise is retirement income. Successive governments have refused to change the age of eligibility for superannuation as the population lives longer.
‘‘There’s going to be fewer workers, and more retirees. If you look at the maths, it doesn’t look good … Raising the retirement age, at some stage, is, I think, inevitable,’’ Bagrie said.
While Labour previously campaigned on raising the retirement age, it dropped the pledge in recent years, with Prime Minister Jacinda Ardern promising not to alter the age of eligibility.
Finance Minister Grant Robertson has said it is not a matter that is up for discussion.
But Bagrie said the issue needed to be debated. ‘‘No-one’s talking about it. As an issue, it’s disappeared, but it’s an issue that the longer we defer, don’t do anything, the greater the cost is going to be on the next generation.
‘‘Do the maths. The numbers just don’t add up. The Super Fund is going to help, but only around the edges.’’
The ageing population would inevitably also raise healthcare costs, he said.
‘‘We’re going to get hit from both sides. Technology is going to elongate our lives, and that’s a great thing, but it’s going to come at a cost.’’
Bagrie said the issues created by the ageing population may alter into one of fairness for workers, in the same way as the debate over house prices had evolved.