NZ pension far from generous: OECD

Kiwi superannuitants get just 43 per cent of average working wage — ranking us 6th worst equal with Oz

New Zealand has one of the least generous pensions relative to the working wage, according to research by the Organisation for Economic Cooperation and Development (OECD).

Retirees in the Netherlands receive more than 100 per cent of their country’s average working wage but Kiwi superannuitants get just 43 per cent — ranking us 6th worst equal with Australia. But it could be worse. Pensioners in the United Kingdom get just 29 per cent of the average working wage and those living in South Africa, which is not in the OECD, get just 17 per cent.

The average across the OECD was 63 per cent.

Financial Services Council chief executive Richard Klipin said the issue of global pension funding and retirement incomes was a key issue for policy makers, governments and industry.

“The recent OECD report provides some very good insights, and highlights that there is more that we can do to help New Zealanders,” Klipin said.

People were living longer and so key issues for policy makers included how to best fund long-term savings (in relation to NZ Super), ensure people created good savings habits, create a tax environment that supported these initiatives, lift con- sumer literacy and engagement and ensure there were products and services that supported good longterm outcomes.

New Zealand had made good progress with the introduction of KiwiSaver “but there is much more to be done”.

The OECD research was part of a wider look at pensions across 35 countries and delves into changes between 2015 and 2017.

It found that the pace of change to pension policy had slowed in recent years as fallout from the global financial crisis had lessened and governments had become richer.

But increasing the retirement age was still on the agenda for many: half of the OECD countries planned to do so in the future, including some that had linked it to rising life expectancy.

Under New Zealand’s Labour-led Government the age of eligibility for New Zealand Superannuation is set to stay at 65.

But the report warned that if greater employment at older ages did not happen the ageing population would “generate lower pension levels”, reducing well-being during retirement.

New Zealand has one of the highest levels of over 65s still in the workforce.

And despite New Zealand’s pension appearing to be less generous than in other countries, poverty levels remain low.

Just 10.6 per cent of over 65s in New Zealand were considered to be living in poverty compared to the OECD average of 12.5 per cent.

But of those 76 and over, 15 per cent were in poverty compared to 13.9 per cent across the OECD.

Australia, which has a compulsory superannuation scheme, has much higher levels of poverty at 26 per cent of over 65s and 29 per cent of those 76 and over.

Susan St John, director at Auckland University’s Retirement Policy and Research Centre, said the report compared apples with oranges as many other countries had contributory systems. “They don’t take into account we have a system that isn’t contributory. Everyone gets the same.”