Longer lives add to cost of Super bill

STATISTICS New Zealand projections of how long we will live have been boosted, raising the possibility of longer-thanexpected retirements and a larger Government superannuation bill.

When the future over-65 population was last projected in 2009, the median life expectancy for a man born in 2011 was estimated at 87, and 90.7 for a woman. Now the officials say a man born last year could be expected to live until 90.2 years of age and a woman until 92.9, with smaller gains for men and women born in 1961.

The picture is rosier because the numbers give more weight to the trend of the past few decades when death rates have fallen faster than previously, especially for men, Statistics NZ’s Kim Dunstan says.

The change follows a report by savings industry lobby group the Financial Service Council arguing that Statistics NZ’s middle longevity projections were likely to be too low because lifespans had consistently beaten official predictions.

NZIER economist Shamubeel Eaqub said the latest figures underlined the need for a political solution to the rising cost of super and possibly healthcare.

‘‘The only discussion [needed] is what we are going to do about it,’’ Eaqub said.

The Treasury’s next long-term costings for NZ Super will take account of the changes. The lower projected death rates made only a small difference to the ratio of working-age people to over-65s by 2061: 44 over-65s for every 100 working-age people compared with 43 in the previous set of projections.

But they could make a difference to people’s retirement savings expectations. If the age of eligibility for NZ Super did not change, women born in 2011 and retiring at 65 would live almost 28 years in retirement instead of fewer than 26 years, while a women born in 1961 would live about 20 years retired.

New projections show one in five New Zealanders will be aged 65 and over by the late 2020s.