Raise retirement age to 67 - commissioner

Diana Crossan, Retirement Commissioner

The Retirement Commissioner says the age of entitlement for New Zealand Superannuation needs to be raised from 65 to 67 to ensure it remains affordable over the long term.

Diana Crossan made the recommendation as part of her three-yearly review of Retirement Income Policy.

She says the age of eligibility should start to increase from 2020 by two months per year until 2033 when it would reach 67.

At the same time a means-tested benefit should be introduced to help people such as manual workers who can no longer work after the age of 65 to cope financially until they turn 67.

Crossan has also proposed changing the formula used to calculate the annual increase in superannuation.

At the moment it is set as a percentage of the average annual wage.

But Crossan says from 2020 it should change so that the rate adjustment is based on the mid-point between the increase in the consumer price index and the average weekly earnings.

Crossan says the changes are "critical" to preserve New Zealand Superannuation for the next generation.

"Something will have to change to keep New Zealand Super affordable for the long term. We know that there's a huge number of baby boomer superannuitants coming, and we can't keep on ignoring this issue until it's too late."