Serious consideration needs to go towards superannuation as the population continues to age, an expert says. Photo / NZME
Serious consideration needs to go towards superannuation as the population continues to age, an expert says. Photo / NZME
One of New Zealand's leading population experts says the country needs to consider raising the age people get their pension as the population continues to age.
It comes as the manager of an elderly support group says older people are already struggling to make ends meet.
The latest Stats NZperiod life tables, which use deaths from 2019 to 2021 to calculate life expectancy, shows a newborn boy can expect to live, on average, 80.5 years and a newborn girl 84.1 years.
This was an increase at birth of about six months for males and seven for females from 2017 to 2019. Meanwhile, life expectancy increased at every age between 2017-2019 and 2019-2021 - both men and women aged 75 years - has increased by about five months each.
Distinguished Professor Emeritus Paul Spoonley, a population expert, said superannuation would be a hot topic over the coming years.
He said people were living longer and in the near future between 20-30 per cent of New Zealand's population could be aged over 65.
Distinguished Professor Emeritus Paul Spoonley. Photo / NZME
Spoonley expected population growth would slow because of the period when the borders were closed due to the pandemic, resulting in fewer migrants moving to New Zealand. He thought the ageing population would become much more prominent.
"We seem very reluctant to talk about changes to superannuation - it's relatively generous [but] can we afford to keep it as one?" Spoonley said.
"Over the next decade, because of the demography and ageing of New Zealand, the cost to superannuation will continue to rise significantly."
Spoonley thought one option to help resolve the pressures of supporting the superannuation could be delaying eligibility.
And with elderly people living longer and healthier lives, Spoonley said along with superannuation costs there would be other expenses because more long-term care would be needed and healthcare costs would increase: "It's very costly."
Ministry of Social Development data showed the number of people receiving superannuation in the Bay of Plenty increased by 1803 between September 2020 and September 2021.
People aged 65 and over may qualify for New Zealand Superannuation and the Veterans' Pension. Both are paid fortnightly on a Tuesday and how much someone gets depends on their living situation and tax rate.
The payments are updated on April 1 each year.
The most someone can currently get is $1013.28 before tax if they live alone or with a dependent child. A couple that meets the criteria both receives $768.92.
It does not matter how much income someone receives, it does not affect the NZ Super or Veteran's Pension payments.
A spokesman for Minister for Social Development Carmel Sepuloni said there were no plans to change any eligibility rules for superannuation.
Retirement Commissioner Jane Wrightson said raising the age of eligibility in New Zealand would "increase inequity" for those with lower life expectancy rates, such as Māori and Pacific peoples, and those already heading into retirement financially worse off, particularly women.
Retirement Commissioner Jane Wrightson. Photo / Michael Craig
"Given the ongoing pressures on government budgets, it's not surprising expenditure on NZ Super sparks regular debate around affordability, prompting questions about raising the age of eligibility or means-testing," Wrightson said.
"Reducing access to NZ Super would likely just result in increased government expenditure in other areas and runs the risk of penalising or disincentivising vulnerable groups, whatever way we look at it."
Wrightson said the majority of superannuitants were "very dependant" on it or other government transfers for their income.
"Forty per cent of singles have no other income, 40 per cent have less than $100 per week from other sources and for the next 20 per cent of the over-65s, NZ Super accounts for 70 per cent of their income. "
Infometrics senior economist Brad Olsen thought increasing the eligibility age needed to happen, a move that wouldn't be unprecedented.
Throughout the 1990s, the age of eligibility increased from 60.
"In 2021, superannuation cost New Zealand $15.5 billion. That's 18 per cent of the total amount of tax collected," Olsen said.
"It's a similar size to the education sector – it's $16.3b - it's the same ballpark.
"Everyone asks if we can afford it going forward - well, we can afford anything in a sense if you're willing to pay for it with debt. The big thing is choice. If we spend on this then implicitly it's less than what we can spend on other things."
Speaking on whether there would be increased inequality for those with lower life expectancy rates, Olsen said these people would be better looked after if they received funding elsewhere.
"Paying them early doesn't mean they live longer," he said.
"If you want to target those groups, make sure those groups are better catered for you. Don't, in my mind, change super policy but ensure you change those other settings in healthcare and education and elsewhere to make sure people do have a greater life expectancy.
"These changes to eligibility will not affect people who are currently on New Zealand super at all...It's probably not even those people 10 years away. It's the younger groups, the wider setting."
Despite people getting older, quality of life for the elderly was a concern for Age Concern Rotorua manager Rory O'Rourke.
He said superannuation "doesn't do anything these days", and while another source of income was important, homeownership was vital.
Age Concern Rotorua manager Rory O'Rourke. Photo / NZME
"You can't live on superannuation," he said. "You have to have a substantial amount in the bank when you retire or own your own home so you're not paying a mortgage.
"There are going to be fewer and fewer [people] who will own their own home and therefore they're going to struggle as things go on."
O'Rourke estimated that about 50 per cent or fewer of people turning 65 owned their own home, with the struggle to get onto the property ladder currently "ridiculous".
O'Rourke, 72, remains employed and expected more people to continue working beyond the age of 65.
