Chester Borrows: Super changes fair proposal

Chester Borrows

SUPERANNUATION gets the ideas flowing ... Yeah, right!

I don't think there are any New Zealanders -- baby boomers, Gen Xs, Ys or millennials -- who would, in their heart of hearts, disagree with the fact that our ageing population will inevitably mean some adjustment in the provision of our superannuation scheme.

And in the past few days there's been a huge amount of comment from all sectors, all age groups and all shades of the political spectrum, attempting to catapult the issue to the dubious status of political football.

But, to continue the sporting analogy, the Government has seized the ball, cut through the rhetoric and put some certainty into superannuation provisions.

So, amid the sensational words, perhaps the facts should come through as we face the bigger, longer-term issue for Kiwis.

Improvements in lifestyle and healthcare mean that New Zealanders' life expectancy has increased by 12 years in the past two generations, so that somebody qualifying for super today is expected, on average, to live a further 21 years. In 20 years that statistic is expected to rise to 23 years.

So good health is good news, meaning that we can enjoy life more and remain active in the workforce and community for a lot longer. But that longer life naturally drives up the cost of super which, by international standards, is quite affordable at around 5 per cent of gross domestic product. However, that cost is predicted to balloon out to 8.4 per cent in 40 years' time -- and that is a significant amount.

We cannot sustain that -- quite simply, it is living beyond our means.

We would not want to increase taxes or cut back health or education, so the Government has decided to progressively increase the age of eligibility for New Zealand super to 67, starting in 20 years' time, along with a 10-year increase in the residency requirement making it 20 years for eligibility for immigrants.

That's fair enough to me, because these schemes only work if there are years of contributions from everyone in the workforce.

These changes, which will be legislated for in 2018, will more fairly spread both the costs and the benefits of New Zealand super between the generations, ensuring the scheme remains affordable into the future. It is the responsible and fair thing to do and also gives people time to adjust.

"Preposterous", "bitter pill", "bombshell", "ham-fisted", "heresy" ... these are just some of the terms bandied about following Prime Minister Bill English's announcement of the gradual increase for superannuation eligibility.

But where are the better ideas for a solution to change that we all know we must face?