ACT leader calls super changes a snub to anyone under 45

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ACT leader David Seymour says the government changes announced today to NZ Super – the universal national pension – are unfair to those aged under 45.

Prime Minister Bill English announced today, after hints at the weekend, that the government will progressively lift the age of eligibility for New Zealand Superannuation to 67 from 65 starting in another 20 years.

The changes will be phased in from July 1, 2037, and won't affect anyone born on or before June 30, 1972. The government is also proposing to double the residency requirements for NZ Super so that applicants must have lived in New Zealand for 20 years, with five of those after the age of 50. People who are already citizens or residents will remain eligible under the existing rules.

The changes will be legislated for next year.

Mr Seymour says it is "facile" that the government's solution to "one of the most urgent challenges of our time is to start moving in 20 years."

"In terms of fairness, it means the first generation to pay for university will also be the first generation to be hit by the rise in the superannuation age. The costs of this adjustment will entirely be paid for by people under 45 and with respect to the economics of it, the adjustment won't capture all of those cohorts of retiring baby boomers that are retiring through to 2030." 

He says it is also silly politically because while it's not enough to make any difference and offends anyone under 45, it's also going to allow NZ  First to go out and scare the oldies with the idea the National Party is not committed to their security.

There will be no legislation before Parliament to enact the policy until after the September 23 election: that makes it an election issue, potentially a difficult one. 

Mr English rejected suggestions the policy will cost National support, saying it will probably "enhance" the government's prospects at the election, because "people expect the government to deal with the long-term issues."

The Prime Minister won't rule out staying at 65 if it is a bottom line of another party in post-Election coalition negotiations as he acknowledges he'd need the numbers in the House to pass the changes.

Supporters and detractors

The move follows a call by Retirement Commissioner Diane Maxwell late last year to shift the age of super to 67 by 2034 along with providing extra help to elderly people who were forced out of work early by ill-health and rampant ageism. She also recommended immigrants should earn their NZ Super over 25 years, rather than the current 10. 

Labour leader Andrew Little supports the change for immigrants, saying it is in line with what other countries do, but opposes the lifting of the age of entitlement. 

Superannuation commentator Michael Littlewood says he regrets that New Zealand has lost another opportunity to have a proper discussion about New Zealand super.

"What should be at issue here is when do people stop working, what are the likely labour market implications of shifting the age and what are the other knock-on effects to the rest of the welfare system by having an older age because there are some people who by the age of 65 even are unable to do meaningful work," he says.

Mr Littlewood gave the Prime Minister a nine out of 10 for political astuteness for parking the super issue ahead of the election but only two to three out of 10 for strategy and benefit design.

"It's quite conceivable that New Zealand could reach a consensus on what it should look like and politicians should join in that discussion but not be leading it. That's now not going to happen."

The facts

The age of entitlement for NZ Super and the SuperGold card will increase six months each year from July 1, 2037, until it reaches 67 on July 1, 2040. The age of eligibility was last progressively increased from 60 to 65 between 1992 and 2001.

There will be no asset or income testing to be eligible for super and there will be no change to the settings – it is indexed to 66% of the average wage.

The age of access to KiwiSaver funds will also remain the same.  Due to changes in life expectancy, the government says in 2017 a 65-year-old can expect to spend 24.3% of their life on NZ Super while in 2040, a 67-year-old can expect to spend 24.5% of their life on the pension.