However, Treasury said that if NZ had been indexed to CPI inflation since 2010, a quarter of those over the age of 65 would be living on less than 50% of median incomes compared to 6% now.
Rennie wasn’t as keen on means testing NZ Super, noting there was some uncertainty around how this would influence the labour market, and whether there would be decent cost savings to the Crown.
While political parties are still formulating the policies they will take to the November election, none expressed support for changing the rate at which payments rise every year.
Governing parties divided
Act was broadly supportive of cutting spending on NZ Super.
“The books show that New Zealand is on a collision course with crippling debt if we don’t face up to reality,” a spokesperson said.
“This year Act will be leading the debate on how we face reality and adapt to it in a way that’s fair for all New Zealanders.”
Ahead of the 2023 election, Act campaigned on lifting the age of entitlement for NZ Super immediately, in three-month increments, to 67.
Once the age reached 67, it said NZ Super should be indexed to life expectancy, ensuring that each generation was entitled to the same proportion of their life on the pension as previous generations.
In 2023, National likewise campaigned on gradually lifting the age to 67 – but only from 2044.
It committed to keeping NZ Super payment increases as they were.
National declined to comment on the party’s current stance on the matter, noting it was yet to unveil the policy it would take to the election.
The coalition Government has been keen to push Kiwis to do more to prepare for retirement themselves.
It is increasing the default KiwiSaver contribution rate from 3% each for employees and employers to 3.5% from April this year, and 4% from April 2028.
It is also halving the Government contribution to eligible KiwiSaver members to a maximum of $261 per year and limiting the eligibility of this payment to those who earn less than $180,000 a year.
National is campaigning on lifting this rate even further, to 6%, by 2032.
If National was re-elected to govern with the support of Act and NZ First (as current polling suggests is likely) and it decided to do more to curtail NZ Super costs, it would struggle to get support from NZ First.
The party is dead set on keeping the indexing and age of eligibility as they are.
“Superannuitants have worked all of their lives paying taxes to help build our country – Super should not be viewed as a benefit but as an entitlement,” a NZ First spokesperson said.
“The issue of affordability of Super should not be lazily viewed in terms of its current or future fiscal cost, rather the need of future growth of the economy to maintain the low [cost of Super as a percentage of Gross Domestic Product (GDP) compared to other countries].
“Additionally, the reason we have the Cullen Fund, which New Zealand First supported from opposition, was to smooth out the hump in future Super cost growth.”
Parties on the left anti cost-cutting
Labour supported keeping the age of eligibility at 65 and said it had no plans to adjust how NZ Super was indexed.
“We don’t support changes that would quietly reduce living standards for older New Zealanders, especially as the cost of living continues to get worse under this Government,” a spokesperson said.
The Green Party was on a similar page.
“We would oppose indexing superannuation to just CPI,” a Green Party spokesperson said.
“Last term, we called for benefits to be indexed to CPI and wages, just like superannuation, because we want to treat beneficiaries like superannuitants. Treasury wants superannuitants to be treated like beneficiaries.
“In a prosperous country like ours, nobody should retire into poverty. Instead of making it harder for those on NZ Super who are already struggling, we could easily afford to sustain adequate superannuation into the future if we stopped giving landlords and tobacco companies tax cuts and had a government that taxed extreme wealth.”
Te Pāti Māori didn’t respond to the Herald’s request for comment.
Last year, it said Māori should receive Super seven to 10 years before Pākehā to reflect the fact Māori have a shorter life expectancy.
The reason Treasury is calling for NZ Super reform is that the number of New Zealanders receiving NZ Super is rising faster than the working age population.
In the 1960s there were seven New Zealanders aged 15–64 for every Kiwi aged over 65. Now there are four, and in 2065 there are projected to be two.
Treasury expects the cost of maintaining Super in its current form to rise from 5.1% of GDP to around 8% by 2065.
New Zealand currently spends less on pensions than the OECD average of 8.1% of GDP.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.
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