As our population ages and governments look for ways to contain long-term costs, the debate keeps returning. So, should we raise the age of eligibility and, if we do, who pays the price?
Prime Minister Christopher Luxon has confirmed National would be campaigning on gradually raising the age of eligibility for New Zealand Superannuation, which it believes is becoming unaffordable – a view shared by the OECD.
Coalition partner and NZ First leader Winston Peters is holding firm, however, telling TVNZ’s Breakfast the issue is “not a bottom line, it’s a top line” and that it’s “not going to change”.
University of Auckland Business School associate professor Susan St John told The Front Page that the debate resurfaces because people are uneasy about paying a universal pension to everyone, including wealthy people.
“We’ve got this wonderful scheme, and everybody gets this income at 65, whether or not they’re in full-time, well-paid work or whether they’ve got millions or billions of dollars of assets.
“And at the same time, we know that there’s a huge degree of hardship and outright poverty within the New Zealand economy at the moment, and it’s getting worse … But we’ve got this payment that seems to be going to people who don’t, strictly speaking, need it at all.
“So the idea of raising the age is kind of like a knee-jerk reaction to that,” she said.
Not everyone can easily work longer. Māori and Pasifika tend to have lower life expectancy and poorer health later in life. And some women may also be disadvantaged after a lifetime of unpaid caregiving.
St John said raising the age would not really solve the underlying issue and would instead worsen inequality.
The idea of means testing generally accompanies debates about New Zealand’s Super scheme. This is when the government checks a person’s income and sometimes their assets to decide whether they qualify for a benefit and how much they should get.
“ The Australian one is enormously complicated, and I think most New Zealanders, if they looked at how it operated and how low the thresholds were before you started losing 50 cents out of every extra dollar earned or your asset level was so low that, you didn’t have much of a buffer there before you were penalised from the asset test, I don’t think they would have a bar of it.
“ Remember, too, in Australia they jointly income and asset test, so that for married women, they can miss out on the age pension simply because their partner earns too much,” she said.
Listen to the full episode to hear more about:
How NZ Super worksWhat is “means testing”?Tax clawbacks and other alternatives.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5pm. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
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