Under one scenario, people who chose to start being paid Super at 65 would receive 90% of the regular rate for the rest of their lives. The rate would step up every year to 100% for those who started receiving Super at 67 and 130% for those who started receiving it at 70.<\/p>\n
The NZIER estimates this arrangement would reduce the annual cost of Super by 8.1%, or $5.9 billion, by 2048. As it stands, the annual cost of Super is expected to rise from $26b to $70b by 2048.<\/p>\n
The Herald\u2019s analysis suggests the cost savings would largely come at the expense of those who died in their 60s and 70s, as well as those who couldn\u2019t wait until they were 70 before they started receiving Super.<\/p>\n
In other words, when compared with the status quo, this approach could harm those who do low-paid and\/or physical work and benefit those who do high-paid and\/or office work. <\/p>\n
The Herald\u2019s analysis suggests that if this type of tiering was introduced, someone who died at 70 or 75 would be better off getting Super from 65 (rather than from 67 or 70). <\/p>\n
Whereas someone who died at 80, 85 or 90 would be better off getting it from 70 (rather than from 65 or 70). The maths is based on the Super people in relationships receive pre-tax. <\/p>\n
A more equitable approach could reduce savings<\/p>\n
The NZIER modelled two other scenarios that would arguably be fairer, as those who held off receiving Super wouldn\u2019t receive too much more every year for the rest of their lives than those who got it earlier.<\/p>\n
However, the Herald\u2019s analysis shows flatter tiering would remove the incentive for people to hold off getting Super. The math simply wouldn\u2019t stack up.<\/p>\n
In one scenario, someone would receive 95% of the regular rate of Super if they started receiving it at 65. This would rise every year to 107.5% if they waited until they were 70. <\/p>\n
In the other scenario, they would receive 100% of the regular rate of Super if they started receiving it at 65. This would rise every year to 112.5% if they waited until they were 70. <\/p>\n
The NZIER estimated the first scenario would deliver annual savings of 10.4% by 2048, and the second scenario, 6.2%.<\/p>\n
The Herald\u2019s analysis shows that under these scenarios, people would be worse off if they delayed receiving Super, unless they lived well into their 90s. <\/p>\n
So, the vast majority of people would likely opt to start getting Super at 65. <\/p>\n
This would mean the cost savings estimated by the NZIER \u2013 which assumed only 60% of people would get Super at 65, as 60% of people currently do paid work until 65 \u2013 wouldn\u2019t eventuate. <\/p>\n
The NZIER acknowledged its model didn\u2019t factor in how people\u2019s approaches to work might change under a flexible uptake Super scheme.<\/p>\n
An additional way Super could be made more affordable<\/p>\n
CA ANZ New Zealand country head Peter Vial said such a scheme would make Super more affordable, preserve universality and provide greater flexibility for older New Zealanders. <\/p>\n
\u201cThe longer we wait to address the rising cost of NZ Super, the fewer options future governments and New Zealanders will have.\u201d <\/p>\n
No political party is campaigning on CA ANZ\u2019s flexible uptake model; however, parties are yet to release their Super policies in full before the November 7 election. <\/p>\n
National, Act and Opportunity are the only parties in favour of making Super more affordable. They want to do so by lifting the age of eligibility from 65. <\/p>\n
Vial believed this wouldn\u2019t deliver enough savings.<\/p>\n
\u201cIt just shifts the impact further out,\u201d he said. <\/p>\n
CA ANZ believed the next government should also index Super to the Consumers Price Index (CPI). In other words, treat Super the same as other benefits and increase it at the rate of CPI inflation every year, rather than the greater of CPI and wage inflation, as is currently the case.<\/p>\n