An independent economist is calling for changes to the age of entitlement for superannuation, saying the current system is “unsustainable”.
The debate over the future of superannuation reignited at the weekend after Labour promised the retirement age would remain at 65 if re-elected to power in October.
Attacks followed from the Opposition, with ACT Party leader David Seymour arguing the status quo was unaffordable.
ACT’s fellow right-bloc party National’s policy on superannuation remained unchanged from what former Prime Minister Sir Bill English announced in 2017, that the age of eligibility would be phased from 65 to 67 starting 20 years after and if the legislation passes. That was to reflect increasing life expectancies and the rising cost of the scheme.
Leading economist Cameron Bagrie told AM New Zealand needed to revisit the superannuation settings.
“Treasury’s forecasts… they’re predicting that if we don’t make changes, net-Government is going to 190 percent of GDP. Now, what that number is actually telling is the current system’s unsustainable,” he told co-host Laura Tupou.
“We need to make changes. The question is, what are those changes going to look like over the next few years?”
Bagrie warned it was “no quick fix” but said raising the age would be “a nudge in the right direction”.
“We need to make changes. Once we accept we needed to make changes then it becomes a debate about – what precise changes [we need],” he said. “We need cross-party support on what’s a pretty big issue going forward in regard to the affordability of some pretty key services.”
Another option, other than raising the age, was “taking from Peter to pay Paul” – reprioritising Government spending toward superannuation, Bagrie said.
Infometrics chief executive Brad Olsen has called for the superannuation age to rise to “save ourselves some money over time, so we have greater options to where Government spending goes”.
But Labour has argued New Zealand’s superannuation was affordable “as long as we keep paying into the Super Fund”.
“This policy ensures settings remain stable and consistent, no one misses out and Kiwis can look forward to retirement now and in the future under a Labour Government,” said Carmel Sepuloni, the party’s social development spokesperson.
Watch the full video for more.