“New Zealanders are healthier and living longer so adjusting the long-term settings of NZ Super while there is time for people to adapt is the right thing to do.” –Bill English PM
### NZ Herald Mon, 6 Mar 2017 3:19 PM
PM Bill English announces Super changes [+ Videos]
The eligibility age for superannuation will rise to 67 years old by 2040, Prime Minister Bill English revealed this afternoon. In a major political development, English promised to begin progressively lifting the threshold from 65 to 67 years old in 2037. That means the changes will not affect anyone born on or before 30 June, 1972. The Government will not act on the promise until after the general election in September.
English said the major change would be legislated for next year. The Government will also limit superannuation eligibility to people who have lived in New Zealand for 20 years, rather than 10 years. That is lower than the commissioner’s recommendation of 25 years. English said the new residency requirement would apply to people who arrived in the country after the law was passed – likely to be next year if the National-led Government remains in power.
Other settings such as linking NZ Super to the average wage and universal Super without means-testing would remain unchanged. The age at which people could access Kiwisaver would remain at 65.
In justifying the change, English noted that even someone who retired at age 67 was likely to receive NZ Super for longer than someone who retired at age 64 today. “That is because average life expectancy is increasing by about 1.3 years each decade.”
The changes to the age of eligibility and residency requirements would save the Government at estimated 0.6 per cent of GDP or $4 billion once fully phased in.
Finance Minister Steven Joyce said New Zealanders’ life expectancy had risen by 12 years over the past 60 years. “When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super. That has since increased to about a quarter. Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average.”
Experts have said the Government will have to do more than raise the age of eligibility to keep the Super scheme affordable. The cost of the scheme is expected to triple in the next 20 years from $11 billion to $36b as more people reach the over-65 age-group and live for longer.
….English said raising the retirement age in 2037 would more fairly spread the costs and benefits of NZ Super between generations, ensure it remained affordable, and would give people time to adjust. It would also bring New Zealand into line with other countries like Australia, the UK, Denmark, Germany and the United States. English said he did not think his proposals would damage National’s chance of winning a fourth term. “I think they will enhance it,” he said.
Posted by Elizabeth Kerr
This post is offered in the public interest.
*Image: stuff.co.nz – John Key (54) and Bill English (54) in August 2015. Photo by David White/Fairfax, tweaked by whatifdunedin