Lifting the age of eligibility for superannuation to 67 could save future taxpayers at least $100 billion by 2061, says a study made public today.
Consulting and investment services company Mercer says the double whammy of an ageing population and global financial crisis has highlighted the urgent need for the Government to address the adequacy of retirement savings, and reduce reliance on NZ Super.
Lifting the eligibility age to 67 and removing disincentives to taking up annuity products such as Kiwisaver are two solutions that could potentially address the problem, it says.
In the report, Securing Retirement Incomes - Time to Act, Mercer recommended raising the age of eligibility as one option, with an alternative being linking the NZ Super age of entitlement to the life expectancy of the population. As life expectancy rises, so would the retirement age.
Lifting the age of retirement in New Zealand from 65 to 67 would save the government at least $100 billion by 2061, says Mercer.
"The solution to our retirement savings conundrum rests in both growing the economy - ultimately increasing the size of the funding pie - and addressing the social and welfare issues associated with an ageing population and ensuring all New Zealanders can live comfortably in retirement," said Martin Lewington, head of Mercer in New Zealand.
"It's time for the government to take decisive action and balance the politics in the current debate with what's ultimately best for New Zealand, particularly in regards to the 'hot potato' issues such as raising the eligibility age for NZ Super."
But recommendations on raising the age run counter to a promise from Prime Minister John Key that he would quit Parliament if the age of eligibility for superannuation did not stay at 65.
Retirement Commissioner Diana Crossan said yesterday she was disappointed the government was not taking more action to address the looming retirement crisis, leaving private firms such as Mercer to do the work.
"The government needs to be doing the sums," she says. "They have come out and said we are going to be OK, but how do we know? The most important thing the government can do at the moment is get the figures out so we can start looking at possible scenarios."
Ms Crossan said the debate was not about the current generation of New Zealanders over 50 years of age.
"This isn't about tomorrow. It's about the long-term future of New Zealand," she said.
The government was due to report back last month on a number of recommendations made in a review undertaken by the Retirement Commission in 2007.
But Finance Minister Bill English and Social Development and Employment Minister Paula Bennett told the commission they would not be responding, due to the change in economic climate.
In May, the Australian government announced the age of retirement there would rise from 65 to 67 in 2017.
Statistics New Zealand figures show that half a million New Zealanders are currently over 65.
It is projected that the Baby-Boomer generation will hit a retirement-age peak by 2029 and that by 2051 one in four New Zealanders - nearly 1.3 million - will be older than 65.