Pension age proposal deepens resentment between generations

Proposed changes to superannuation in New Zealand have inflamed resentment between baby boomers and younger generations.

Lifting the pension age to 67 in 2040 would punish generations which were already burdened by student loans and high housing costs, political leaders said today.

Prime Minister Bill English rejected any suggestion of a growing generational divide, saying that the baby boomers also had it tough.

But his proposal to gradually lift the age of eligibility in 20 years' time has gained little support in Parliament outside of the National Party.

Act Party leader David Seymour, whose party has a supply and confidence agreement with National, is one of the strongest critics of the policy.

"By making sure that the time when the pension age rises captures exactly those people who were the first people to have to pay for their own university, they've set up a generational fault-line," he said.

Act wants a higher pension age to be gradually introduced from 2020 to ensure all generations paid for its costs.

Younger generations would be "absolutely shafted" by delaying it for another 20 years, he said. Citing Treasury figures, Seymour said it would cost $58 billion to keep paying pensions for 65 and 66 year-olds until 2037.

"So delaying action represents a $58 billion wealth transfer from millennials to the baby boomers."

Green Party co-leader James Shaw said putting the change off for 20 years "exacerbates the generational war" between baby boomers on one side and millenials and Generation X on the other.

Speaking to reporters at Parliament, he listed what he saw as the injustices heaped on younger generations.

"People in their 40s and below are the people who are currently locked out of the housing market, they're people who have had to pay for tertiary education, quite of lot of whom have had to pay interest on those, they also pay for their own superannuation through KiwiSaver, they also have to pay for the demographic bubble in the form of the Cullen Fund, they also have to pay for superannuation through general taxation.

"They're getting hit from a variety of sources. The only people who come out of it are actually National's voter base."

Immediately after being selected as Labour's new deputy leader, Jacinda Ardern also took aim at National's proposals. She said her generation would be carrying the cost of English's failure to save for superannuation by continuing contributions to the Super Fund.

"[English] has essentially said that it's my generation that are going to pick up the tab."

In response, English accepted there was "some pressure" on people in their mid-30s and 40s.

"That's why we focus on economic policy that supports increases in their incomes, better job opportunities and a country that's going somewhere."

But he said baby boomers had not had an easy ride and pointed to the high interest rates they paid on their houses.

"I don't think it is actually that helpful to have the generational comparisons. Because things change over time. I mean back in the early 80s interest rates were 18, 20 per cent.

"I'd much rather be in New Zealand's economy today than how it was 20 or 30 years ago."

Because New Zealanders were living healthier, longer lives, they would get the same amount of super in 2040, he said.

Figures released by the Government show people would spend a similar amount of time on super in 2040 because of increased life expectancy.

In 2017, a 65 year-old could expect to spend 24.3 per cent of their life on NZ Super. In comparison, a 67 year-old in 2040 could expect to spend 24.5 per cent of their life on super.

- NZ Herald

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