Serious consideration needs to go towards superannuation as the population continues to age, an expert says. Photo / NZME
"We're all getting old buggers ... Sooner or later the whole country is going to have to face up to the fact that old buggers can't retire yet."
That's Mount Maunganui RSA president Arthur King's take on the impact of people living longer and a leading population expert's view that the country needs to consider raising the age of eligibility for the pension as a result.
King, 78, said the difference superannuation made on people's lives depended on their circumstances.
"A lot of people in the past who did not purchase houses and things like that and now they're in a bit of a bind to how they're actually going to survive in this world or not. Unless you've got your own home, your back's against the wall."
The latest Stats NZ period life tables, which use deaths from 2019 to 2021 to calculate life expectancy, shows a newborn boy can expect to live, on average, 80.5 years and a newborn girl 84.1 years.
This was an increase at birth of about six months for males and seven for females from 2017 to 2019. Meanwhile, life expectancy increased at every age between 2017-2019 and 2019-2021 - for both men and women aged 75 years, it has increased by about five months.
Distinguished Professor Emeritus Paul Spoonley, a population expert, said superannuation would be a hot topic over the coming years.
He said people were living longer and in the near future between 20-30 per cent of New Zealand's population could be aged over 65.
Spoonley expected population growth would slow due to the borders being closed during the pandemic, resulting in fewer migrants moving to New Zealand. He thought the ageing population would become much more prominent.
This would present a number of challenges.
"We seem very reluctant to talk about changes to superannuation - it's relatively generous [but] can we afford to keep it [like that]?" Spoonley said.
"Over the next decade, because of the demography and ageing of New Zealand, the cost to superannuation will continue to rise significantly."
Spoonley thought one option to help resolve the pressures of supporting the superannuation could be delaying eligibility.
And with elderly people living longer and healthier lives, Spoonley said alongside with superannuation costs, there would be other expenses because more long-term care would be needed and healthcare costs would increase: "It's very costly."
Ministry of Social Development data showed the number of people receiving superannuation in the Bay of Plenty increased by 1803 between September 2020 and September 2021.
People aged 65 and older may qualify for New Zealand Superannuation and the Veteran's Pension. Both are paid fortnightly on a Tuesday and how much someone gets depends on their living situation and tax rate.
The payments are updated on April 1 each year.
The most someone can currently get is $1013.28 before tax if they live alone or with a dependent child. A couple that meet the criteria receive $768.92 each.
The level of income someone receives does not affect their NZ Super or Veteran's Pension payments.
A spokesman for Minister for Social Development Carmel Sepuloni said there were no plans to change any eligibility rules for superannuation.
Retirement Commissioner Jane Wrightson said raising the age of eligibility in New Zealand would "increase inequity" for those with lower life expectancy rates, such as Māori and Pacific people, and those who are already heading into retirement financially worse off, particularly women.
"Given the ongoing pressures on government budgets, it's not surprising expenditure on NZ Super sparks regular debate around affordability, prompting questions about raising the age of eligibility or means-testing," Wrightson said.
"Reducing access to NZ Super would likely just result in increased government expenditure in other areas and runs the risk of penalising or disincentivising vulnerable groups, whatever way we look at it."
Wrightson said the majority of superannuants were "very dependent" on it or other government transfers for their income.
"Forty per cent of singles have no other income, 40 per cent have less than $100 per week from other sources and for the next 20 per cent of the over-65s, NZ Super accounts for 70 per cent of their income. "
Infometrics senior economist Brad Olsen thought increasing the eligibility age needed to happen, a move that wouldn't be unprecedented.
Throughout the 1990s, the age of eligibility increased from 60 years.
"In 2021, superannuation cost New Zealand $15.5 billion. That's 18 per cent of the total amount of tax collected," Olsen said.
"It's a similar size to the education sector – it's $16.3b - it's the same ballpark.
"Everyone asks if we can afford it going forward, well, we can afford anything in a sense if you're willing to pay for it with debt. The big thing is choice. If we spend on this then implicitly it's less than what we can spend on other things."
Speaking on whether there would be increased inequality for those with lower life expectancy rates, Olsen said these people would be better looked after if they received funding elsewhere.
"Paying them early doesn't mean they live longer," he said.
"If you want to target those groups, make sure those groups are better catered for, you don't, in my mind, change Super policy but ensure you change those other settings in healthcare and education and elsewhere to make sure people do have a greater life expectancy.
"These changes to eligibility will not affect people who are currently on New Zealand Super, at all ... It's probably not even those people 10 years away. It's the younger groups, the wider setting."
When asked about whether an eligibility increase in New Zealand would be a good idea, Mount Maunganui RSA president Arthur King said: "It's happening more or less worldwide.
"It's a fact of life, we're all getting old buggers ... Sooner or later the whole country is going to have to face up to the fact that old buggers can't retire yet."
In Australia last year, the eligibility age increased from 66 years to 66 years and 6 months in July last year for anyone born between July 1, 1955, and December 31, 1956. From July 1, 2023, it will rise again to 67 years for those born after December 31, 1956.
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