Govt under fire over super

Diana Crossan fears a decision on funding NZ super will be made too late. Photo / Wairarapa Times-Age

The Retirement Commission has hit out at the Government for failing to address recommendations it made to look into the future cost of superannuation.

The Government was due to report back last month on a number of recommendations made in a review undertaken by the commission in 2007.

But Finance Minister Bill English and Minister for Social Development and Employment Paula Bennett wrote to the commission this week to say it would not be responding due to the change in economic climate.

"We understand that a response to some of the remaining matters was not completed by the previous Government and you were expecting this to be released shortly," the ministers stated.

"Clearly the economic climate has altered significantly in the past 12 months and given the significant impact of the global economic downturn we consider that it is important to review the Government's income policies in light of these changed conditions."

The ministers said Treasury would aim to produce its long-term fiscal statement by the end of the year that would assess the fiscal situation but any further concerns about superannuation would not be addressed until the next review in 2010.

Retirement Commissioner Diana Crossan said the response was a huge disappointment.

"Both major political parties have said they won't alter New Zealand superannuation, but they need to say how they will fund increased future costs."

Figures show the baby boomer generation will hit a retirement age peak by 2029 and by 2051 nearly 1.3 million people will be older than 65.

"Paying for New Zealand Superannuation in the future is either going to require new money or an adjustment to the current parameters of New Zealand Superannuation or else it's going to be a significant burden on future generations."

Crossan said if the Government did not make a decision now or at least have a discussion about it something would "have to give" in the future.

"My fear is that in 10 years time a Government will have to make a decision and will have to make it too late and the population will just have to adjust to it."

The Australian Government announced this year it would be raising the age of eligibility for superannuation.

The Government inaction is the second blow for future provisions to retirement costs. In the May Budget it said it would be putting on hold contributions to the NZ Super Fund for up to 11 years.

Crossan believed New Zealanders would prefer to find out if there was a problem now and whether anything needed to be done rather than having it "dumped" on them in the future.