OECD suggests linking NZ Super eligibility to life expectancy and hiking KiwiSaver contributions

OECD suggests linking NZ Super eligibility to life expectancy and hiking KiwiSaver contributions. Photo / Mark Mitchell

The OECD is adding its voice to the choir of groups saying the age of eligibility for New Zealand Superannuation needs to rise.

Specifically, the international agency recommends linking eligibility to life expectancy, using means testing to try to account for the fact this can vary depending on one’s ethnicity and occupation.

It also sees value in the Government continuing to lift default KiwiSaver contributions.

The recommendations were two of numerous suggestions the OECD made in a wide-ranging report, published today.

The OECD said New Zealand’s ageing population was making it harder for the Government to get the country’s books out of the red, and public debt would rise “unsustainably” without reforms.

The OECD believed the Government should continue tightening its spending in the short to medium term, but said it may need to temporarily spend more to provide targeted support to counter the effects on New Zealand of the conflict in the Middle East.

It believed the Reserve Bank should look through the initial fuel price shock, while ensuring inflation expectations remain anchored.

This position broadly aligns with that of the Reserve Bank, which is expected to start tightening monetary policy more quickly if it sees inflationary pressures become embedded.

The OECD saw the annual inflation rate breaching the Reserve Bank’s 1-3% target range over 2026, hitting 3.4%, before easing to 2.4% in 2027.

It expected gross domestic product (GDP) growth to strengthen to 1.4% in 2026 and 2.3% in 2027.

It believed boosting growth would require “decisive reforms” to improve energy security and affordability, and to deepen capital markets.

The agency acknowledged New Zealand’s electricity system had relatively low emissions, but noted the country’s supply shortages (partially thanks to dwindling gas supply) and correspondingly high prices.

It suggested establishing a ‘Firming and Flexibility Market’ to ensure there was a portfolio of independent and reliable non‑gas supply to “break the gas–electricity price link that is driving up prices”.

The OECD also saw scope for the Crown to invest in non-gas seasonal firming electricity generation.

On the capital markets front, the OECD recognised there had been no initial public offerings in the country since 2021.

It proposed a package of reforms.

One of its many suggestions was to launch a more lightly regulated public growth equity market to make it cheaper and easier for smaller firms to raise capital via an initial public offering.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.

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