'Extra pension for parents'

Professor Natalie Jackson. Photo / Christine Cornege

A population professor has come up with a novel idea to cope with New Zealand's ageing population - pay a higher pension to those who have children.

Professor Natalie Jackson, the new director of Waikato University's Population Studies Centre, says the welfare state is "a great pyramid scheme" based on a pyramid-shaped population with only a few old people at the top supported by growing numbers of young people at the bottom.

"Just like a pyramid scheme, you have to have a continuous supply of new people coming in to support the numbers of old people," she said yesterday.

"Once you add in falling fertility since the 1960s, the age structure tips upside down ... so eventually the welfare state will have to change dramatically."

She said society would have to give more priority to children to maximise their contribution to the labour force and hence to the tax base that pays for pensions. And it would have to look at linking pensions to producing children.

"The welfare state has to change, and one of the potential things we might look at is limiting pensions to those who have had children," she said.

Professor Jackson, a New Zealander, has had a distinguished career as an expert on ageing in Australia for the past 15 years, including a term as president of the Australian Population Association.

With three children and four grandchildren all living in New Zealand, she would benefit personally from the scheme she proposes.

But she acknowledged that other policies aimed at increasing thebirth rate, such as Australia's A$5000 "baby bonus", had had only a limited effect.

"There is some evidence it's had a minor impact but only in terms of the fertility ratio," she said.

"That can go up because people have their second child maybe a little bit faster than they would have.

"There has been a small increase in teenage pregnancy. That was one of the unintended consequences."

But she said linking pensions to having children was not about enticing people to have children.

"The point of it is that there are not going to be enough young people in the workforce generating income that we need to support the welfare state that we have at the moment ... and, by restricting the drawoff to those who have provided the kids who will provide the taxes, that reduces the demand on the welfare state," she said.

She said society benefited from children through the taxes they would pay in the future, yet parents bore most of the cost of raising them.

"Some people may have wanted them and can't have them and that's a sad situation," she said.

"But those who haven't had children, whether by chance or for any of a multitude of other reasons, have had the opportunity to save for their old age. It's not an option to go on the way we are."

However, the co-director of Auckland University's Retirement Policy and Research Centre, Dr Susan St John, said linking pensions to having children "doesn't bear thinking about".

"How do men get their pensions? Surely not more based on the number of women they happen to impregnate?"