Means-testing and later eligibility for new residents among suggested changes Government should consider.

The Government will need to do more than raise the age of eligibility for New Zealand Super if its rising costs are to be managed, experts said after Prime Minister Bill English hinted at changes to superannuation.

English caused a stir on the weekend after saying that his government had an "opportunity for a bit of a reset" on superannuation because he had not made the same undertaking as his predecessor John Key to leave eligibility rules alone.

He would not go into more detail, except to say the Government was "working through the long-term affordability" of NZ Super and that voters would know more about his intentions before the general election on September 23.

The cost of the scheme is expected to triple in the next 20 years from $11 billion to $36b as more people reach the over-65 age-group and live for longer. Any prospect of reform stalled under Key, who said he would resign rather than tighten eligibility rules.


The Herald's former economics editor Brian Fallow said English was right to review superannuation, but raising the age of eligibility alone would not be enough to put a dent in NZ Super's rising costs.

The Government would also need to introduce means-testing or change the way Super payments were calculated. At present, payments are tied to the average wage.

Fallow said NZ Super's costs were forecast to "head north" to unaffordable levels - 7.9 per cent of GDP by 2060. Raising the eligibility age to 67, as some parties have proposed, would only reduce that to about 7 per cent.

The Retirement Commissioner Diane Maxwell is among those wanting changes to Super to avoid a "painful decision" in the future. Maxwell said in December the eligibility age should be raised gradually, government contributions to the Fund should restart, and the residency requirement raised from 10 years to 25 years. Any of those changes would politically sensitive, let alone in election year.

English's comments, made in an interview with Three's The Nation, were seized on by Labour and New Zealand First, who said they would "alarm" households and that English needed to give voters more certainty about his plans.

Labour leader Andrew Little: "To continue with very vague language is at the very least clumsy, but will also cause considerable anxiety." Little wants the age to stay the same but has promised to resume contributions in his first Budget if in power. Labour previously campaigned on a higher eligibility age but Little scrapped that policy when he became leader.

New Zealand First leader Winston Peters said he supported tighter rules for older immigrants, citing figures of 86,000 people who had claimed Super in the last 15 years after just 10 years in the country.

Peters said English was the latest to make "alarming noises" about the affordability of the NZ Super.


The scheme was relatively affordable by OECD standards but New Zealanders were being "railroaded" into thinking it was unaffordable, he said.

English's comments were described as evasive by support party Act - leader David Seymour said English needed to be more up-front with voters about the fact that a higher eligibility age was "inevitable" because of the costs of the scheme.

A spokesman for English told the Herald yesterday it was too early to give specifics about his superannuation plans.