National would increase the age of entitlement for New Zealand Superannuation from 65 to 67 starting in 2037 and saving the taxpayer $4 billion a year if elected to Government.
But Labour is sticking to its promise to keep it at 65 despite a call by a think-tank to increase the age to help cut rising debt levels driven by the Government's Covid-19 response.
The New Zealand Initiative yesterday said the Government should consider raising the retirement age to 67 , pausing contributions to the New Zealand Superannuation Fund and stopping all KiwiSaver subsidies to get debt levels back under control.
Currently public debt is expected to rise from 19 per cent of GDP in 2019 to nearly 54 per cent by 2024.
David Law, senior research fellow at the New Zealand Initiative, said ending KiwiSaver subsidies, increasing the eligibility for NZ Super and slowing the growth of individual NZS payments slightly could reduce government debt to about 25 per cent of GDP in 2034 instead of 42 per cent as is currently projected.
But neither major party are prepared to go that far.
Paul Goldsmith, National's Finance spokesman said it would ensure the Superannuation scheme remained sustainable by progressively increasing the age of entitlement from 65 to 67, starting in 2037.
"These changes will save $4 billion per year and give everyone certainty about saving for their retirement."
The policy is consistent with the proposal announced prior to the 2017 election when it was last in government.
It would also pause contributions to the New Zealand Superannuation Fund, saving nearly $10b over four years.
"It makes no sense to be borrowing against future generations to invest in foreign investment markets. It is much wiser to pay down debt," Goldsmith said.
National paused contributions to the fund in 2009 while it dealt with fallout from the Global Financial Crisis and the Canterbury earthquakes.
But it was heavily criticised for doing so as the fund had very strong investment returns. Labour restarted contributions as soon as it was elected in 2017.
Latest figures for the $44.8b fund show it posted a return of 1.73 per cent in the year to June 30, below its benchmark reference portfolio which returned 3.82 per cent.
Since inception in 2003 the fund has returned 9.63 per cent per annum, adding value of $7.75b over the benchmark reference portfolio.
Goldsmith said National would not make any changes to the existing KiwiSaver subsidies and would keep New Zealand Super indexed to the average wage rise.
A Labour Party spokeswoman said it planned to retain both Super Fund contributions and keep the age of superannuation eligibility at 65.
"Labour has also had a longstanding commitment to KiwiSaver and does not have any plans to get rid of it, or cut the subsidies.
"We believe it is important New Zealanders are able to feel secure in their retirement."
She said Labour would focus on growing the economy as well as a balanced revenue policy that would keep a lid on debt while maintaining investment in services like health and education.
Claire Matthews, a retirement policy expert at Massey University, said the New Zealand Initiative's proposals were focused on debt reduction and had a short-term focus.
But she said Covid-19 had turned the world on its head and there should be a rethink of KiwiSaver and New Zealand Superannuation in light of it.
Matthews said she wasn't keen on ditching the KiwiSaver subsidy as its removal could send the wrong signal to members and discourage them from saving.
But she agreed with the idea of pausing contributions to the New Zealand Superannuation Fund.
"Borrowing to invest just doesn't make sense, particularly when we have so much other borrowing."
Matthews said she was already a proponent of raising the age of eligibility for New Zealand Superannuation.
Prime Minister Jacinda Ardern has previously ruled out raising the age under her leadership.
But Matthews said to an extent Covid provided an out and she said there should be a robust discussion around whether the age should or shouldn't be raised.
"Until we can have that discussion we can't make progress in making a decision."
Matthews said New Zealand's Retirement Commissioner should lead the discussion but Treasury should also run the numbers to find out what it looked like in the current economic environment.
She said the political parties were probably not seeing KiwiSaver and New Zealand Superannuation as a focus at the moment given the election involved two referendums and dealing with Covid-19.
But Matthews said how they were handled could have a major impact on the recovery of New Zealand.