Maori and Pacific Islanders - who have shorter lifespans - would benefit most from being able to take superannuation early, United Future Leader Peter Dunne said this afternoon as he released a discussion paper on his flexible superannuation proposal.

Investigation of Mr Dunne's proposal was part of his confidence and supply agreement with National at the last election.

The proposal allows people to choose to take a reduced rate of NZ Super from the age of 60, or an increased rate if they defer taking up superannuation until they reach 70.

"Flexi Super lets people choose for themselves when they want to take up superannuation without being told by the government when they should or should not retire," Mr Dunne said.


"Maori, Pasifika and other demographic groups with shorter life spans would benefit most," he said.

The discussion paper says the proposal would offer greater choice, flexibility to adjust for "unexpected changes in retirement wealth" resulting from, for example, a partner's death, a relationship shock or a positive or negative financial shock.

Risks included an increased risk of financial hardship in old age for those who took NZ Super early.

The paper also notes a series of reasons why the scheme would prove costlier to the Crown than NZ Super under current settings.

They included:

* A potential increase in the total number of people receiving NZ Super

* The need for additional assistance for those who took NZ Super early but found it insufficient to live on

* A decrease in tax revenue as people waited until they finished working and dropped into a lower tax bracket before receiving NZ Super


The paper also notes the proposal would require people to make an informed decision about their financial situation in old age which many may lack sufficient financial literacy to do.

It also suggested the scheme could reduce incentives to work amongst those aged 60 to 64 and would add complexity to what was currently a simple system. particularly with regard to the transition from social security and ACC benefits.

The discussion paper is open for public submissions October 11 and the Government would decide what action it takes after that.

In his foreword to the discussion document, Finance Minister Bill English noted National had undertaken not to change super eligibility.

"These undertakings are a bottom line for the National-led Government."