Luke Kirkness: It's time to raise the retirement age

Our country's rising population age raises the stakes for NZ Super debate. Photo / NZME

OPINION:

Paying people their retirement benefits doesn't mean they're going to live longer or better lives.

Improving their quality of life earlier, providing them with better education and making sure they have access to great healthcare will.

That's why I'm suggesting a rethink of New Zealand Superannuation.

Last year, NZ Super cost $15.5 billion. That's a hard number to put in perspective but I'll try. It was 18 per cent of the total tax collected in New Zealand last year.

That number is only going to get bigger too, as was reported on Saturday, largely due to there being more people receiving NZ Super.

Stats NZ data showed the 65+ dependency ratio (the number of people aged 65+ per 100 people aged 15-64 years) increased from 14 per cent per 100 in the mid-1960s to 24 per 100 in 2020. That number is expected to skyrocket to 31-41 per 100 in 2040 and 38-52 per 100 in 2060.

In contrast, the 0-14 dependency ratio (the number of people aged 0-14 years per 100 people aged 15-64 years) decreased from a peak in 1961 of 57 per 100 people to 29 per 100 in 2020. The downward trend is likely to continue and is expected to be in the 21-29 per 100 range in 2040 and 18-31 per 100 in 2060.

Simply put, there will be more people aged 65+ than those between 15-64 in a few years.

It would appear younger generations of New Zealanders, like myself, are in the firing line of a shotgun loaded with crippling tax.

NZ Super is not funded directly through tax. It is managed by an Auckland-based Crown entity, the Guardians of New Zealand Superannuation. The Guardians invest money the New Zealand Government contributes to the fund.

Anyone who has worked full-time for many years - it's only been a mere six for me - might think I'm being naive by suggesting NZ Super's rules should be reworked.

It'd be a fair point, with an employment finishing line of 65 years clearly set for the past 20-odd years; however, the evidence can't be ignored.

The age of NZ Super must be increased - or it needs to be means-tested.

Everything starts with a discussion rather than avoiding the subject. The sooner we start seriously thinking about changes, the better.