NEW ZEALAND SUPERANNUATION: 2025 UPDATE
Generational wellbeing: Excellent public policy!
Kiwi Saver, Annuities, New Zealand Superannuation,Protection Society Incorporated. www.kaspanz.com
Authored by: Alec Waugh, MPP, BA. Research Associate Equity Hub, Economic Policy Centre, Auckland University.
Len Bayliss a well-respected New Zealand economist (1927-1918) said in 1996,”Doomsday rhetoric characterizes NZ media handling of retirement income policy”. Nearly 30 years later his comment still retains validity.
I suggest some of the language about NZ Superannuation over the last two decades has moderated, and there is a growing awareness that our superannuation scheme is excellent public policy, supported by the sound Kiwi Saver scheme. Our Retirement Commissioner has recently suggested NZ Super should be a Taonga, a national treasure, stating there is no need to raise the age of entitlement.[1]The New Zealand Society of Actuaries (2024) said NZ Super “is becoming more essential”. Retaining NZ Super at current settings is one way every generation can have similar financial security…
Knee Jerk reactions do continue, pop up commentators with dubious credentials are everywhere. Talk back radio is one example; social media platforms another. Fascinated by their own one-line rhetoric, and often conservative political orientations, some talk back hosts run the risk of becoming on-air trolls .
Economists are also prolific with comment; remember they are not Public Policy experts, nor social/community analysts. They have a role in monetary issues, but not to the extent they claim.
No issue here with voicing opinions, but transparency about your bias is important Those with the strongest bias are often the most strident in disguising their rigidity of conviction. The media in all formats continues to do a poor job in the transparency stakes , about the faces and voices engaged in 2025 communications, and the bias they bring to the microphone or opinions.
Long term projections often appear in the Retirement income discussions. Time-frames around 2050-2080 projections are useless and can be disregarded. Why disregard? History shows such assumptions are so wide of the mark they lack value, and the projections cannot factor in society changes over time. Inevitability commentary over lengthy time periods overstate the extent of existing knowledge and its degree of certainty.
Those who are prepared to research NZ Retirement income policy should start with Roger Hurnard, previously a consultant on NZ retirement issues, with his 2011 paper “Mixed messages :the future direction of NZ retirement income policy”[2]. Then read the 2019 Retirement Commissioners Review paper to government3 It is a thoughtful and restrained discussion paper. Add in Michael Littlewoods’s various superannuation papers published throughout the two decades 2000-2020. [3]
Commentary by commentators Martin Hawes, Mary Holm, Rob Stock and analysis work by Susan St John and Dr Claire Dale further add substance to readers’ knowledge . They all help provide the platform for useful contributions to the topic and the further development of sound public policy.
The Retirement Commission work on the NZ Supernnuation since 2020 are also prerequisite reading[4].
The myth “burden of the ageing population” continues to be aired, rarely understanding the fact that superannuation policy is far more than a monetary formula. It is linked to issues of physical security, personal well-being, economic productivity, social health and the distribution of income and wealth.
New Zealand’s superannuation scheme is a recognised world leader, with simple structure, low-cost administration, and with few exceptions. Be alert and wary to those suggesting means-testing or removing universality, as these are wonderful pub fare one liners, but are poison for the greater public good. Act Party leadership are offenders here, be wary of David Seymour and Brook Van Velden and their views on NZ Super.
Be sceptical of those saying “throwing younger generation under the bus.” Referencing such throw away lines usually means one is unable to sustain a coherent argument, or is unaware of the development of NZ Super policy over time, and the wealth of quality research papers supporting New Zealands Superannuation
The dollar cost of NZ super as a proportion of GDP is also exaggerated. Unlike many other countries New Zealand does not pay a tax-free Superannuation pension, that needs to be factored into any numbers and costings discussed, often misused by commentators. The current after-tax figure is 5-5.5% of GDP, a low figure, and future projections within a reasonable time frame (2030) show around 6.5-7.5% also a sustainable figure. Compared to other OECD countries we are very well placed.
Many of today’s seniors are economically active, boosting the participation rate and paying tax. We should talk about “multipliers.” More people working means increased output, stimulating the economy, and increasing Productivity. Conversely rampant discrimination and the fact many of the elder generation have many quality-of-life health issues, means the vision of working seniors does not apply. Research strongly suggests that usually it is only the well-educated who can find regular income after 65 years of age.
The next paragraph shows a paradigm shift in New Zealand’s economic landscape.Voluntary and unpaid work needs to be factored into all economic costing’s, with seniors involved in less crime, road accidents etc. Seniors are the backbone of New Zealand family child care arrangements. Seniors are also assisting with many housing deposits, and early inheritance lump sums, frequently at their own savings disadvantage.
The input of the older generation in providing a place of abode for those who often do not leave their child hood home is now everyday living arrangements. Many children who have departed are also returning to their original ‘nesting place’ after the ravages of failed marriages and independent living arrangements All these issues are the new normal, and represent a significant community adjustment and must be incorporated into ways of thinking.
*We are talking of a fundamental societal shift over recent years. Seniors are now the backbone of many of the family economic arrangements in New Zealand. New Zealand Superannuation has become a generational transfer entitlement wrapped around family, equity, and well-being principles.
NZ SUPERANNUATION IS WONDERFUL PUBLIC POLICy
- Reference Key papers over last 3 decades
HOW IMPORTANT IS NZ SUPER?
2013 Michael Littlewood
“New Zealand Superannuation (NZS) is one of the simplest, most effective, and most cost-effective Tier 1 schemes in the developed world. We mess with it at our peril”
2013 Martin Hawes
“NZ Super is a system so simple and cheap that we need to give people certainty and stop playing football with it.”
2017 Diana Crossan ex Retirement Commissioner
“NZ Superannuation is a truly wonderful thing and although we know there is still some poverty in old age, it has made it so much better for so many people, particularly older women. So apart from the age, we do NOT need or want politicians interfering with it!
Malcolm Menzies : Looking back to move forward https://assets.retirement.govt.nz/public/Uploads/Retirement-Income-Policy-Review/2019-RRIP/Research-docs/The-big-picture/Historic-Review-of-the-Reviews-of-Retirement-Income-Policies.pdf
- Alec Waugh Chairman Kaspanz kaspanz.com “We are talking of a fundamental societal shift over recent years. Seniors are now the backbone of many of the family economic arrangements in New Zealand. New Zealand Superannuation has become a generational transfer entitlement wrapped around family, equity, and well-being principles.”
2024 NZ Super is a taonga, not a burden: Retirement Commissioner seeks political accord Retirement Commissioner Jane Wrightson says “NZ Super is a taonga that protects New Zealanders from poverty in old ag”e.
“Claims that NZ Super is unaffordable are not supported by independent, publicly accessible analysis,” she says.
“NZ Super is a vital part of the retirement income system and needs to be fair, stable, and affordable for current and future generations. Tomorrow’s pensioners will not be in the same position as today’s. We need a way for politicians to take a longer-term, and purposeful approach, so the right decisions are made.
2024 October 10.2024: Longevity in New Zealand report, Alison O’Connell. Alison O’Connell New Zealand Society of Actuaries PHD
“New Zealand Superannuation is the best protection against longevity risk, and we all need a good NZS system. It is quite possible that, despite the introduction of KiwiSaver, younger cohorts will need NZS just as much, if not more, than older cohorts, because of lower home ownership, lower wage growth, less stable jobs, and lower savings rates.”
Compiled By Alec Waugh, 2025
MPP, BA Chairman of Kaspanz www.kaspanz.com Research Associate, Pensions, and Intergenerational Equity research hub.
Bibliography
- 2004 Comments on NZ Super by Len Baylissshttps://www.geocities.ws/len7373/crossan.html
- 2010: How much will NZ Superannuation really cost, RRPC Pension briefing
- 2010: Improving the affordability and equity of NZ Superannuation, RPRC Pension Briefing .
- 2011: Mixed messages: The future direction of New Zealand’s retirement income policies, Roger Hurnard
- 2012: The assessment of Retirement income system options, Roger Hurnard.
- 012: We all must talk about New Zealand Superannuation: Michael Littlewood 2012.
- 2013: NZ Superannuation is affordable now and even more affordable in 2050 Michael Littlewood.
- 2013: New Zealand’s Superannuation real costs-looking to 2060 Michael Littlewood
- 2015: The coming debate on NZ Superannuation-the review process. Michael Littlewood
- 2016: New Zealand Superannuation policy and overseas state pensions. M. Claire and Susan St John September 2016.
- 2019: Intergenerational impacts: the sustainability of NZSuperannuation, Commissioned Report Susan St John, and Claire Dale.
- 2022: Review of Retirement Income Policies, Retirement Commission
- 2024: NZ Super Issues and Options, Retirement Commission
- 2024: New Zealand Superannuation: An actuarial view on reform By the Retirement Income Interest Group of the New Zealand Society of Actuarie
- 2024 NZIER w Lessons from across the Tasman: Comparing the Australian and New Zealand retirement income systems
[1] https://assets.retirement.govt.nz/public/RRIP_2022.pdf
[2] The assessment of retirement income system options A paper for the External Panel on the Treasury’s Long-Term Fiscal Statement October 2012 Roger Hurnard 3 CFFFC Review of Retirement Income Policies 2019
[3] Michael Littlewood: Our pensions are affordable for future taxpayers 17 Aug, 2018.
[4] Raising NZ Super age would cause financial misery for over 65s – Retirement Commissioner says