Breaking news: Small increase for superannuitants in May 30th Budget. The headline (rule of thumb) suggests $9 per fortnight.

NZ Super is assessable income for tax purposes. The recipient advises MSD of their tax code and the net amount is paid directly into their bank account every two weeks.

The rate of payment is calculated with respect to average wages. This is sometimes referred to as the ‘wage floor’ for NZ Super. For couples the rate is 66% of average wages, for a single person living alone it is 65% of the married rate, and it is 60% of the married rate for a single person sharing. The figure for average wages is determined as the average ordinary time weekly earnings [AOTWE] for full-time equivalent employees taken from the last Stats NZ’s Quarterly Employment Survey published before 1 March (generally the previous December). The net amount of AOTWE, after tax and ACC Earner levy, is used.

Rather than immediately reset the rate against average wages, as outlined above, a check is made to consider the impact of inflation. The Consumer Price Index [CPI] rate of inflation over the year to the previous December is applied to the current rate of NZ Super2. If the resulting figure is higher than the figure produced by the ‘wage floor’ calculation the inflation indexation is used. Although this has not actually occurred in the last decade it would apply in a high inflation environment. 2 Note that NZ Super can only be increased through the annual adjustment process, so if CPI were to fall, no adjustment would be made to the rate of payment. Te Ara Ahunga Ora Policy Papers 2021 | 03 An introduction to New Zealand Superannuation 4 A further consideration in review of the payment rate is a ‘wage cap’. If the inflation indexation is used, the resulting payment rate is restricted to a maximum of 72.5% of the net AOTWE, although to date this constraint has never actually had to be applied.