Comment on this paper below by Tony Alexander BNZ, Weekly Overview 3 August 2017

I took a look at the paper to try and gain some insight into a couple of factors relevant to the long term sustainability of the NZ super scheme. One is Treasury’s assumption about net average annual migration flows. They use 12,000. That seems much too low considering that over the past ten years the flow has average almost 25,000 per annum and before that 11,000 per annum. A higher average flow will mean more employees able to make tax payments supporting NZ Superannuation flows because migrants tend to be working and tend to be young. I also wanted to see how they factored in a rise in the proportion of people 65 years of age and over remaining in paid employment – therefore delivering more tax into government coffers. But it is not clear that this proportion is assumed to rise above the near 24% recently achieved – from less than 6% in 1998. This means the actual rise in the after-tax cost of NZS measured as a % of GDP could be less than the projected 4+% now to just over 7% come 2060. The current OECD average is about 8%. The proportion of NZ’s population projected to be 65 and over come 2060 is 27 from 15% currently. For your guide here are the current ratios in some other countries. % Australia 15 Denmark 21 Finland 21 Germany 21 Greece 22 Italy 23 Japan 27 New Zealand 15 Portugal 21 Spain 19 United Kingdom 18 USA 15 http://data.worldbank.org/indicator/SP.POP.65UP

http://www.treasury.govt.nz/publications/informationreleases/superannuation/sup-3753731.pdf