In response to their article (see link below ) , I wrote the author and this was the dialogue that followed
https://www.moneyhub.co.nz/nz-super-future.html
Hi Christopher Walsh and all the Money Hub team.
I normally find your website articles sound and balanced, but not this time.Your current focus on NZ Superannuation is the typical grab a calculator, then cut and paste scenario, usually emerging from individuals and groups with no public policy background, little knowledge of the research over time on such an important subject, and often never involved in the regular debate and research pieces that emerge and have policy value.
So I am not impressed with your recent analysis of NZ Super, as posted on your site.
Do you read and research the numerous research findings on NZ Super, and I have no recall of your group ever attending the many symposiums on this issue?Basing your article using Treasury Future Projections assumptions and your own “This will happen, must happen and there is no alternatives” , approach is crisis rhetoric at its worse.
Good public Policy proponent’s avoid using such 40 yrs ahead projections, they are close to worthless, a tool in the policy arsenal only, and they take no account of the annual changes that society and politicians engage in. I note AI says
“Policy projections 40 years ahead are widely considered unhelpful for specific outcomes because unforeseeable events, rapid technological change, and shifting social dynamics introduce immense uncertainty that models cannot accurately capture. While useful for long-term strategic thinking (identifying potential challenges and opportunities), they are often useless for precise, actionable policy-making due to several key limitations”:
Trade-offs are always associated with policy , unintended consequences are important but ignored by most , and a complete lack of policy alternatives, and highlighting new costs that often emerge, when policy change is suggested , are not in your article, let alone any comment on Capital Gains, or the primary incremental ways of increasing Govt revenue, many suggested by the Tax working group recommendations over the last few years.
Most off shore commentary on NZ Super is favorable, lauding its effective, efficient, and simplicity, and NZ is well below the costs of virtually all the OECD pension schemes. Australia is recognized as a complicated mess, favoring the wealthy and the consultancy workforce. Those suggesting the Aussie model be introduced into NZ are naïve and foolish, clutching at bob- wire in the context of good public policy.
Suggest you read and reflect on the recent 2024 NZ Actuaries report on NZ Super (https://actuaries.org.nz/content/uploads/2024/01/RIIG-NZS-Reform-Jan24.pdf .
I include its simple overview page ( shown below), and the numerous papers from the office of the Retirement Commissioner, on NZ Super, all providing a professional, measured and considered approach to both reform, the associated costs, and how single lever issues are rarely the answer .
I include a modified version of recent recommendations by the Retirement Commission (below) and also attach as a link the Guru of NZ Super Michael Littlewood with a recent update. https://www.kiwiblog.co.nz/2025/08/guest_post_on_the_long-term_costs_of_new_zealand_superannuation_more_affordable_now.html#google_vignette
Michael Littlewood over the last 25 yrs has issued papers on NZ Super at regular intervals ,often used as the basis for evolving informed opinion on how to approach Retirement income issues in the NZ context. Have you read any of his papers?
New Zealand Society of Actuaries, 2024 :Analysis of NZ Super, and an actuarial review of reform.
Overview synopsis
- We conclude that the current structure of NZS fulfils its purpose well.
NZS is equitable, as it is based on individual entitlement. It does not distinguish by gender, ethnicity, or socio-economic position
• NZS broadly gives an adequate level of income for current retirees. Its indexation to inflation and link to average earnings provide some future protection. However, there are concerns over the future as more retirees’ mortgages or are renters.
• NZS is empowering. It encourages people to save for their retirement and enables people to plan for their retirement with confidence because it is not means-tested and currently enjoys a
level of political consensus around the need for stability in NZS structure. Because of its annuity role, it also makes for simple drawdown plans which can be changed easily as required.
• NZS is sustainable, under current settings, both in terms of the share it takes of GDP and politically in that New Zealanders widely support it.
• NZS is simple, understandable, and easily accessed by most retirees.
*We therefore are still of the view that it is not necessary to reform NZS.
Debate usually focuses on the “cost” of NZS, which is often portrayed wrongly as in crisis. Contrary arguments which stress the value and purpose of NZS are strong. No reform to NZS is without difficulties.
- We need to recognise trends which argue against diminishing the role or restricting the value of NZS. Today’s younger people may need NZS more than older generations.
Although younger people can save in KiwiSaver for longer than older people could, they may have less potential to both own a home and save. KiwiSaver balances are not going to be high enough to allow any painless reduction in NZS. Inequalities in length of life are significant and visible to the extent
that they should be addressed before planning to make them worse.
Superannuation Issues
- New Zealand Superannuation (‘NZ Super’) is the Government’s primary contribution to financial security for a person’s later life and ensures an adequate standard of living for older New Zealanders.
- The system needs to be fair, stable, simple, and affordable.
- NZ Super is the eighth least expensive pension in the OECD, as a proportion of GDP.
- NZ expenditure will continue to be well below the OECD average in 40 years without any change to the age of eligibility.
- The current age of eligibility for NZ Super is not low relative to other OECD countries: 70% currently have a pension age of 65 or below, reducing to 53% by the 2060s.
- Discussion around changes to NZ Super needs to consider a wide range of data to inform decisions. Be wary of persons suggesting one off solutions, when recommending changes.
- Any change to the age of eligibility would disproportionately disadvantage manual workers, carers, and those they care for, and those with poor health, due to differences in savings and wealth and ability to remain in paid work after the age of 65. Women, Māori, and Pacific Peoples are over-represented in those groups.
- Extra benefits to support people through to a later age of eligibility, would reduce fiscal savings substantially
- Means testing is discredited policy, with admin costs, difficulty in identifying the boundaries for means testing, and many unseen consequences, note those suggesting this approach only suggest means testing income and not assets, and frequently such advocates are in trusts camouflaging their own income .
Re the Aussie Super model, its complex , unwieldy and difficult to replicate. Why would you?
Did you know
- If you had to generate a steady income in retirement, the same as you receive in NZ Super, from your own savings, you would need to have close to $585,000 invested in a balanced fund to withdraw regularly from to age 90, Couples would need close to $920,000 to replace that level of NZ Super on their own and to keep it going to 90.
Longevity in New Zealand report, 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.”
Retirement Commissioner Jane Wrightson says NZ Super is a taonga that protects New Zealanders from poverty in old age. “Claims that NZ Super is unaffordable are not supported by independent, publicly accessible analysis.
I resist including my own work, but suggest you look at www.kaspanz.co.nz a website on NZ retirement income, a solid information site been around for over a decade.
TEAM MONEY HUB REPLIED
From: Team MoneyHub <team@moneyhub.co.nz>
Sent: Tuesday, 13 January 2026 9:42 pm
To: Alec Waugh <alwaugh@xtra.co.nz>
Subject: Re: The Future of NZ Superannuation
Hi Alec
Thanks, this guide was a summary of a recent Treasury report – we are not political, if the guide needs added disclaimers, let me know and we’ll message that. I agree that the narrative is enthusiastic to changes in super – this can be removed.
So, a disclaimer and “alternative views” with links out to the NZAoA etc – that’s insightful.
Let me know if I’m missing anything
ThanksChris
KASPANZ EDITOR RESPONDED
Hi Chris. Thanks for the prompt response and content.
Money Hub has an excellent track record of describing key consumer issues, in practical and simple terms, very helpful for choices and understanding.
Your approach on NZ Super is not a breakdown of entitlement/qualification, or understanding, it reads as an explanation of why NZ Super costs too much and must change, highly charged in its view, and contrary to many assessments. It reads like an economist from the far Right spectrum has been tasked to scare the citizens of NZ.
Pension schemes and retirement income policy are always high cost items, the difficulty is achieving either necessary balanced change or a comprehensive alternative, both great discussion topics.
While I am tempted to say you need to take down and re think your approach, your disclaimer/alternative views or perhaps a disclaimer that long term projections are recognized as not being that helpful or useful, would go some way to helping readers understand the width and complexity of retirement income issues.
Regards Alec Waugh.
*Jane Wrightson’s recent comments on the topic, show the breadth of the issue, and Littlewoods comments touch upon the dimensions of the difficulty of change
WHAT ONE ISSUE KEEPS YOU UP AT NIGHT? JANE WRIGHTON, RETIREMENT COMMISSIONER
I worry that our retirement income system is quite fragile. There are only two pillars, NZ Super and KiwiSaver, and they are not as intertwined as they should be. People advocating to change one or the other need to understand the flow-on implications. Just saying “we can’t afford that” – people or fiscal – fails to paint a full picture.
I especially worry that the convos around NZ Super are quite ill-informed and without a values-driven starting point. What kind of country do we want our older citizens to live in? How can we best provide that? If we want to encourage more private savings (for example), how might we do that so we lift everyone up? We need broad and long-term policy support for a principled system.
What trends do you see shaping the future for seniors/retirees?
To be honest, it might be a bit grim. Sixty percent of current retirees live on NZ Super or just a little more and we think that figure will grow, particularly with housing pressures. More people will hit pension age with a mortgage or still renting, and of course, NZ Super is predicated on low housing costs (mortgage-free or affordable public housing). This is why I am such a passionate supporter of not fiddling with NZ Super.The generation that retires with a full 40 years of KiwiSaver will be comparatively better off, but only if they haven’t withdrawn much on the way through, apart from getting their first home. And that’s a big assumption.
MICHAEL LITTLWOOD On the long-term costs of New Zealand Superannuation: more affordable now?
As New Zealand’s population ages and as the proportion of over-65s increases, the cost of New Zealand Superannuation (NZS) is rising. We know that and it does not help us understand the issues to create headlines that catastrophise the expected costs.
The pensions payable in the future, public and private, will be claims on tomorrow’s economy, so the best way to express the expected cost of NZS is as a proportion of tomorrow’s economy. At present, this is probably best measured by the Gross Domestic Product (GDP). This is not a perfect measure, given the number of factors that bear on its calculation, particularly for long periods into the future. But it’s the best we have.
A catastrophiser will cite the billions of dollars of costs today and the even greater billions of dollars of costs tomorrow but that is misleading and matters much less than the ability of tomorrow’s economy to meet those claims.
Pensioners pay income tax on NZS so the government pays with one hand and collects with the other. Again, what matters to future voters is the net cost of pensions.
With that introduction, let us look at what the Treasury thinks about the expected net cost of NZS. Since 2000, the Treasury has published estimates that put together all the known information about the drivers of the cost of NZS: number (and expected number) of pensioners, mortality expectations, expected growth of the national average wage and prices (those drive the annual calculation of the level of NZS) and all the assumptions that drive estimates of future growth.
The Treasury’s ‘New Zealand Superannuation Fund Contribution Rate Model’ (NZSF Model) works out contributions to the NZSF and expected future drawdowns. Those calculations are done twice a year and are archived here[1].Given the headlines created recently by apparently dire, future projections, I was curious to see what the Treasury now thinks is the best estimate of the net cost of NZS in future decades.
The table uses the Budget Economic and Fiscal Update (BEFU) versions over the last 25 years.
| Expected net costs of NZS (as a % of GDP) – NZSF Contribution Rate Model | ||||
| Year Model run | NZS net cost in that year | Net cost in 2050 | Net cost in 2060 | Net cost in 2070 |
| 2000 | 3.7% | 9.0% | 9.7% | 10.0% |
| 2005 | 3.3% | 7.5% | 7.8% | 8.1% |
| 2010 | 3.7% | 6.4% | 6.9% | 7.0% |
| 2015 | 4.1% | 6.3% | 6.9% | 7.4% |
| 2020 | 4.5% | 5.7% | 6.5% | 7.1% |
| 2023 | 4.1% | 5.6% | 6.2% | 6.7% |
| 2024 | 4.3% | 5.5% | 6.2% | 6.7% |
| 2025 | 4.4% | 5.4% | 6.0% | 6.4% |
Yes, over the last 25 years the current year’s cost of NZS has risen by 19% (0.7% a year) but over the same 25 years (2000-2025), the expected net cost of NZS in 2050 has fallen from 9.0% of GDP to 5.4% (down 40%).
NZS is expected to cost less, in real terms, in 2050, 2060 and 2070 than we expected 25 years ago? That sounds like a ‘good news’ story to me. The pattern of possible costs across the table is consistent; consistently downwards.
We know this is all based on a bunch of assumptions that have varied over the 25 years but, in each case, the estimate is the Treasury’s best contemporary guess about those future costs.Focussing on just the 2025 numbers, the Treasury expects the net cost in 2070 to be about 2 percentage points of 2070’s GDP higher than today’s 4.4% (+45%).
So how come the real future cost seems to be falling over the last 25 years? NZS is the numerator in this equation; the denominator is GDP and that has grown more than the Treasury expected in the early 2000s and in subsequent years, due to a combination of increasing labour force participation rates and higher immigration numbers. That combination drives the reduction. For example, the 2000 model predicted the net cost of NZS in 2025 would be 5.3% of predicted GDP. In fact, it turned out to be just 4.4%, a reduction of 17% in real terms.
That’s why real, future economic growth is so important in this discussion. An actuarial colleague and I put a substantial submission together for the 2019 Retirement Commissioner’s Review. We called it Informing the 2019 Review – 133 questions that New Zealand needs answered[2]. Of nine key “reforms that really matter”, we ranked greater economic growth than we, or even the Treasury, expect as the #1 priority:
“Greater economic growth (than expected) should be central to discussions on every aspect of public policy, including retirement incomes. At the foot of every significant retirement or pension policy proposal should be the question: ‘How does this help New Zealand grow more than under current settings?’ Not all policy changes have to be about economic growth, but if we do not get that growth, we will not see material improvements in the standard of living of the population, including retirees.”
How do we judge whether NZS is/will be ‘affordable’ in 2070?We could compare the cost of our pensions with those in other countries. International comparisons of public pension systems are difficult – the OECD tries to do that in its Pensions at a Glance 2024[3]. The net cost of government spending on public pensions across all OECD countries was an average 7.0% of GDP in 2020 (and will be higher now). And that doesn’t include the cost of favoured tax-treatment for private savings in all other countries. New Zealand’s $0.55 bn on KiwiSaver subsidies for 2026[4] is exceptionally modest in that regard.
So, New Zealand’s net 6.4% for NZS in 2070 (up from today’s 4.4%) looks modest in that context. But that doesn’t necessarily make it affordable. We need to talk about NZS. The 2019 Submission already cited had something to say about that as well:
“New Zealand needs a research-led review of every aspect of NZS… New Zealand has never done such a review before. NZS is the best Tier 1 scheme in the world but it can undoubtedly