22 Jan 2017

Super-expensive super prompts call for budgeting policy

10:14 am on 22 January 2017

Politicians need to explain how superannuation will continue to be funded when costs are expected to triple in 20 years to $90 million a day, the retirement commissioner says.

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Photo: 123rf

In December, Retirement Commissioner Diane Maxwell released a report calling for the eligibility for superannuation to be raised to the age of 67.

She also called for people to have lived in New Zealand for 25 years before they could qualify for it.

Speaking to RNZ'sThe Weekend, Diane Maxwell said that to simply say New Zealand can afford to continue superannuation at 65 was not enough.

Retirement Commissioner Diane Maxwell

Retirement Commissioner Diane Maxwell. Photo: Supplied

"Where do they plan to get the extra money from - if you say you can afford it you'd better say how you're planning to do that because of the sort of sums we're looking at.

Ms Maxwell said the cost of superannuation annually was already more than $12 billion, and about 1.5 million New Zealanders would be aged over 65 by 2061.

She said raising the retirement age was seen as a vote-losing move politically.

"And if we start talking about this idea of intergenerational equity - which just means what do we owe the next generation and what do they owe us - and once we start talking about the decisions we make as a society then I find increasingly people go 'well I can get my head around that, understand that'."

"The fear I have is that if this remains a partisan issue, then we won't get anywhere, it needs to become a bi-partisan issue, we need a cross-party agreement on this."

She said it was hard to reconcile the data around work-force participation rates among people aged 50 to 60.

"We know that participation rates are really really high and unemployment is low relative to overall unemployment - so clearly the jobs are there but what that hides is the individual stories and those groups of people who lose a job in their 50s and can't get another one."

"Often we find that younger managers don't want to manage an older person, now that's just a training thing. The other thing we find is that recruitment consultants don't want to pass on CVs of older people - frankly they just have to grow up and get on with it. You know, some of this stuff is just unacceptable."