Retirement Commissioner puts pension age back on the agenda

Retirement Commissioner puts pension age back on the agenda

By Paul McBeth

Dec. 7 (BusinessDesk) – Retirement Commissioner Diana Crossan has put the pension age back on the political agenda in her latest report on retirement policy.

To keep a universal pension affordable, Crossan proposes the government begin hiking the age of entitlement two months every year from 2020 until it reaches 67. New Zealand superannuation is affordable at present, but this won’t always be the case, and Crossan’s office is calling on the government to protect the long-term life of the pension.

Along with lifting the age of entitlement, the Office of the Retirement Commissioner recommends linking the rate of adjustment to both the average wage and inflation, and to introduce a means-tested benefit during the transition period.

“The broad principle that NZS is a non-income-tested individual entitlement is worth defending and preserving,” Crossan said in the report. “If there is no commitment within the next 10 years, the total cost of NZS will continue to trend upwards and more severe changes might need to be taken later, putting the long term future of NZS itself at risk.”

The government has appointed a taskforce to look into New Zealand’s dismal savings rate and find ways to lift the pool of investment as national indebtedness weighs on countries around the world. The Savings Working Group isn’t allowed to look at superannuation, which Prime Minister John Key made a leadership issue in the run-up to his successful election, saying he will resign from Parliament if the pension age is raised.

Like the Savings Working Group, Crossan opposed introducing compulsory savings schemes, saying it would direct and limit the choices of individuals to save on their own, and could undermine the retention of the super scheme.

Crossan also recommended KiwiSaver default fund providers continue to be based on conservative investment programmes, and the introduction of a standard measure of the schemes to allow for easy comparison.

The office’s next retirement policy review, flagged for 2013, aims to include a more thorough assessment of KiwiSaver.

(BusinessDesk)

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