NZ pensioners relatively best off in OECD
April 7th, 2009 at 10:00 am by David FarrarAuckland University’s Retirement Policy and Research Centre has done a report based on a 2008 OECD survey of income distribution.
They first note that the Tier 1 pension (NZ Super) for a single person living alone is 46% of the median GDP per capita. By comparison, the UK is 13% and US 17%.
The OECD studied how many people of retirement age (0ver 65 in NZ) were below the relative poverty line of 50% of the median equivalised household disposable income. So this is not a study of absolute comfort, but how those of retirement age in a country fare compared to the overall country.
NZ has the lowest level of elderly people in relative poverty. Only 1.5% of those aged over 65 have an income below 50% of the median income. Also at around 2% are the Czech republic and Netherlands.
I’ve often said we have the most generous schemes in the world. The average poverty rate in the OECD was 13%.
Incidentally our poverty rate for elderly has got slightly worse under Labour – it was 1.3% in the mid 90s and is now 1.5%. But not a big change and still way less than almost everywhere else.
Australia has an elderly relative poverty rate of 27%. So wages may be higher there, but the pension is not as generous relative to wages.
Interesting we spend around the same amount as Australia on social spending for the elderly, as a percentage of GDP.
I recommend people read the full report. Good food for thought.
Tags: OECD, RPRC, superannuation
April 7th, 2009 at 10:43 am
That’s good news. Now we can reduce the super and still be ahead of Australia!
Vote:April 7th, 2009 at 10:53 am
The cruel reality: by the time anyone today under the age of 40 reaches 65, there will not be any money in the kitty to pay them superannuation. It is a Ponzi scheme with much worse implications than Bernard Madoff’s investment fund.
Vote:April 7th, 2009 at 11:01 am
Nice study, but ultimately of limited use because it defines poverty relative to local wages – as if poverty is a function of envy as opposed to, say, how much food, water, housing and energy superannuitants can buy. This study shows a low poverty rate for NZ superannuitants – but to the extent that statistic is an artifact of New Zealand being a low wage country (which it is) then what’s the point? That statistic isn’t measuring how many superannuitants can’t pay the power bill, only that they aren’t that far behind the median income earner in a poor country.
If poverty were not so arbitrarily measured then studies like this might carry some clout.
Vote:April 7th, 2009 at 11:23 am
Ben has hit the nail on the head.
Take a bundle of items a pensioner might reasonably need: Housing, water, food, clothes, transport, bowls club subscription etc. and then tell me how well the social welfare system in each country meets those needs.
That would be a far better measure of how well we treat the elderly.
I do take the point, however, that if you don’t have a lot of money as a country you can’t spend very much of it on super.
Vote:April 7th, 2009 at 11:27 am
Yep and we baby boomers intend to keep up our standard of living well into old age.
So you Gen X and Yers be prepared because we are going tro be the most powerful grey hairs in history. Any pollie that wants to occupy the Treasurery benches will have to listen up and listen good and deliver to us.
Pensions and healthcare will be the new intergenerational battleground.
Vote:April 7th, 2009 at 12:38 pm
Yeah, I came across this issue last year – basically, the level and form of our NZS means we do really well on a 50% threshold and pretty badly on a 60% one. MSD identifies the same point in their Household Incomes in New Zealand report, pp. 113-4. http://tinyurl.com/5tyx5p
Vote:April 7th, 2009 at 12:41 pm
Given the height of the bar on this “the best” is hardly anything to get excited about.
Vote:April 7th, 2009 at 4:33 pm
There seem to be any number of these silly studies and reviews these days. I don’t think they show anything and reach only the conclusions that the paymaster is prepared to pay for.
Vote:April 8th, 2009 at 4:28 am
It will be good fun watching what happens when the taps on the state funded pension are turned off.
The country of course could be in complete anarchy before then or simple not exist as an entity, both outcomes would suit me fine.
Vote:April 9th, 2009 at 1:51 pm
It would be interesting to see the same comparisons done on an extrapolation out 10 years to when we BBs are right in there with the oldies!
My expectation would be that Australian pensioners will be WAY WAY ahead of us, because of their minimum 9% of income contribution to a personal super-fund.
Any thoughts out there?
Vote:January 9th, 2010 at 1:24 pm
I am officially about to become a pensioner but have been on it since my husband turned 65 over 3 years ago. It’s so nice to know how well off we “retired” Kiwis are despite having to count every cent so we can make sure we’re able to pay our bills. God knows what it will be like for my husband and me when we are no longer able to cut down our own trees for firewood (which we wouldn’t be able to do, anyway, without the help of kind farmer friends). Already I find humping wood painful to both hands and feet. (How can a log be so excruciatingly HEAVY when it’s only a quarter of the round from which it was split and the tree wasn’t even 12 years old?) By the time I’ve finished my daily housework (with dinner preparation still to come) I’m ready to scratch out someone’s eyes. And I don’t care whose. But of course I don’t do that because I wouldn’t like it done to me. However, anyone here who considers New Zealand “superannuitants” are well off can consider his or her eyes well and truly gouged out. Here’s hoping we all have a much better year in 2010 than 2009, which positively stank.
Vote: