NZ Super should be means tested and age increased
Stuff report:
Almost 50,000 people claim NZ Super while also earning more than $100,000 a year, data from the Retirement Commission shows – and income-testing them could be one way to make the system more affordable.
There have been concerns that NZ Super will become too expensive as a growing proportion of the population reaches the age of 65.
The commission has released a paper outlining policy options. It says leaving the age of eligibility at 65 is the best option. But income-testing would be a fairer way to reduce the cost of the system rather than raising the age of eligibility, if required.
I’d do both, but one is better than none.
Here’s my ideal NZ Super scheme.
- Private savings should be main source of retirement income through KiwiSaver etc. Potentially have state top ups into KiwiSaver to ensure people are saving at the minimum needed.
- Full NZ Super starts at age 70.
- A transition benefit between NZ Super and Unemployment Benefit available from age 65 to 70
- NZ Super is set at a level based on empirical cost evidence and then only adjusted for CPI (but CPI for super annuitants).
In 2013, NZ Super cost $10.9 billion. In 2023 it costs $21.6 billion. we need to reduce the cost.