Universal super at 65 is increasingly unsustainable, but any attempt to change it will attract fierce political blowback. What’s a government to do, wonders Catherine McGregor in today’s extract from The Bulletin.
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No cuts to super – but everything else is on the table
Last week’s budget delivered a raft of cost-cutting measures, from halving the KiwiSaver member tax credit to tightening access to the Best Start payment. But superannuation was conspicuously untouched – a move that came as no surprise, given NZ First’s long-standing defence of the universal pension. High-income earners who can no longer access the KiwiSaver contribution remain fully entitled to super, a benefit projected to cost nearly $25 billion this year and rise to over $45 billion by 2037.
Critics have pounced on the apparent double standard, reports RNZ’s Susan Edmunds. As economist Shamubeel Eaqub put it: “It’s incoherent … incentives for Kiwis to save for their future [are] means-tested, but New Zealand Super, which is universal welfare for older people, is untouched.”
National’s slow path to raising the age
While ruling out means-testing, both prime minister Christopher Luxon and finance minister Nicola Willis have reiterated National’s plan to raise the super age – eventually. The party’s policy is to keep the current entitlement age of 65 until 2044, after which it will rise gradually to 67. No one born before 1979 would be affected.
In the NZ Herald (paywalled), Fran O’Sullivan argues that such a distant target is little more than political theatre. She contrasts Luxon’s timidity on the issue with former National PM Jim Bolger, who methodically raised the age from 60 to 65 over a nine-year period. O’Sullivan notes that Bolger “managed to convince New Zealanders that a gradual increase … was plain commonsense” at a time when life expectancy was increasing. By contrast, today’s leaders seem content to avoid political pain, she writes, even as super becomes an increasingly heavy burden on the budget.
One millennial’s wail of despair
The idea of delaying retirement might make sense on paper – but it’s enough to send some younger New Zealanders into an existential tailspin. Writing in The Spinoff this morning, Hayden Donnell delivers a howl of generational frustration: “Millennials have spent their formative years selling kidneys to pay rent on a draughty villa and getting bullied by gen Z for admittedly being huge losers. They’ll spend the next 20 helping fund their parents’ generation’s Mediterranean cruises. Surely after that they can have a break? I guess not.”
Donnell’s broader point is that policies like lifting the super age hit those with lower life expectancies and more physically demanding jobs hardest. And while life expectancy has barely moved in recent years – and is even declining in some countries – the financial squeeze on younger generations is intensifying, just as the likelihood of a guaranteed super at 65 starts to fade. Or, in other words: “Come on man how much shit can people under the age of 40 have shovelled onto them from a great height god damn it christ on a bike argh argh argh no.”
‘You can touch anything else. Do not touch my pension’
Two of New Zealand’s most prominent right-leaning commentators have also weighed in – and their take is not encouraging for National. In his Mike’s Minute, Mike Hosking warned that voters’ emotional attachment to super far outweighs any argument of fiscal prudence. “For many, superannuation is untouchable. It’s a lifetime’s worth of work. ‘I paid my taxes’ they say, even though that line isn’t actually real because we spent your taxes years ago and then borrowed a bit more to keep the lights on.”
Hosking’s Newstalk ZB colleague Heather du Plessis-Allan was even more emphatic: “Don’t touch my pension. You can touch anything else. Do not touch my pension.” Despite advocating for cuts to almost every other form of welfare, she drew a hard line at super, arguing that she and millions like her had earned it through years of tax contributions. “So, good luck to Chris Luxon getting this one across the line,” she wrote. With opposition like that from his own ideological camp, Luxon may find that even floating the idea of reform is as far as it goes.
