The retirement age can seem like a really abstract concept while you are young. Sure, you might have grandparents who are retired, or near retiring – but the retirement age seems so far away when you are just starting out in life. That being said, just because something is a long way off doesn’t mean we shouldn’t think and talk about it.
The current age of retirement in New Zealand is 65. Recently we have announced that National’s intention is to progressively lift the age of eligibility for Superannuation from 65 to a new age of 67. You might find yourself wondering why?
The reality is that New Zealanders are healthier than ever before and as a result people are living and working longer. Our life expectancy has risen 12 years in the last 60 years and is expected to continue increasing by about 1.3 years every decade. This is great news as it means more Kiwis are able to spend more time with their families, get to know their grandchildren, and have a higher quality of life as they enter their old age. That being said, longer lives are driving up the cost of NZ Super.
At our current rate superannuation costs about 5% of our GDP, however, it was expected to rise to 8.4% by 2060. We have decided to make a sensible decision now to help us avoid having to make a difficult decision later. While we could have afforded this cost, we would have had to make trade-offs that could have restricted spending in areas like health, education, or transport.
We have tried to make sure the change will be implemented in a fair and balanced way. Yes, we are making a change that will benefit our young people, but it won’t be to the detriment of our elderly. Changes to Super won’t kick in for 20 years’ time. It would be unfair for us to announce to a 64 year old that “Sorry, you’ll need to work an extra two years” just as they were ready to retire. We are giving enough notice so that it won’t be a shock to anyone and people have time to plan for their futures.
This decision may not necessarily be the most popular, but I am convinced that it is the right move for you – our future generations. It is also fair for our elderly and our taxpayers.