Early this week Prime Minister Bill English announced a policy change to national superannuation that will take effect if the Government is returned to office later this year.
The National-led Government proposes to progressively increase the age at which one is eligible for superannuation from 65 to 67, starting in 20 years' time. Legislation will need to be passed to enact this, and that will happen next year, provided, of course, National leads the new government.
The policy change will also lift the New Zealand-residency requirement from 10 to 20 years; it will apply to new residents and citizens only, from that date.
"What has brought this policy about is the need for long-term planning and fiscal responsibility. Superannuation is affordable today -- it is about 4.5 per cent of GDP," says Brett Hudson, National's list MP based in Ohariu.
"It would remain technically affordable in its current form into the future, but only by making trade-offs in other areas of government spending, such as health and education, or by hiking tax rates."
Brett says that, over the next 40 years or so, the cost of superannuation as a proportion of the total economy is forecast to almost double (and the actual sum of superannuation expenditure is expected to peak at $36,000,000,000 per annum ...).
Given the rate of increase in life expectancy, those who will be required to work until 67 will still spend the same proportion of their lifetime receiving superannuation as those who will be able to retire at 65 -- nearly 25 per cent of their lifetime in receipt of the payment, Brett says.
"I'm particularly pleased to see a legislated review planned for 2030, when the Government of the day will assess the effect of the proposed eligibility-age change on those in jobs that are traditionally harder on the body. At that time, and based on evidence collected over the intervening 13 years, the Government can decide on the universality of the proposed change.
"Given the long-term outlook, I believe the proposal is a fair and responsible one. By setting a horizon of 20 years for the change, New Zealanders will have plenty of time to plan for it."