New Zealand doesn’t actually have an official retirement age. Nevertheless, for many people, 65 years old is the target. It’s the age when most superannuation plans (including KiwiSaver) begin to pay out your savings, including government-funded NZ Superannuation.
The Commission for Financial Capability is carrying out a review of retirement income policies, after which it will make recommendations to the government. Diana Maxwell, the Retirement Commissioner, wants the age of eligibility for New Zealand Super to be slowly increased to age 67. One of the proposals she is considering is increasing the age by three months a year over a period of 10 years to a final age of 67.
The Commissioner said super is not affordable and needed to be tackled. The number of 65 plus will double in the next 20 years. The cost of super will triple in the next 20 years and our dependency ratios (this is the number of people of working age to retirees) will go from 4.4 to 2.4 people of working age to every one retiree.
Ms Maxwell is also considering recommending the number of years that people are required to be in New Zealand before qualifying for the pension be increased from the current ten years. It may potentially mean that an immigrant may have to be resident in New Zealand for anywhere up to 25 years before they qualify for the pension.
At this stage, these are just concepts being promoted by the Commission for Financial Capability. However, the concepts are very much in alignment with the debates and actions occurring in other OECD countries where many have already increased the age of eligibility for a pension to 67 years and beyond. It is likely that as we approach the 2017 election, the issue of retirement age will once again become a political issue.