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The New Zealand government has ruled out following in Australia's steps in raising the retirement age, despite also having an ageing population.
In a surprise move last week the Rudd government raised the retirement age from 65 to 67 years old.
The change will be phased in from 2017 and will be fully in place by 2023.
Australia follows other countries like the United States and the United Kingdom who have also raised the age of entitlement for superannuation payments.
Australian retirement consultant says the Australian government's move saves money in number of ways.
"While people are working, they're actually healthier. They've actually got some discipline and structure around their life, and of course they interact with their workmates.
"Not only that they're contributing to their retirement savings because they're earning income and putting the money aside," he says.
Currently in New Zealand there are about five workers for every superannuitant, but in 40 years there will only be two workers for every superannuitant.
Given this, many believe the New Zealand government will be forced to raise the retirement age if it is to keep a lid on the rising costs of an ageing population.
Vance Arkinstall from the Investment Savings and Insurance Association says it is "inevitable".
"The cost of superannuation is predicted to increase from currently about 4% of GDP (gross domestic product) to about 9% by 2030. Health costs are going to double also over a similar period, so the cost of ageing will become a huge burden on the government," he says.
But the issue is a political football and any government choosing to pick it up and run with it won't win any votes.
In a poll taken by TV ONE's Breakfast programme an overwhelming 93% of people did not favour raising the retirement age.
Nevertheless, Paul Newfield, Mercer's head of retirement, risk and finance, says the issue needs to be debated, though he says raising the retirement age is not the only option that should be considered.
"There are a lot of risks with the ageing population. We need to manage those risks carefully and we need to manage them holistically...in some professions you cannot continue to work (past the current retirement age)," he says.
He suggests steps such as starting early saving for retirement
and better planning around the use of Kiwisaver
funds.
What do you think about changing the retirement age? Share
you thoughts on the message board below.
Add a Comment:
Post new commentTartanDread said on 2009-05-20 @ 19:55 NZDT: Report abusive post
Easy answer to the problem of whether you are going to have to work until 70 before you get the super. Join your local Grey Power Association, as a member or associate member.
Piglet said on 2009-05-20 @ 11:14 NZDT: Report abusive post
Don't do it!!! I'm too close to the dreaded age and all my financial planning hinges around the magical 65 - this is a purely selfish point of view of course. Ideally, like the previous respondent it would be nice to retire early and rich
kstew said on 2009-05-19 @ 11:15 NZDT: Report abusive post
Yep. I agree it's going to happen, but I'd rather make lots of money and retire young.