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Commissioner stands by super age rise stance

Published: 5:38AM Tuesday June 12, 2012 Source: Fairfax

New Zealand's retirement commissioner says while she can advise the Government to raise the eligibility age of NZ Superannuation, it is up to the Prime Minister to make the changes.

The Financial Services Council (FSC) yesterday warned taxes would need to increase by 28% by 2070 to keep paying out the pension at age 65.

Diana Crossan told TV ONE's Breakfast this morning she stands by recommendations made by the Retirement Commission in 2010 to raise the eligibility age of the scheme to 67 by 2033. This would come into effect from 2020 and would rise gradually by 2 months.

"After having a look at the report put out by the FSC, we've gone back to our report and we still recommend our process," she said.

John Key has refused to break his promise and raise the retirement age from 65, which Crossan said she cannot do much about.

"The Prime Minister is the Prime Minister and I'm only the Retirement Commissioner," Crossan said.

Key tried to strangle the debate yesterday by claiming the cost of the state pension had fallen between 1990 and 2007. But he failed to point out that the age of entitlement rose from 60 to 65 in this period.

Crossan said the option of raising taxes to 28% to compensate for the cost of keeping the same NZ Super age is not plausible.

"I don't think anybody ever seriously suggested that would happen," she said.

"You could also drop the amount of NZ Super, and that's something that nobody would want either."

Crossan said the promising thing about the debate was the private sector getting involved as well as the NZ public.

"We are finding out that more New Zealanders are understanding that something will have to give, and we are really keen that we hold on to New Zealand super.

"I think it's a national treasure."

Kiwis support super age rise

Research conducted by savings and investment lobby group FSC has provoked a storm of reaction, with Opposition MPs calling for a debate on the affordability of NZ Super.

Almost 60% of people questioned believe New Zealand cannot afford the scheme if the age eligibility stays at 65.

Key has point-blank refused to move on the retirement age - staking his career on his commitment.

Yesterday he attempted to bolster his argument by saying the cost of NZ Super fell from 14% of government spending in 1990 to 10.9% in 2007.

But the age of entitlement was lifted from 60 in 1992 over a nine-year phase-in that would have had a significant impact on costs.

Labour leader David Shearer wants cross-party talks and a "nationwide discussion."

Coalition partner ACT also called on National to reconsider. Leader John Banks said that, by 2016, NZ Super would make up nearly 55% of total benefits paid by the Government.

The report shows New Zealanders are under prepared for old age. The average expected retirement age for women is 67.1 and for men 68.7.

Most of those questioned thought they would live, on average, to 83.5 years. But those aged between 18 to 24 believed they will still be around until 85.8.

However, 45% agreed they were "not really planning for their retirement".