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Govt against raising retirement age

Published: 6:14PM Monday July 27, 2009 Source: ONE News/NZPA

Raising the retirement age to 67 could save taxpayers billions of dollars in pension payments, according to a new report.

However, Prime Minister John Key is against the idea, saying the government will not touch the retirement age.

"I've made it quite clear it would be my intention to resign from parliament if I broke that promise to New Zealanders," Key says.

Retirement Commissioner Diana Crossan is frustrated at the lack of action, saying reliable forecasts about the future financing of superannuation are needed urgently.

"We need to give New Zealanders a long lead time if we are to make changes," Crossan says.

The government was due to report back last month on a review undertaken by the Commission in 2007. But Finance Minister, Bill English, and Minister for Social Development and Employment, Paula Bennett, told the Commission it would not be responding, due to the change in economic climate.

Consulting services company Mercer says the double whammy of an ageing population and the global economic crisis highlights the urgent need to address the issue of retirement saving, and reduce reliance on New Zealand superannuation.

The number of retirees will grow from its current level of one in four, to one in two by 2051.

"It's time for the government to take some decisive action and balance the politics in the current debate with what's ultimately best for New Zealand - particularly in regards to the 'hot potato' issues such as raising the eligibility age for NZ Super," says Martin Lewington, head of Mercer in New Zealand.

Mercer says the government needs a holistic, rather than piecemeal approach, to retirement.

It says while KiwiSaver has been a good start, improvements could be made, such as greater incentives for higher contributions.

Mercer also suggests other measures, such as allowing people to defer getting super to remain in the workforce.