NZ Super age: 82% of business leaders back raising eligibility (NZ Herald)

NZ Super age: 82% of business leaders back raising eligibility (NZ Herald)

That puts the boardroom well out of step with the public. A 1News-Verian poll in June found only 26% of voters supported gradually raising the eligibility age from 65 to 67. Another 44% wanted it kept at 65, and 25% preferred reducing or removing payments for those with higher incomes or assets.

For many business leaders the case barely needs arguing.

“A no-brainer,” independent economist Cameron Bagrie says. “Current settings are unsustainable,” responded a grocery boss.

NZ Super is universal and isn’t means-tested. It is paid to everyone aged 65 and over who meets the residency requirements, regardless of their income, assets or whether they are still working. That simplicity has long been one of its strengths. But as the population ages, it comes with an increasingly large fiscal bill.

More than 960,000 New Zealanders get NZ Super, at a cost of about $24.7 billion a year. That makes it the largest single item of government spending. The bill is forecast to climb to more than $31b by 2030 as New Zealand’s population ages.

The eligibility age was last changed between 1992 and 2001, when it was raised in stages from 60 to 65. Australia raised its pension age to 67 in 2023, while the United Kingdom is increasing its State Pension age from 66 to 67 between 2026 and 2028.

Simon Bennett, managing director of Metro Performance Glass, suggests a simple test of where the self-interest lies: “Ask for a show of hands in the room of all those over 60. Ask them to keep them raised if they need super when they’re 65.”

But support for a higher eligibility age does not mean CEOs want an abrupt change.

The most common theme from respondents is that any change must be gradual and signalled well in advance, so people have time to adjust their savings and retirement plans.

Port of Tauranga chief executive Leonard Sampson favours a “staged approach over two decades”. Non-executive director Fraser Whineray agrees it should happen “in time and phased”.

Some have a clear number in mind. “Happy for it to go to 67,” a real estate chief says.

One long-serving company director goes further and would raise the age to 70 over 10 years.

Under her proposal, people could still elect to receive NZ Super from 67 at a lower rate, with payments calibrated so the expected lifetime value was broadly the same.

This would see the total value of payments over a person’s retirement be about the same whichever age they chose to start.

Versions of that flexibility exist overseas.

Canada’s pension, for example, can be taken from 60 at a permanently reduced rate or deferred until 70 for a larger payment. The US Social Security system also adjusts payments according to the age at which they are claimed.

A recurring qualification is fairness for people in physically demanding jobs. Several respondents point out that asking a 67-year-old lawyer to work longer is very different from asking the same of someone who has spent decades on a building site, farm or factory floor.

“Raise the age, but not over 67,” the head of an engineering consultancy says.

“We do need to do something about it, but I don’t think there is one option that fits all. I think people have the right to choose when they retire – some have physically demanding jobs.

“However, we owe it to our future generations to improve the current settings.”

Greg Gent, chair of Seafood New Zealand and Dairy Holdings, backs raising the age “but with an exception for hard manual work”.

Among those opposed to raising the age, one infrastructure chief says the answer is to means-test.

But a health CEO, who supports raising the age, strongly disagrees with that approach.

“Raise it, but don’t means-test it. It is not fair, and sends a very bad signal to punish those who have made sacrifices in the short term for the long term.”

Whatever the preferred mechanism, the Mood of the Boardroom results show little appetite among business leaders for leaving the system untouched.

For most, the question is about how quickly, how far, and what protections should accompany it.

An energy CEO frames the argument in intergenerational terms: “This needs to happen – it is bloody selfish to be burdening our tamariki and mokopuna [children and grandchildren] with the long-term debt levels caused by the refusal to raise the retirement age.”