Support for raising retirement age

Written By: - Date published: 11:36 am, May 30th, 2011 - 37 comments
Categories: superannuation - Tags:

A Herald poll asked people their views on raising the retirement age. Surprisingly, support was strong – 52.3% think the issue needs addressing

National whines the country is broke so they have to cut public services and sell assets (while keeping on borrowing for tax cuts for the rich), but super for 65 year olds alone costs $625 million a year. That means just raising the retirement age by one year would save over ten years about as much as National is hoping to get from asset sales. And we wouldn’t lose the dividends from and control over our strategic assets.

12% of the money the government is spending this year will go on super, by 2015 that will be 15%, and  by 2025 it will be 21%. Simply put, the system was never designed to support the majority of people for 15+ years of their lives. It’s not realistic to expect that the retirement age won’t rise while life expectancy does.

The UK and Australia are raising the retirement age to 67 in 2020 and 2023 respectively. A 67 retirement age in New Zealand would save $1.2 billion a year today, and more as the population ages. Should we follow other countries’ lead?

John Key has said he will never act on superannuation. He said this morning he can’t worry about something ten years off because he has too much worry about in the next ten weeks. That wonderful short-termism again. (he also said that selling assets reduces the country’s indebtedness to the rest of the world – its impossible to believe anything out of his mouth).

Will any party have the courage to take on super?

37 comments on “Support for raising retirement age”

  1. We urgently need to have this debate. Essentially either we start saving now or the weight of numbers of baby boomers will cause severe financial stress on the state in 20 years time.

    We can start saving by:

    1.  Accelerating private savings. (Kiwisaver)
    2.  Establishing and contributing to a designated fund (Cullen fund)

    Or we can reduce the cost either by

    3.  increasing the eligible age or
    4.  means testing the benefit.

    So far Key has gutted 1 and 2 and refused to do 3 or 4 “while he is prime minister”.  This is highly irresponsible and will make it inevitable that something will give eventually.

    I guess when you have $55m you do not need to worry about such things …

  2. marsman 2

    All very well to raise the retirement age but what about people who have been in demanding physical jobs all their working lives, I’m sure their bodies would be grateful of a rest at age 65.

    • Blighty 2.1

      Agree that that’s a problem with a retirement age of 67, just as it is with the age at 65 but it’s not an argument against raising the age in itself, it’s an argument for special arrangements for those people.

      If people can’t work any more due to age and work-related degradation, they should be able to get either the invalid’s benefit, ACC, or the pension earlier. I believe this already happens to an extent.

      • onsos 2.1.1

        ACC specifically excludes age-related degradation. The invalids benefit is significantly less than superannuation. The people concerned are unlikely to have insurance, or have had the capacity to have saved for their retirement.

        This is not an issue that can be blagged away. Raising the age of entitlement to super will make life worse for people who work physically for a living. Much worse.

  3. Maybe John Key is not keen on having to deal with the issue of providing more jobs for both young and old if the retirement age is raised?

    I also can see a problem for those who have worked hard and manual jobs all their lives. It would work against lower paid workers.

    Why have a fixed reitrement age for all occupations? What about having a more flexible system eg lower retirement age for those who have worked a significant amount of time in low paid jobs requiring physical labour, part time work & partial pensions for others? I know people who have told me they have less energy for fulltime work as they get into their mid-60s.

    And is the cost of superannuation the real problem, or the vast inequalities in income across all ages?

    • handle 3.1

      “I also can see a problem for those who have worked hard and manual jobs all their lives.”

       
      That’s true. Raising the age also disadvantages groups who tend to die younger – such as Maori and Pacific peoples, and men.

      • Vicky32 3.1.1

        Raising the age also disadvantages groups who tend to die younger – such as Maori and Pacific peoples, and men

        Not just those groups! As I have said in my post below, of my whole family, only one grandfather ever lived long enough to make it to National Super age, and then he died 5 years later… If I am lucky enough to live long enough, I will be the first since 1945… Oops, I forgot – my Mum made it to 62, and back in those days the pension went to women at 60, so she was lucky, she had 19 months of it… (We’re Scottish/English with a huge history of cardiac problems and an average age at death of 35!)

  4. Janice 4

    The pension should be means tested on other income, why should someone still working get paid the pension? This includes people like Don Brash, Roger Douglas and Bob Jones. If it was means tested these people wouldn’t even be able to apply for it. The pension is a state benefit and should be treated like other benefits, but where is the politician who will say so? There could be a reasonable abatement level to cover interest, etc. I am pretty sure that Australia has a system to not pay people who don’t need it.

    • Carol 4.1

      I paid into a compulsory system when I worked for a small number of years in Aussie. So on retirement, I will get something back based on what I paid into it.

      • John D 4.1.1

        I pay into a compulsory system called “tax”. I don’t expect to see anything back.
        Agreed on means-testing pensions. I know relatives who are still working at aged 65 and getting the pension.

        We’d be much better giving the dosh to students to give them a kick start in life

        • Lanthanide 4.1.1.1

          “We’d be much better giving the dosh to students to give them a kick start in life”
           
          Alternatively, one would hope that these people who are 65, getting the pension and working, would be saving the pension for their later years when they won’t be working and their health might pack up.

    • KJT 4.2

      What was wrong with the surcharge?

      This is a mantra. “We cannot afford superannuation” which has been repeated so long and so often that even those who should know better repeat it.

      And what did Government’s do with the more than a million, in today’s dollars, I paid in tax that they cannot afford to pay me a small proportion on retirement.

      Do we really want to return to the days when most elderly people were totally impoverished when their working lives ended.

      In fact super has been so effective in removing poverty amongst the elderly it should be extended to everyone in the form of a guaranteed minimum income. There is now excuse for having people with inadequate food and housing in a country which is capable of supplying an excess of both internally.

      Super and other benefits are easily affordable if those who get the most benefit from our society paid their fair share.

      We are fast becoming a country which does not look after its children, the sick or the old.

      What does that say about us?

      • RedLogix 4.2.1

        The single most cogent comment on this topic ever!

        • onsos 4.2.1.1

          Agreed; the welfare of the elderly in this country should be an example to the world, not a dirty secret. They’re doing all right, and I’m okay with that.

          • terryg 4.2.1.1.1

            hear hear! KJT wins this weeks internet. Clear, concise, cogent & completely correct.

  5. ZeeBop 5

    Commodities are high globally. NZ dollar is a buy. We export more than we import. Why so we have poor economics, poor savings habits both private and government, because we have a poor policy debate that allow the few to wreck havoc and claim they can solve the crisis. We don’t have a age social security crisis. Its all a bureaucrat gimmick. If its harder for pensioners then they will find ways to adapt like any age group. They will share accommodation. They will employee each other part-time. They will use the amassed wealth to vote in governments that keep their old age liveable. Its will never become a crisis. We can afford to look after everyone, its just as divide and conquer strategy to separate national wealth from kiwis and hand it over to the global international trading markets. We don’t have a problem with money in NZ, we have a government who won’t raise taxes on exporters, or get exporters to pay their fair share of tax.
    Citizens should be able to afford to buy milk if milk is our national export, that’s just wrong.
    Sure if the people who got into debt are the one who can’t afford milk, but no its not them,
    its hard working lower and middle class people just trying to live the dream.

  6. JaJ 6

    A very lucid post and absolutely spot on. People can save a bit more of their income to make up for the loss of 2 years superannuation easily enough.

    • Colonial Viper 6.1

      People can save a bit more of their income to make up for the loss of 2 years superannuation easily enough.

      You must mean all those people who aren’t already living on the bones of their ass, eating catfood, or maybe those who got handed $100-$200 p.w. tax cuts by National? I’m sure they would add to their savings quite OK.

      • JaJ 6.1.1

        Most people aren’t living on the bones of their ass for the entire duration of their life.

  7. Tammy Gordon 7

    I’ll vote for any party that doesn’t make me wear matching grey jumpers with the old fat, bald guy when I’m retired.

  8. What about setting retirement age as a set proportion of adult life. So when you’re 18, and your life expectancy is another ~64 years, and you might be expected to work 75% of them, or 48 years (to age 66). As life expectancy goes up or down it would remain fair. After all, originally retirement age was set at 100% of life expectancy…

    If you wanted to get extra fair you could in theory give people personal retirement ages at 18 based on their personal life expectancy by taking ethnicity, gender & parental wealth into account, but that would no doubt be all too bureaucratic in practice.

  9. The Voice of Reason 9

    Much as I hate to be pedantic, it’s worth pointing that the post, the Herald headline (but not the Herald article) and a few of the comments seem to be under the impression that there is such a thing as ‘the retirement age’ in NZ. There isn’t. Nobody can be forced to retire, though Brash should be encouraged in that direction for the good of the nation.
     
    What is actually meant is the ‘pension age’, a totally different concept. The arrival of the pension allows the consideration of retirement, depending on personal circumstances. Nobody still paying off a mortgage is likely to think the pittance the pension provides is sufficient to give up working.
     
    I’d suggest that rather than lifting it to 67, we have a good hard look at why it isn’t already lower. If capitalism is so shit hot, how come it isn’t 60? Or 55?
     
    Eddie, why do you think it neccesary to screw more work from older folk and remove a earned benefit and a promisedvfinancial option from these people who have already spent half a century building this country through their labour and their taxes? Shouldn’t we socialists be advocating the very opposite position?
     

    • Herodotus 9.1

      The Kiwisaver will stop any party from increasing the age. How could Labour campaign to increase the age when they have attacked Nat for charges in the scheme this. Whilst I do go with a review with an increase in age. Yet them many who have joined this scheme will see that this age will increase as the cost to the govt increases and that then KS becomes a dog, in that we all pay into it and as the age increase fewer receive the benefit.
      There is also the issue of savings result in a decrease in value as tax and inflation mean the principle amount goes down in value. Lok at retirees currently with a few dollars in the bank- the value of their savings diminishes,so why would someone leave $ in the bank, this then just increases the idea of property as an investment and the cycle continues

    • lefty 9.2

      Well said Voice of Reason.

      We should be concentrating on running an economy that can provide for people to retire at 60, or earlier, rather than giving up and continuing to raise the age.

      Its not about building fancy retirement investment funds that profit from stealing workers labour and pillaging third world economies, or increasing savings, or raising the age of retirement, or some sort of degrading testing to work out whether you are physically fucked enough to give a pension to.

      Its about running a fair and sustainable economy to serve the needs of the people, including the need to sit back and put your feet up for a few years before you die.

      And its not that hard to do – we managed to pay my father, and his father before him, a pension when they turned 60. Then the bloody labour party introduced neo liberal economics and since then we supposedly can’t afford any of things that make up a civilised society.

      Nor should we be fooled by the baby boomer bulge rhetoric. Productivity gains in the last few decades more than compensate for the changing ratio of retirees. Its just that we are to busy giving all the benefits to a few rich bastards rather than sharing them.

      If capitalism can’t cut it then its time to discard it.

      • Colonial Viper 9.2.1

        If capitalism can’t cut it then its time to discard it.

        +1

        This is not a financial crisis.

        This is a crisis of that now broken system known as capitalism.

        Broken by whom? Broken by those who are so greedy that they can’t allow themselves to settle for a few million dollars in wealth, they want more, more, more with no end, even if it means crushing the life out of entire peoples, cities and countries.

  10. Tiger Mountain 10

    Well re-framed Voice. What did happen to those paperless offices, 35 hour weeks on full pay, flying cars and delicious work life balance?

    Bugger, the futurists forgot to tell us that utopia only applied to the ‘few’, the Filthy Few as I call Shonkey and his mates, no disrespect to the motorcycle club of the same name.

    The tendency of the rate of profit to fall over time is true in reality as much as most economists try to say otherwise or ignore it. That is why the captialist keep tightening the screws down and the many work harder or not at all.

    • The Voice of Reason 10.1

      “What did happen to those paperless offices, 35 hour weeks on full pay, flying cars and delicious work life balance?”
       
      I’m told you can get number’s one and four across the ditch, TM. Plus a 12% pension contribution. NactM do have a paperless office strategy, however. It appears to consist of removing the need for filing cabinets by moving the workforce onto the dole queue.
       
      And in the future, I guarantee the flying cars are actually going to be usurped by steam punk style personal dirigibles or my name’s not George Jetson.

    • Colonial Viper 10.2

      35 hours per week? Nay my friend, I think the next goal has to be 4 day work weeks, 32 hours per week, 3 day weekends as standard, and able to make a decent living wage with that.

      Would require an hourly rate of $18-$20.

  11. What about rejecting this whole beat up of ‘no money’? As Standardistas have proven, labour productivity has shot up in the last decades while labour’s share of that has not gone up, in fact its gone down, so that the share of wages is falling way behind the share of profits. So let those who have taken the lion’s share of the surplus as profits be taxed to provide for the retirement of workers whose value they accumulated as profits during their working lives. Making workers work longer under these conditions is just prolonging the exploitation and shortening the years that workers should live to enjoy their retirement. From the bosses’ perspective of course it screws more surplus from workers over their lifetimes, and reduces their liability to contribute more of their profits to the well being of workers and their families.

  12. Vicky32 12

    This is something I never thought I would ever say… I’ve been unemployed for 3 years now, managing on casual work until I was told by Housing NZ that I am not permitted to do it. Neither of my parents lived to be 65, and I am still 8 years off… but I hope I do make it! (I gather my chances of getting a proper job drop every year, so National Super is my only hope of getting off UB). Another year to wait, and I may end up doing as my parents, all but one grandparent and both my brothers (younger than me!) did and saving the taxpayer the cost of the pension, by dying first. I laughed at my ex when he said 25 years ago, that he just couldn’t wait! (He’s an official OAP now, being much older than me). I still don’t know what he was thinking (he was only 40 and earning phone numbers) but personally, it’s my only way out! 🙁

  13. vto 13

    There is another course of action….

    Means / asset test it. I resent supporting oldies who are wealthy enough to not need the pension. And I have never understood their argument that they paid their taxes all their life etc etc…. because they bloody didn’t. They bloody voted in Muldoon for example, and many others, who have canned super schemes to use the money elsewhere. i.e. they have voted in govts who have pissed it up against the wall.

    Or, how about this course of action – combo raising the age AND means / asset test it.

    Bloody chicken shit debate. It is all about greed and votes. Reflects poorly on those involved. Brings them down in line with the rest of humanity..

  14. SHG 14

    “Will any party have the courage to take on super?”

    No.

  15. I find that the majority of those who want to raise the pension are the one’s who have had nice sit down jobs.I’m yet to find anybody who labours on the roads or is a farm workers or other hard graft manial workers, who want to stay till they are 67/70 .No its fat paper shufflers who are demanding this change of supporting the raising of the pension.A few more years at work will not affect them .
    I believe that it would be better to lower the age of eligibility to 60, however allowing a person to stay at work but with no pension if they wish.
    This would open the job market to younger workers thus reducing the unemployment figures ,Which is a far more burden on the taxpayer with far more serious consequences than the Super payout. Compulsory Super saving would enable this to be possible.

    • weka 15.1

      Maori are also disproportionately penalised by raising the age for the pension because they die younger and earn less over their lifetimes than non-Maori (or pakeha at least).

      I agree it would be better to offer incentives to people who can stay in employment rather than force the whole population to.

  16. Justaminute 16

    No, it’s not fair to raise the age of eligibility for Government superannuation, and nor is it fair to means test the superannuation benefit. Higher tax rates for employed persons also collecting super. is definitely, however, an option to consider.

    What about those who have worked for fifty years in physically demanding positions, whose bodies can no longer handle the stresses and strains of their work? What about those whose brains just can’t keep up? It’s not their fault, for goodness’ sake! Many of them hate to give up an occupation they love.

    And what about those who are lucky enough to be valued by their employer and have relatively stress-free occupations, just a job that needs to be done? In my experience, the employer finds it difficult to replace these people, as younger and more dynamic men and women want more of a challenge, offering more opportunities and greater financial rewards.

    The Govt.Super should be available to all who attain the age of 65. Superannuitants pay tax on their benefits, those who are still working pay tax on their salaries as well; those with particularly high incomes are probably paying tax enough to support several others. Give everyone the choice!

    Disclaimer: I’ll be seventy this year, still working (part time) in IT, and also collecting my Govt. Super – which is taxed, I might add, at a higher rate, as it should be. My partner, who is almost 75, welcomed retirement at 65, as he was a manual worker, and the physical contortions and stresses that accompanied his work made it impossible to continue doing a job he loved. Yes, I am one of the fortunate few. My employer is ‘grey-friendly’, accommodates my needs in the workplace, and when I tried to retire some time ago, made it clear that my presence was still wanted around the place. Everyone should have such a choice – retire and live if they wish on a limited budget and Govt. Super, or keep working and be taxed fairly (heavily?) while collecting both salary and super.

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