Raising the age of superannuation eligibility would disproportionately hurt Māori, Pasifika, and women, and the government’s retirement watchdog says it would be a mistake.
Some 40 per cent of people aged 65 and over have no income besides national super of between $18,000 a year and $24,000. Another 20 per cent only have that, and a little more, Retirement Commissioner Jane Wrightson says.
"We're trying to bust the myth of the dominant narrative of retirement, which is a wealthy-ish person owning their own home with sufficient capital to live quite comfortably,” Wrightson says.
"That's 50 percent of the population, give or take a bit, and that's going to decline over the next 10 or 20 years."
Wrightson says the numbers are worse for Māori, Pasifika, and women because they’re less likely to own their own home, so many can’t sell up, and downsizing isn’t an option.
Increasing the retirement age to 67 by 2037 is a National policy but Wrightson says given the number of renters is expected to double by 2048 due to failed housing policies, rather than cutting back, governments will need to invest even more.
“The implicit assumption underlying NZ Super is that it is received by people who own their home outright. This impacts the payment rate and so, as ownership patterns change, other support is likely to be required by a growing number of people,” the commissioner says.
Things get worse again for Māori according to the report, because of lower life expectancy.
Tane Māori live till they’re 73-years-old on average, compared to 81 for Pākehā. Wāhine Māori live on average to 77-years-old vs 84-years-old for Pākehā.
Māori men could be missing out on more than $200,000 of payments, and Māori are likely to have lower savings too according to Wrightson.
“Generally speaking Māori earned less over their working life and would have suffered more than the normal life shocks,” Wrightson says, adding Māori will typically have bigger whānau and that means time off for caregiving.
Lower life expectancy
An OECD report analysing New Zealand’s superannuation in February said given people are living longer the retirement age should go up but not for everyone.
Qualification ages for people with lower life expectancy should go down, so they get the same benefits of those that live older, according to that report.
Wrightson says if things are going to change, those things need to be taken into account.
“It is clear to me that the age of eligibility to access NZ Super must remain the same, or a more complicated system be considered to reduce the inevitable inequity such a change would bring,” Wrightson says.
“Any increase to the age of people accessing NZ Super will only further disadvantage women, Māori and Pacific People.”