An aging population we can’t afford
An article in the NZ Herald on Tuesday was talking about the aging population and how we should raise the age of eligibility for the pension in order to keep it affordable going into the future. This is a policy both National and Labour are against.
Personally, I accept that we have an issue that will be very prevalent in the next five to ten years. We will have more pensioners than workers soon and the responsibility will fall on those workers to pay for them. Or will it?
The current thoughts on pensioners is that the Government should pay for them because they have paid taxes and contributed to society for years. This takes a lot of money. However, I would suggest that is not necessarily the best option. What I would suggest is that we slowly reduce the pension as people who have had the option of KiwiSaver start hitting the Superannuation system. People who were already retired when KiwiSaver was brought in should have the same system they have now. People who enter the Superannuation system now should have a slightly lower rate. Every year, this should be reduced slightly for new pensioners. This is because as we get to people who have had KiwiSaver for longer, they will be able to better afford to live off that. Eventually, we will get to a point where Superannuation is affordable without pushing the eligibility age out. I am not suggesting that Superannuation be scrapped. Nor am I suggesting people who don’t have much in their KiwiSaver be forced to live off that from the age of 65.
Not only will this solve the issue, we will also end up with more people signing up to KiwiSaver, because they will need to this when they retire. This increased investment will be positive for the economy. Two birds, one stone.