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.

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Posted on July 16, 2011, in New Zealand Politics and tagged , , , . Bookmark the permalink. 5 Comments.

  1. The issue I see with this is that kiwisaver isn’t a compulsory scheme. I believe kiwisaver (or whatever superannuation savings scheme we have) should be MANDATORY. Until and unless the scheme becomes mandatory, we will always have this issue.

    I also think we should be raising the age of superannuation (or retirement, if you want to call it that) as there have been a lot of advances in medicine in the last 30 years that mean our life expectancy has increased greatly. However, I think the change should be gradual – ie in 2018, raise the age to 67, in 2024 raise it to 68 etc so people can anticipate it.

    • I don’t think it’s fair to make KiwiSaver compulsory. However, if we reduce the amount of superannuation people receive, people will be almost forced to join KiwiSaver without actually legislating this.

      I don’t support the raising of the superannuation age simply because while most people can continue working, there are some who can’t. Maybe superannuation should be based on if you are able to work, so once you turn 65, if a doctor gives a certificate to say you are no longer able to work, that’s when you get superannuation.

  2. It used to be that the old age pension(that’s what is used to be called) was means tested. The Rob Muldoon made it a universal pension. Realistcally it was never affordable it was vote buying then and is still being used to keep votes. As for Grey Power’s cry of we paid taxes all our life we’re owed. Sorry doesn’t wash. People in their 40’s and 50’s will have paid taxes for years and lived under a user pays system and global prices perhaps if the grey power members had lived within their means all those years ago (Muldoon era) we wouldn’t be so broke now

    • Making the pension means tested would work too, but I don’t see it flying with any political party. The Grey Power group are far too vocal for political parties to do something like that. If only New Zealanders in general actually had the brains to be vocal when the disagree, rather than just having the same voices come up every time.

      • The problem(reason ) is that the “baby boomers” are the largest number in the population and sadly it would be political suicide to say “Hey guys sorry but we actually can’t do this” Add to that the generation before them is living to a ripe old age and they truely do feel entitled and sadly it would seem do not give a damn what they are doing to the younger generation. Inititally as these baby boomers hit 65 there will be an economic boom as they are the wealthiest fittest generation to ever retire.

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