We have had seven years where the growth in the number of workers has been faster than the growth in beneficiaries, despite the ageing population. But is that trend about to reverse?

We have had seven years where the growth in the number of workers has been faster than the growth in beneficiaries, despite the ageing population. But is that trend about to reverse?

The ratio of the number of workers-per-adult-beneficiary has risen to 2.0 times as at the end of 2017, continuing a seven year trend higher.

In September 2009 it was just 1.7x, having fallen from 2.4x in 2004, its recent high. (Our data starts at 1999 when it was just over 2.1x.)

Improvements (a rising number of workers per beneficiary) are hard to extract in New Zealand because of the ageing of the population and the growth of those 65 and older on the most expensive benefit of all, National Super.

New Zealand taxpayers will spend $13.7 bln on National Super in this budget year, the single most expensive budget line item. (Other adult benefits cost $5.9 bln, Working for Families tax credits cost $2.4 bln, and the Accommodation Supplement costs $1.2 bln. For perspective, the total Health budget is $16.8 bln, the Education budget is $14.7 bln, both with a very wide range of line items.)

In the year to December 2017, the over 65 population rose +3.3%. But that was a slightly slower pace than the over +4% pa we saw in the years 2012 to 2015.

This demographic of beneficiaries 65 and over is growing by +24,000 per year and now totals 741,500 people.

Other beneficiaries - job seeker, sole parent, supported living, 'other' incl. students - are declining by -3.4% per year but the numbers here are much smaller, being declines of about -6,000 each twelve months.

What causes the ratio to improve is the faster growth in the employed workforce. That was up an average of +3.2% over 2017, adding 48,000 new workers paying taxes.

Relating tax-paying workers to beneficiary numbers results in 2.5 times more workers than beneficiaries.

But some workers themselves are on public benefits, specifically in-work tax credits delivered by the Working for Families programme.

Adjusting for that, the number of workers-to-beneficiary ratio slips to 2.0 times.

Beneficiary numbers fluctuate seasonally and there has been a general downtrend since 2011.

But worth watching is that the growth in the employed labour force seems to be fading recently, certainly in the final quarter of 2017. We will get the next data update with the Household Labour Force Survey on February 7 and that will be something to watch. A slackening in employment growth will turn the ratio quickly, especially as the pace of new claimants for National Super isn't going to change materially anytime soon, and the death rate keeps dropping.


Select chart tabs ┬╗

The 'Workers per adult beneficiary' chart will be drawn here.
Source: MSD
The 'Over 65 National super' chart will be drawn here.
Source: MSD
The 'Working aged beneficiaries' chart will be drawn here.
Source: MSD
The 'Total beneficiaries' chart will be drawn here.
Source: MSD
The 'Total employed' chart will be drawn here.
Source: MSD

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We have had seven years where the growth in the number of workers has been faster than the growth in beneficiaries, despite the ageing population. But is that trend about to reverse?

Well has the government changed to Labour?
Does the bear s**t in the woods?
Is the Pope Catholic?

After 9 years in power National didn't manage to get the unemployement rate back down to what is was when they took over from Labour in 2008 (it was climbing due to GFC). Perhaps you should go look at some figures before spewing partisan propaganda that has a very questionable basis in reality.

If your outlook is so blindly simplistic and partisan I guess anything is possible in your world view.

I'm actually shocked there is 1 beneficiary for 2 workers! What a huge burden on the working people

It's going to get far worse as Generation X (boomer kids) start retiring. The next 20 years will be a nightmare for net taxpayers. The serious lack of retirement savings/investments is a major problem.

Hmm not really, the biggest blip / problem is the boomers. When X starts to retire the boomers will mostly be dead and hence no burden. "20 years" yes, hence from what I can see the burden is going from 13%? retirees to 26% of boomers falls on X and Y.

In 20 years the majority of Generation X will be over 65. The burden falls to those that are working age unless there's enough retirement savings or investments.

Before that however the boomers are retiring. This is one of the downsides of a failing grow for ever economics model you cannot afford the promises.

Peak month for boomer births was in 1948. So peak year for them hitting 65 was five years back. In retirement terms the boomer are past the peak.

Peak year for births in NZ was 1961 at 65,476. 1948 was ~45,000 births. So no, the retiring boomer peak isn't even here yet unless immigration skewed things rather severely.


At year end 2016, there were 65k 53 year olds as opposed to 46k surviving 68 year olds according to stats NZ. So brace yourself, tax rises are coming to pay for those pensions.

I guess we need to look at what a beneficiary is. I

All benefits including WFF. We don't need to look at what beneficiaries are, we need to look at what we can afford in the future and plan for it.

Indeed. "afford" I think you are being un-usually hopeful. 26% of the voting population will be retirees, that is a huge voting block demanding public services for free they cant afford or do not wish to affford to pay for.

Hence when BH says "inter-generational theft" this here partially is exactly what he means, IMHO.

Meanwhile no one wants to increase taxation today to pay for these future demands. The Q is then how are they paid for? debt? how is that paid back exactly?

Please read my response right after Yvil's post. I have no idea where you're getting the concept of debt from. Stop projecting.

If you dont raise taxes in order to afford services then you have to increase debt. Which in effect is stealing not only capital from the future but adding interest.

"projecting" btw is what you do to try and understand what the future holds. "stop" that's is a bit rich when projecting is exactly what you are doing with Gen X.

So less healthcare and pensions for the boomers is it? That is going to be the biggest expense in the next 20 years. Hip replacements, dementia care and other age related conditions, obesity/diabetes and pension payments are all going to be a huge drain on the taxpayer. Obesity and diabetes will affect all adults, but the age related healthcare costs are going to balloon hugely if we keep paying for everything we do now.

The one thing steven has correct above is that most of the boomers will be dead in 20 years. You're correct in that we cannot continue the boomer model of intergenerational theft because what we have will cave in without people having enough retirement savings or investments.

Incorrect. The oldest Boomers are currently 72. A female boomer at 72 can expect to live another 17 years. It's 15 years for a male boomer. That means in another 20 years only the very oldest boomers will be dead. In 2038, there will be another 15 years worth of female boomers still to cark it and another 13 years of male boomers still to shift their mortal coil.

Retired Poppy, you have another 35 years of retirement ahead of you. I'm sure at some point over that time you'll be right with your pessimistic outlook.

Ex Expat, sorry dude but your way off the mark - I'm not a boomer. Yes, I chose to retire young but only because I worked long hours earlier on and because it was affordable.

I kindly suggest you first gather some facts rather than making baseless assumptions. Only then will you be in a position to make your own predictions worth noting ;-)

I don't recall labelling you as a boomer. You have previously stated you are 52 which gives a likely birth year one outside the generally accepted 1946 to 1964 cohort.

In any case, according to the Stats Department calculator you can expect to live to:
87.7 years (assuming low death rates)
86.5 years (assuming medium death rates)
85.4 years (assuming high death rates)

A very broad brush? Yes, but it gives an indication how long modern lives are. Although I'm financially secure there is no way I can fund a retirement in a manner I want to, for that long. Good for you having achieved that.

Ex Expat, I hope to be still be watching the horizon well into my 90s! There will be a few more booms (and busts) while i'm alive ;-)

It certainly makes it pretty critical also to re-start the Cullen Fund as it's been somewhat a lost opportunity to alleviate the burden that's going to hit soon - rather than relying only on importing as many replacements as possible and hoping that'll be enough.

Assuming that we dont see a second greater depression and the Cullen fund and indeed them all dont go down the tubes.

Cullen fund, raising taxes, creating debt... Why don't we all take care of our own future instead of expecting the government = others, to always do it for us

Because there are far too many that won't do it if not forced/coerced (several in my extended family) .. And since we live in a decent society the rest of us will end up picking up the tab for providing for them.. So better to make it compulsory/unavoidable in one way or another. Also a properly regulated public scheme eliminates a lot of potential fraud.

Well said Pragmatist, too true. Still, personally I like to be the captain of my own ship.

What a load of garbage, IMOP

Well..I'm certainly not against those who proclaim that others should stand on their own two feet also being willing to stand on their own two feet themselves. Genuine and consistent belief in capitalism would surely lead to that, one might think. It could be achievable too - e.g. means testing on the value of one's primary residence(s) could kill multiple birds with one stone.

But that aside, the whole point of the Cullen Fund is for those who are part of the pension bubble/hump issue to help contribute to the solution for the issue, before the hump arrives. It's those who will be drawing down the pension during that time having the opportunity to contribute to it, knowing that the numbers won't work otherwise. It's taking some personal responsibility.


Let me guess- you are a 'self-made man/woman' and don't see why everybody can't be just like you.

I wonder though-did you by any chance benefit from a public education? Have you ever driven on public roads? You,or your family might even have made use of the health service?

Do you ever wonder how it is that the Nordic countries do so well on almost every measure,when they typically have much higher tax rates than NZ?
Here's a short reading list for you; The Spirit Level by Wilkinson and Pickett- The Price of Inequality by Stiglitz- Saving Capitalism by Reich-The Age of Fallibility by Soros and The Unwinding by Packer. Read that lot and you might see things a little differently.

Most people who stand on their own two feet have already pumped their dosh into all those public services you talk of linklater01......there are a number of people who are not standing on their own two feet and getting a free ride. They are politicians, bureaucrats, public servants, beneficiaries along with some in busines who's model is all about government contracts.......so the real hard working private enterprise tax generators are everyday slogging the donkey for those others who contribute nothing as a tax generator!!

Not so fast, I didn't say that The last of the boomers is about 55~58 today. The average life expectancy is around 80, so in 20 years time the boomer generation which is the biggest will still be a huge burden.

"cave in" indeed you are correct in spades. The problem is any model you care to name assumes there is energy and raw materials and that its cheap in order to make investments have any meaning.

If paying boomers is a problem for every other non boomer workers, then why did the majority young working population did not vote in favour of raising the super age to say 70 during the last 2 elections? Can someone share something on this or was it that the majority of young workers now was not informed of the situation?

To vote for that would have required either
a) a referendum on superannuation - and there wasn't of those
b) a party with that as one of their core policies. I don't recall any of the large parties having that as a core policy.

Thanks for the reply :). With both A and B we know which group dominates and decides what's best for the country (or themselves -.-). But then again young people are partly to blame for not making their own party with their interests in mind at the great expense of the boomers.

You say that like young people are all one group with homogeneous needs/wants.. this is not the case. And even if it was, getting a party formed and noticed requires capital.. which the youth mostly don't have a lot of, such is the problem with representative democracy. Not to mention many of the youth haven't yet woken up to how screwed they really are.

Just what are you guys smoking? What is dribbling from your mouths

If paying boomers is a problem for every other non boomer workers, then why did the majority young working population did not vote in favour of raising the super age to say 70 during the last 2 elections?

There's a simple answer for this:

National's proposed pension age raise was only going to apply to those young people, NOT to the boomers. The age was going to increase after the boomers were all safely through.

Young Kiwis would have been shooting themselves in the foot to vote for more for boomers and less for themselves.

Benefits in this review are those tracked by the Ministry of Social Development on the Benefit Fact Sheets (working aged adults only), plus NZ Super (everyone over 65). Plus the in-work benefits of the Working for Families set of tax credits.

DC, is it possible to work out the numbers net tax takers? If a high income person is getting $10 a week in tax credits I wouldn't count them as a beneficiary.

Would be nice if you could provide the source of the article so we can read what it is based on.

MSD as above. Population stats for over 65s. IRD annual report for WfF data (it is hard to find). We bring them all together in an analysis sheet to work out the ratio. $ are easier to track than numbers, but they are all there. (IRD has been 'hiding'/shifting the WfF volume data recently so that is particularly tricky to get. Treasury has the $ budget values.)

We exclude all child benefits, numbers or values.

The solution of continuing pumping young people into the equation is not a solution. Because that is just a ponzi with no realistic useful end. You can't just keep growing the population on an increasing curve upward.
A stable population will have a higher proportion of older people. It's just a fact to be dealt with. A stable population is the only way to go

thank to DC for crunching some numbers like this. We just have opinions while David does the work.

Perhaps we could fund the pension in a similar way to students, we could extend the pension payment in the form of a loan, that would be more in line with the user pays neoliberal philosophy of NZ.

Think of the saving for the country.

Except the students have their entire working life ahead of them to pay off the loan.. the pensioners are a dead end. Let the private sector provide them with reverse mortgage type deals where the bank gets their house once they pop their clogs and leave the taxpayer out of it.

That would only work for those with houses, those without would either starve or have to be supported by the Government, no win.

Pay the pension as a loan, take the house if any on death and fix the social housing issues at the same time, win win.

No, just announce that all pensions from 2025 onwards will be means tested. Those with no money were always going to be paid, but the taxpayer can keep hold of the money that otherwise would go to those who can afford to live without it.

I wonder how many extra public servants we will need to means test the elderly. Probably a whole new Department If Australia is an example.
I do reccomend all those who are getting into an angst abut their taxes to read or watch/listen on YouTube to either Bll Mitchel or Randall Wray on Modern Monetary Theory (MMT) as to how running a country actually works. A hint. It is not your taxes. You are taxed for a completely different reason.

Bugger off you two..I have worked hard all my life and paid my taxes. I am entitled to the national super and see no reason why I should have to contribute more in the form a pension loan or similar..whatever assets I do have will help my children overcome the theft by the previous 2 administrations, of their potential to obtain their own home in NZ.

And I see no reason why I should have to pay more taxes* because your shortsighted and selfish generation didn't put any money aside for funding its entirely foreseeable pension expenses and healthcare costs, and in fact voted in Muldoon who abolished the compulsory superannuation scheme before I was born.

I need that money to be able to afford to buy a house in Auckland, and my morning smashed avo on toast fix ;)

I well remember the early days of compulsary super. Most of my friends and aquaintances were very much against it. At that time I had already been in a super fund for years and now in my dotage, I very much enjoy reaping the excellent benefits.

If only all wealth resets on death and so everyone born in later generations have to work their way up with relatively level playing field competing with their peers. While it will be extremely hard to implement in today's complex society it is an interesting idea to at least think about it.

Smiley face...!

We have John Key to thanks for this ............ he stimulated the economy during the GFC and we are all still benefitting ( pun intended ) from those policies

Boatman give us a break. John key and the National party have worked hard to get the New Zealand economy back on track for the benefit of ALL New Zealanders. and thru the vagaries of MMP we have now a lot of fools ready and eager to spend taxpayers money on their unrealistic ideas and fantasies.If you don't like the ship find another and set sail

Steven is right - you need to re-examine the make-up of the "beneficiary cohort"

For all those re-awakening the baby-boomers-bash-brigade try this from September 2015

More than 55% of current baby-boomers are imports

two othereguys, thanks for posting the link. Just so NZ could get a bit of low productivity growth under Nationals watch, the stage has inadvertently been set for an even bigger strain on the tax payer tomorrow. Also, contributor Robert Meeks comments made interesting reading :)

Quite the short term pump and dump scheme at the ultimate expense of young and upcoming Kiwis, really. Especially when combined with the seemingly deliberate slowness to act on anti money laundering legislation.

One thing missed by many is the wealth created by boomers which with no death taxes goes to the next generation providing a cash cushion to supplement their incomes and health needs. And current non boomers should be thankful that boomers have largely created the society they benefit from.

It would be great if the worker to benefit ratio placed all the politicians, bureaucrats and public servants into the benefit category as they are funded from the tax generator real worker category.