Economist Bill Rosenberg runs the ruler over NZ Super cost predictions, and argues it's not as scary as we've been told; Calls for a proper debate on population policy

Economist Bill Rosenberg runs the ruler over NZ Super cost predictions, and argues it's not as scary as we've been told; Calls for a proper debate on population policy

By Bill Rosenberg*

Last month, Prime Minister Bill English announced that his Government now favoured raising the age of eligibility to receive New Zealand Superannuation from 65 to 67 by 2040, a turnaround from its previous denial that any change was necessary. Labour has also reversed its 2014 election policy and now opposes the raising of the age.

The usual reason given for raising the age of eligibility is affordability of the scheme. For example the Commission for Financial Capability (formerly the Retirement Commission) in its 2016 Review of Retirement Income Policies justified it by asserting that in 2015/16 New Zealand Superannuation (NZS) cost 4.1 percent of GDP, and that “Treasury predict that it will rise to 7.1% (net) of GDP in 43 years”.

I have a look at these numbers and find that they are misleading. The picture looks very different if we take into account the tax paid by the New Zealand Superannuation Fund, the contributions both main parties say they will start making to the Super Fund, and the contributions the Super Fund will start making to the cost of New Zealand Superannuation in 2032/33 (according to current plans).

There are further arguments to be considered about the affordability to the public purse of current levels of payment and economic affordability.

The affordability to the public purse is frequently presented as an absolute. But affordability is a matter of priorities, what New Zealand society wants and what it is prepared to pay in the way of taxes. Many other countries are facing the same problem and many have considerably more retired people, and costs, in proportion to their populations than we do.

Economic affordability centres around the ‘dependency ratio’ – the number of people who are working, thereby generating income to be taxed and shared with superannuitants, compared to the growing number of superannuitants. But this does not take into account either other ‘dependants’ such as children, nor Treasury’s most recent long-term projection which did not show a looming economic problem.

Finally, it will become apparent that the question of New Zealand Superannuation cannot be seen on its own: we need to think about matters like New Zealand’s population and other forms of retirement income. I don’t cover these in detail but they are important to gain a full picture.

How much will New Zealand Super actually cost into the future?

Treasury looked at this question as part of its regular statement on New Zealand’s Long-term Fiscal Position. It released its latest one in November. In it they project current policies into the future to look at the ‘fiscal’ consequences of continuing those policies indefinitely – that is, the effect on government spending and revenue needs.

It shows that it is important not to rely on the headline figures of what the government spends on New Zealand Super. In the year to June 2016, payments to New Zealand superannuitants cost 4.9 percent of GDP or $12.3 billion. The projection shows that by 2060, the period of Treasury’s long-term Statement, it would be costing 7.9 percent of GDP – an increase of over 60 percent, which sounds a little scary.

But New Zealand Super is taxed – so it is actually its net cost after the claw-back of superannuitants’ tax payments that is important. (A Government could easily reduce its apparent level of spending by simply making New Zealand Super tax-free at its current net levels!) Its net cost to the government in 2016 drops to 4.2 percent of GDP or $10.4 billion. In 2060 it would cost 6.7 percent of GDP.

In addition, the Super Fund, set up by the 2000s Labour-led Government to partly fund New Zealand Super in the future, also pays tax. It doesn’t make much of a difference right now (though the $0.5 billion in tax paid in 2016 and $4.6 billion since the Fund started is not to be sneezed at) but by 2060 the tax is projected to be $8.0 billion a year. That brings the net cost by 2060 down to 6.1 percent of GDP.

Then there is the direct effect of the Super Fund. Firstly, both main parties (and the Retirement Commissioner) want contributions to the fund to resume – some earlier than others. The current Government won’t restart contributions until the year to June 2021. From then until the year to June 2033, when withdrawals are started from the Fund, there is an additional cost of up to $3.0 billion (which incidentally isn’t counted in Core Crown expenses because it is regarded as capital spending). In 2021, the total cost to the government of New Zealand Super plus these contributions is projected to be 5.0 percent of GDP. It would have been the same in the year to June 2016 had contributions resumed that year. By 2060, when the Fund is projected to be contributing $4.0 billion to that year’s New Zealand Super costs, the net cost to the government of the day amounts to 5.9 percent of GDP.

So the true comparison of the fiscal cost now and the cost in 2060 is more like this: 5.0 percent of GDP soon, compared to 5.9 percent in 2060. That increase doesn’t look nearly as scary. If it is affordable now (as all seem to agree) then it is likely to be affordable in 2060. Here’s a table summarising the situation with the total impact on government finances in the bottom line:

Affordability to the public purse It is wrong to present affordability to the public purse as an absolute in the way that English and some others put it: he was raising the retirement age to “ensure the scheme remains affordable into the future” . Affordability is a matter of priorities, what New Zealand society wants and what taxes we are prepared to pay.

The Retirement Commissioner points out that there are other costs that rise as the population ages such as health care. But to draw the conclusion that superannuation should be cut to pay for these is not logical, unless we are moving to a society where each generation is expected to look after itself and not concern itself about younger or older generations.

We do always need to consider our priorities and options, but one option is to raise more revenue. Many New Zealanders would be willing to pay more to maintain the financial security of their parents and themselves in retirement, and for other public services that they value. If the assumption is that the current level of taxation is fixed and can never increase as a proportion of GDP then there are many other problems we cannot address and the outlook for New Zealand is dim. Some of these problems cannot be addressed by individuals on their own (such as environmental problems, income inequality and poverty). In other cases such as health and retirement income, individuals could pay for it but it becomes inefficient, inequitable and impoverishing (as the US private health system shows). It is much better for everyone if the risks are shared and it is paid from government revenue. It might raise the government’s costs, but from an economy-wide and societal point of view it costs less and is fairer.

We are not a highly taxed country. OECD data shows that we have one of the lowest differences between what an employer pays and take-home pay among the high income countries that make up the OECD – we rank between 28 and 34 out of 34 countries and well below the OECD average. Our tax revenue as a proportion of GDP is low for a small country . We rank 19 out of 35 OECD countries and less than most similar size OECD countries. Our problem is not the level of taxation but its distribution.

The proportion of GDP New Zealand spends on pensions is also low. The OECD put it at 4.8 percent of GDP in 2013 (a misleading figure but it is just a basis for comparison). The OECD average was 6.4 percent of GDP and only 10 out of 33 countries had a lower proportion, including Mexico with zero and others that also have private compulsory contribution schemes. There were 14 already above 7 percent of GDP. New Zealand’s ratio is low partly because we are fortunate to have a relatively young population.

Clearly affordability is a decision that societies make in terms of their priorities.

Economic affordability

Much of the economic debate centres around the ‘dependency ratio’ – the number of people who are in paid work and thereby generating income and tax revenue, divided by the number of older people. This is projected to fall: fewer people will be working to generate the income required for each retired person. Treasury’s population projections show it falling from 7 working age people to every person 65 or over in 1972 to 4.3 in 2017 to 2.1 in 2060. (That’s taking the working age population to be aged 15 to 65. It’s unlikely that adjusting the lower limit of 15 up a little would make a big difference to the analysis. Statistics New Zealand defines it to be aged 15 years and over.) . Of course the effect of the fall in the ratio will depend on how many people of working age are working (the participation rate), and how many of the over 64s are working. The participation rate is currently rising more rapidly in this age group than any other.

But consider this: people over 64 are not the only ‘dependants’ in society (and an increasing proportion of them are not dependent either). Children make up the other main group of dependants. In 1972 children under 15 made up 31 percent – almost a third – of New Zealand’s population and the 65+ age group only 9 percent. The working age population made up 60 percent. The whole ‘dependency ratio’ was 1.5 working age people to every dependant. The population is aging in two ways: we have a greater proportion of over-64s and a falling proportion of children under 15. In 2017 the children made up only 19 percent of the population, people of working age made up 65 percent and the over-64s 15 percent. The ‘dependency ratio’ is 1.9. By 2060 the projection reduces children to 16 percent of the population, people of working age 57 percent and the over-64s to 27 percent. The ‘dependency ratio’ would be 1.4 – not much lower than the 1.5 it was in 1972. So in 2017 we are in a sweet spot – the highest dependency ratio since 1972 was in 2.0 in 2006 and we are not far from that. Perhaps this is the unusual time rather than 2060! The effect of this all depends on the cost of raising, educating and looking after the health of children compared to the costs of old age.

It is interesting that Treasury’s economic projections for the size of the economy do not show an economy struggling to pay for New Zealand Super – otherwise its cost as a proportion of GDP would be much higher. It is of course dependent on its assumptions which may be unrealistic. These include a high proportion of people continuing to work, and in particular among the 65+ age group. It also assumes that labour productivity grows at an annual rate of 1.5 percent and that real wages (the average hourly wage adjusted for rising prices) grow at the same rate. Productivity has been struggling well below that level for a decade. Wages since the early 1990s have failed to keep up with productivity.

However if the link between productivity and wages were achieved, Treasury observes that raising productivity is not the answer to paying for New Zealand Super: raising productivity raises wages, which raises the cost of Super because it is linked to wages, and we are no further forward without more progressive tax rates.

All of this means that this modelling cannot be the final word on the subject. But it is not immediately obvious that there is an economic reason to reduce the cost of New Zealand Super.


This discussion raises many questions: the question of New Zealand Superannuation cannot be seen on its own. What would be the impact on its affordability of increasing our future working age population by encouraging people to have more children or a somewhat higher level of immigration (better managed than now)? We could encourage more children by paying a universal child allowance, making child care better quality and free, and reducing working hours. Treasury says that if it raised its assumed net immigration rate from an average of 12,000 per year to 25,000 per year in the long run (both much lower than at present), “population ageing slows and the population is younger and approximately 928,000 higher in 2060. The higher net migration lowers the ratio of expenditure-to-GDP” and reduces net core Crown debt. These questions add to calls for a proper think about where we want for New Zealand’s future population to head – a population policy.

New Zealand Super is not the only income retired people rely on. We should be thinking about boosting Kiwisaver, and the Retirement Commissioner recommends raising contribution rates. The CTU has proposed making Kiwisaver compulsory if the employer contribution rate was raised to 6 percent, there was a 2 percent contribution from both workers and the government, the minimum wage was increased at the same time, and the government contribution of 2 percent (of minimum wage or benefit level or another amount) applied to all those of working age who are not earning for a period.

We should also be thinking of fair ways to pay for the increasing cost. Susan St John in the Auckland University Retirement Policy and Research Centre has made proposals for a progressive tax on those receiving New Zealand Super but more universal solutions may be less contentious given our history.

There will never be a last word on this subject. We should continue to review the situation, keeping a watch on both the adequacy of our people’s retirement income and the cost of it. But New Zealand is lucky enough that we don’t have to make urgent decisions to manage the cost of New Zealand Superannuation.

* Dr Bill Rosenberg is the Policy Director and Economist for the New Zealand Council of Trade Unions. This piece was first published in the CTU's March Economic Bulletin and is republished here with permission.

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The 5.0% shown in the bottom line of the Net Fiscal Costs table for 2016 is fictional. The value to compare to is 4.1% instead as there was no contribution to the fund in 2016. Going from 4.1% to 5.9% of GDP is a non-trivial increase in expenditure.

A major challenge for the future is the increasing percentage of various costs. Healthcare has been increasing at a far higher rate than inflation/GDP. The combination of increasing super and increasing healthcare costs are putting pressure on other expenditures. Another challenge is the increasing need for infrastructure spending due to population increase as well as replacement of existing infrastructure that is reaching it's maturity. I do not envy the people that have to sort out what gets left on the table in order to balance the books.

Dont worry the author makes a clear case that millenials will be happy to pay higher taxes to look after the boomers in retirement.

On the basis the boomers have managed housing outcomes as effectively as generations preceding them did.


Some good points raised here. The cost of super will increase of course but not that great and probably very manageable. However, it is the healthcare costs that we have really thought about as much. It will require more money of course but the question is where that's going to come from?

An insightful and balanced article, the temptation to revert to politicking resisted (apart perhaps from the little CTU/St John plug at the end).

Bill touches only lightly on the growing workforce participation rate through older workers being incentivised to remain in employment because NZS is not means tested. This factor increases the tax take that would otherwise apply and further lowers his net of tax super to GDP cost ratio number.

This article is a clueless mess. Growth is dead. Projections of future retirement affordability assume ongoing debt growth can be viable and ever increasing energy burn is possible (this HAS to underwrite the debt)... the economy MUST increase energy consumption every year to generate growth ... the projections assume this can happen or they make no sense. Conclusion; they make no sense.
As for importing more people to pay for the super ... thats called a Ponzi scheme. It doesn't create more resource per person ... even an economist should be get their head around that.

To make the bald statement that 'Growth is dead' is simply nonsensical. Thus, in nominal terms,NZ GDP will be be around 3%pa for some years. Per capita,it will be significantly lower,but not zero. I could go through a list of countries from China onwards and give you their most recently published GDP figures.They would all be above zero.
You devalue your arguments by such a statement and there are areas where I would broadly agree with you;immigration being one.

"Affordability is a matter of priorities".
Thank you Bill - finally someone says it.
Talking about it in absolute terms is just politics. Even worse, it seems to have worked. Young people are convinced that NZ Super will not be available to them in retirement - what a lovely message for the government to send.
The fact that modern medicine is keeping 90-year olds alive for a few more years, does not mean that a 65-year old labourer is any better able to carry on for 2 more years than at any time previous. So the whole "people are living for longer" argument misses the point entirely.

Affordability is a matter of priorities.

Only someone who believed in infinite resources can believe this. Its total delusion.

I think it's the opposite.
Scarcity of resources means having to prioritise.

Totally - and thats acts as a direct counterweight with affordability.

Which brings us back to:
"Affordability is a matter of priorities".

So if the "resources" arent there - the ability to pay people to sit around as if on a permanent holiday disappears. I agree.
This was always the case when resources were stretched and it will be again.

If there are no resources, then we cannot live. If we have some resources (as is the case), then we must prioritise how we allocate those resources. Hence, affordability is a matter of priorities.
Not sure what your issue is. You seem to be envisaging a world with next to no resources, where only 10% of the population can survive. If this is what you foresee, then the retirement affordability debate is the wrong debate.

"the retirement affordability debate is the wrong debate."

I agree.

Well done, you agree with yourself.

Young people are convinced that NZ Super will not be available to them in retirement - what a lovely message for the government to send.

If young people are convinced that NZ Super will not be available to them in retirement, that is not because of anything the government has said or done. The government has consistently said that NZS is affordable and that there is no need for any more than minor changes to make sure that it can continue to be paid to older people in the future.

And it actually is the case that people (on average and in general) are living more years in good health, not just more years.

Thanks Bill. A much needed, dose of realism.
I can't see that raising the age to 67 is as significant as they are making out. On current figures we have about 70,000 to 80,000 65 and 66 year olds. At $17,500 each this equates to $1.3 billion before tax or $1 billion after tax. Then we have to account for the unemployed and people who are not physically able to continue working. How many, 20%? In today's terms we may only save $800 million.
By 2040 automation could be expected to change the whole landscape of work and employment and we could be looking at lowering the retirement age so that young people can be employed.
The whole subject of employment and reward needs to be considered from a much wider and long term perspective. The idea of a universal benefit may be relevant in future.
I cant help thinking that the super wealthy are only to happy to have the argument framed as a battle between the retired and those working. I think that we would all be better off directing our attention at redistributing wealth away from the super wealthy and reversing the ever increasing inequality.

Good point.

"we would all be better off directing our attention at redistributing wealth..."

If you redistribute "resource tokens" but there is ever less resources per capita, do you think the above actually achieves anything?
The one sure thing you will do, is collapse the resource base faster.

We could just drive out the wealthy out so we don't have any wealth left to distribute - end of the problem.

Some good points made especially regarding the super fund but overall just more obfuscation.

My pet peeve through the wider retirement discussion is quoting the change as a percentage of GDP - government spending is around 40% so while a change of 3% or 2% as suggested (taking YanKiwi's point into account), is actually 7.5 to 5% respectively in terms of actual government spending - that is a lot more scary! Last time I checked that's about as much as we spend on secondary schooling or police.

Regarding affordability ratio and working age populations while it's a nice try to take the sub 15 year old population into account I think you'll find it's a little more expensive to fund hip operations than MMR jabs...

I laughed out loud at the bit about priorities and increasing revenues down the line, lets just push taxes as low as possible now and let future generations pay a bit more - I'm sure they won't mind... Perhaps this is the reason why we're having these conversations in the first place?

Excellent article. Scare stories about dependency ratios have been thoroughly debunked. Yes. We can survive without a continually increasing population.

Isn't the real bogeyman debt. Personal debt, government debt, corporate debt, global debt. It's a house of cards built on worthless foundations. For example what happens to a retiree who finds national super & whatever might come in ex Kiwi Saver if anything, is not enough to service the mortgage & pay the credit cards? Not much point in giving a drowning man another straw is there.

the real bogeyman is really return on debt (or the flipside being the affordability of more debt)
Pension schemes like Kiwisaver & the Super funds rely on these returns ... if no one can generate sufficient returns on the (ever increasing) debt load, they have little value. Capitalism is broken at this point.

South Sea bubble? Much bigger world now though! Ominous times for sure.

Yes, God forbid there is any return on your investment - that would be the end of the world as we know it.

I blame all these diligent, hard working, imaginative people out there, who are working their butts off inventing clever things, building useful stuff and generally making their dreams and ideas flourish. Off with their heads!

What we need is more dull, lazy, unimaginative people who focus on demanding their entitlements and ofer zero return. Zero is the key word.

Your misconception is that you are under the illusion that People create wealth.
The corrected version is that People leverage resources (which are all a subset of energy in some form) to create wealth. The resource base is the key. "Dreams & ideas" just like money - don't actually feed anyone. The resources do.

To constantly provide the investment returns for these hardworking folk, you need to constantly increase the resource use underlying it.

An overly simplistically and Malthus view I believe.

1. Despite all intense hopes to the contrary - wealth does not create itself and nor does it fall from the heavens each year in fixed quantities as deemed necessary by politicians. Resources at best are a potential and not a "base", the key to creation of wealth is the act of creation. Just as action trumps talk, so creation trumps potential. And people are the creators.

2. We live in the greatest age of plenty ever, where energy is more widely available than in any other time in all of history. Energy is available in such huge and cheap quantities we make energy choices based on political issues more than any other factor. Talk of resource limitations in energy terms is laughable.

3. The Malthus idea that we will all die from resource limitation (famine in his flavour of it) has the proven track record of being wrong since 1798.

4. A dream of one person to feed the world many well end up feeding people. The new ideas that formed the foundations for the mechanical agricultural revolution did, in fact, feed people.

Let me introduce you to a wonderful word you maybe haven't heard before. A fantastical/magical way to increase investment returns without the linear relationship to resource (not that there is any limit to reproduce) - efficiency.

"Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result."

It worries me people think like this. Its what has led to people quoting economists rather than scientists. Like our cleverness somehow skirts laws of physics.

Theres several words you might want to look up; overshoot, diminishing returns and carrying capacities would be a useful start.

What you don't explain away is how cleverness fed millions upon millions of real people in a real world when the Pseudo scientists of their day said we would overshoot, be victims of diminishing return and the system wouldn't carry anymore.

None of these ideas are new. Remember - Malthus, wrong since 1798 .. as the centuries glide by.

The problem is not with physics, it is in incorrectly applying such a useful tool as physics is.

Except we are hitting diminishing returns, as reflected in the slowing growth prospects of advanced economies and environmental degradation of highly populated regions.

To imply there are no limits requires perpetual motion level physics.


You seem to have missed the point that the very same ideas and dreams that ham n eggs asserted "never fed anyone" - did, as a matter of historical fact, result in a whole new food production paradigm that fed millions.

All paradigms come in waves, or cycles. Almost nothing in nature is linear. The existence of diminishing return (or slowing of efficiency improvements) is only evidence within its own cycle. It is important to see that Malthus was correct - but only within his paradigm. He didn't know the rules were about to change.

But the paradigm did change - in fact and not theory - standing as evidence that you are wrong. No perpetual motion physics took place and yet history showed, and continues to show since 1798, that the rules can change.

I am not arguing any misplaced pseudo science, I am simply pointing out historic facts.

Of course, you may say, as every doomsday before has done, 'this time is different'.

We shall see. For myself, I continue to be an optimist and believe history will prove to be correct yet again.

Ralph - you need to shut yourself in a closed room with 5 supercomputers to give you all the ideas you need.
Then use them to make a ham sandwich.
Physical rules haven't changed.

You missed the point again.

The reason Malthus was wrong, has been wrong since 1798 and continues to be wrong is that the rules *did* change.

Try this for a bit of thinking;

Assumption 1 - Physics (the physical rules as you put it) cannot change.
Assumption 2 - Malthus based his theory on physics.
Assumption 3 - Malthus predictions proved incorrect (in modern language, his models were inaccurate).

Possible conclusions - Either his theory wasn't really physics (assumption 2 is not true) or there was more to it than physics alone.

Poor logic. The rules didnt change - the energy sources did.
You dont appear to be able to make the link between this

and this...

1. Rules weren't in the logic.

2. You are obfuscating in pretending a change to energy source wasn't part of Malthus paradigm. But it was. The specific change is irrelevant to the reasoning.

Its quite easy to explain - Petrochemicals.
Fossil fuels have allowed us (temporarily) to go way into overshoot ... like a billion tons of beans washing up to a deserted island will result in a rat boom ... but to keep going we need to (ever increase) our energy source. Malthus hasnt been right (yet) because we have been able to consistently increase our (energy) resource base ... its pretty obvious limits are now starting to show ... take a look at rivers / waterways / fisheries / soil health / pollution ...

ham n eggs,

Fossil fuels are not limitless-a statement of the obvious-but neither are they yet at critically low levels. The implications for the environment are a separate issue. As I have pointed out here already,the potential for fracked oil and gas is significant well beyond the US and will be exploited at some point.
However, the costs of solar and wind are dropping and will continue to do.Their potential is almost unlimited.
On a darker note, Climate change may impact on food production so significantly as to finally prove Malthus right. Too much of our global food chain rests on monocultures like US grain and that makes it highly vulnerable to disease. Thes ystem has no resilience built into it.

The system has no resilience built into it ... Totally right. We wont run out of fossil fuels - its about the stability of the system to keep delivering them. See Venezuela - the biggest reserves anywhere and Oil production falling through the floor... when you are losing money on every barrel, the more you produce the faster you go broke ...
Solar & wind are not replacements for a million reasons; lack of power density, portability, instability, lack of infrastructure, physics. Quite simply, ask yourself; can a solar panel possibly be used to manufacture a new solar panel?
There can be no solar / wind powered trucks, supertankers, planes, trains, heavy machinery capable of remoting emulating fossil fuels - theres your supply chains gone.
And you dont transition to a lower energy source for a higher cost to the system as a whole...

you mean that electric trains don't exist? Norway is in the process of replacing all its diesel ferries with electric ones. Are really saying that there will Never be electric or hydrogen vehicles?
Now,plastic's a problem,but that will be solved one way or another. Either we will solve it with techology or we will of sheer necessity,stop making it. Your thinking is just too limited. Fossil fuels will be around for many decades and better technology will enable most of us to use less of it. Eg. Solar panels may well become an integral part of roofs,not someone stuck on later.
The fact that Venezuela is currently a failed state proves nothing. It has not always been one and may not be in future. The Arctic will be exploited when the numbers stack up. Putin was there very recently,to emphasize Russia's claim to the Lermentov Ridge. he wasn't there to help the polar bears.

Linklater - nice try. Saying they dont exist and saying they won't replace fossil fuel are not the same thing.
Please answer how we can use solar panels to produce more solar panels. Please answer how a diesel truck can be powered by battery and still carry freight ... We need portable viable energy sources, not more electricity. I know its tempting to believe the Elon Musk spin .. but it just doesn't stack up.

Ham n eggs,

What you are saying is that technology simply isn't capable of solving these admittedly very difficult problems.but I just don't accept that. Go back to say 2000 and who would have predicted the technology to allow driverless cars? Perhaps Elon Musk will not have the answer,but that doesn't mean that someone else won't.
Here re couple of books I suggest you read: The Second Industrial Age Work Progress and Prosperity in a Time of Brilliant Technologies by Bryjolfsson and McAfee and very recently published, Thank You For Being Late,An Optimist's Guide to Thriving in the Age of Accelerations, by Thomas Friedman. You might also try The Rational Optimist by Matt Ridley.
I have no doubt that the world faces significant problems;climate change,population,food,water,etc. Where you and I appear to differ is that you seem to believe that we are doomed,while I believe that,i the end,succeed.

well Bill Gates probably agrees with you but in his words "we need an energy miracle".

A FEW REMINDER of Figures printed in the ChCh Press --3 weeks ago.
The current Cost of NZ Super is 4.2% of GDP.
The Projected Cost of NZ Super to 2036 is 5.8 % of GDP.
The Projected cost of NZ Super to 2050 is 6.1 % of GDP.
The Average Cost of Superannuation NOW in the OECD is 9 % of GDP.

All I've gotten out of this article is that the Government made a bad decisions stopping contributions to the Super Fund. Both for being able to top up payments to retirees but also the tax revenue gained. It's as if an entity benefits from investing instead of accumulating debt.

The Super Fund will make absolutely no difference to the affordability of NZ Super. Mr Rosenberg is quite wrong to subtract the Fund's contribution from the future cost of NZS.

Unless you genuinely believe that the money that has gone into the Fund has always made, and will always make, better returns than any other use to which the money could possibly be put (in which case, why not give Adrian Orr all of New Zealand's money) - the Super Fund does not increase the total amount of money that will be available in NZ in future years.

All it does is to sequester a proportion of that total for the purpose of paying NZS.

You might say "the Super Fund is money that will be available to help with the cost of NZS" but it is equally true that "the Super Fund is money that will not be available for other purposes".

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