The Retirement Commissioner has told Parliament's Economic Development, Science and Innovation Committee (EDSIC) there’s a “crucial need” for all political parties to support a stable retirement policy.
Jane Wrightson appeared at an EDSIC meeting on Thursday for a briefing on the 2022/23 annual review of the Retirement Commissioner. Wrightson told the select committee a “long-term view” is needed when it comes to retirement.
“Nationwide, the retirement income system, education, savings, financial capability and pensions are interlinked. So taking a holistic and long term view is crucial for our people,” she said.
“Put simply, tinkering with only one part of the system doesn't serve retirees and future retirees well. Taking a systemic approach means the reasons for change and indeed status quo are looked at together to achieve the best outcomes for New Zealanders.”
Wrightson has held the Retirement Commissioner role since early 2020 and is currently in her second term as Retirement Commissioner which expires in early 2026.
During her speech to the committee, Wrightson said the key recommendation from the 2022/23 annual review was to keep the age for New Zealand Superannuation – the NZ super – at 65.
“Our modeling shows that if there's to be any change considered, this has got to be accompanied by a suite of other actions, particularly looking at the inequity this would cause and mitigations to compensate,” she said.
Wrightson added that NZ has the eighth lowest pension cost in the OECD (which has 38 countries as members) and NZ was in the lowest quartile for expenditure.
“What we can see from our reviews across the years is that to really make change requires long term policy thinking, which is generally beyond election cycles,” she said.
“Ideally, I'd like to see cross party accord so we can get parties to broadly agree on policy approaches for future retirees.”
When it came to questions from the committee, EDSIC committee chair Parmjeet Parmar was particularly focused on the subject of pension age.
Parmar was a National MP from 2014 to 2020 but didn’t make it back into Parliament during the 2020 election. However, she got back into Parliament in the 2023 election after she left National and joined the Act Party.
Parmar wanted Wrightson to confirm the Commission’s current view that the pension age of 65 shouldn’t be changed was not a “flip flop”.
This was because the two previous Retirement Commissioners – Diane Maxwell and Diana Crossan – had called for the pension age to be pushed up from the age of 65 to 67.
Wrightson said it wasn’t a flip flop and the Commission had looked at new evidence which included environmental change and looking deeper into more systemic issues around women as well as Māori, Pasifika and single people.
Parmar still wanted to know what the advantages of increasing super could be and Wrightson replied that there were “no advantages other than a fiscal advantage”.
“If the country is going broke, then perhaps it's an option,” she said but added that it was about choices in government expenditure.
Wrightson also pointed out that Australia could afford to means test – Australia’s pensions are means tested whereas NZ Super is universal – and also raise the pension age to 67 because Australia has a “particularly robust” private savings scheme that is much more robust than NZ’s.
According to the Retirement Commission, the current rate of people over the age of 65 that still work sits at 24%, which is much higher than other countries. In Australia, that stat is at a much lower 12% and in the UK it's 10%.
Order, order
Two Labour MPs — Helen White and Willie Jackson – got told off by Parmar during Thursday’s select committee.
When White interrupted a reply Wrightson was giving to one of Parmar’s questions, Parmar twice reminded White she was chairing the meeting, following that up with: “Helen White, I call you to order”.
Midway through the meeting, Parmar interrupted Jackson to ask where his question was after Jackson congratulated Wrightson on recommending that the retirement age stays at 65 before getting to his question.
Jackson wanted to know if the Commission had taken discussion that has cropped up over the years around if instead of being raised, the NZ retirement age should be lowered to 60.
“Māori are always saying we’re dying too early and we don’t want it [the retirement age] increased, we want it dropped,” he said. “That was one view from Māori.”
Wrightson said the Commission had done a deep dive into women as well as Māori in the Commission’s last review and that view came through “very clearly”.
“And that exemplifies why just saying, 'put the age up, we'll solve the fiscal problems and it will all be fabulous' is not the right approach. It is much more complex than it looks. The impact on Māori is disproportionate,” she said.
Jackson also wanted to know – like every person does – how much New Zealanders need in the bank now when they reach retirement age.
Wrightson replied that there were lots of variables but the answer is “definitely six figures” – seven figures for those who wish to have a “very comfortable” lifestyle.
She said the point of NZ Super as well as private savings were to try and “mirror” the standard of living people had before retirement.
“And so the amount of private savings then becomes quite crucial about whether you can mirror that, because NZ super will give you the baseline,” Wrightson said.
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