I went to a panel on the Super Age to try and get my head around the issue. I left way more confused

By Natalia Albert*

I went to an event run by IDEA, the Institute for Democratic and Economic Analysis, called What should we do about the Super age? Good line-up. Cameron Bagrie, Managing Director of Bagrie Economics and former ANZ Chief Economist. Susan St John, Honorary Associate Professor at the University of Auckland. Bill Rosenberg, economist and former CTU Director of Policy. All experts, all different takes. 

I went because Super is one of those issues I have opinions on but don't feel I fully understand how to solve or how to implement the best option. I wanted to come out the other side with something clearer. I came out with a headache.

The numbers came hard and fast. One per cent of GDP here, 3.5 per cent of GDP there, 5.5 of GD according to The Treasury, blah blah blah. Each figure meant something to the person saying it. I couldn't always tell whether we were talking about what Super costs now, what it'll cost later, or the gap between the two.

Then came the ifs. If we raise taxes. If we raise the age. If we means test it. If we're talking about intergenerational wealth and fairness. If women end up worse off, because they earn less, save less and live longer. If raising the age pushes more people into poverty, especially people in physical jobs who can't work until 67.

Every one of those ifs is legitimate. Stacked on top of each other for an evening, with no one tying them together, they turned my brain to mush. And I study policy for a living. If I was lost, I don't fancy the chances of someone who just wants to know whether they'll get a pension, and when.

So, I asked the panel how can we make this debate accessible to voters who aren't economists? Quickly I was told that asking economists to get better at communicating was a stretch. Then, I was told that it's the younger generations' responsibility to care and understand. And then some more economic gobbledygook. Great! Thanks.  I'm not having a go at the panellists. They answered the question they know how to answer, and they know far more about retirement incomes than I do. But I didn't like being told the confusion was my problem. So, I went digging.

And it’s pretty darn complicated to follow, let alone solve

Here's what NZ Super costs right now, according to the government. 

Treasury's Long-term Fiscal Statement, published last September, says 5.1 per cent of GDP. Treasury's Budget update in May says about 5.6 per cent. Inland Revenue's long-term insights briefing in April says 4.4 per cent.

None of them are wrong. They use different base years, some fold in the Veteran's Pension and some don't, and they differ on whether they count Super before or after tax. Super is taxable income, so a decent chunk of it comes straight back to the Crown. Treasury's gross figure of about 5.1 per cent is closer to 4.3 per cent once you net off that tax. That's a gap of roughly $4 billion, depending on which way you count.

The forecasts are worse. Every number about the future hides a few more choices. Are we talking about Super alone, or Super bundled with health and aged care? What year do we stop counting? Are we quoting the level or the change? "Super will cost 8 per cent of GDP by 2065" and "Super will cost 2.9 percentage points more than it does now" describe the same projection. I still don't know where the 3.5 per cent came from. I couldn't find it published anywhere. You can get to something like it by comparing a gross future figure with a net current one, but I'm not going to guess what the speaker meant.

So no, I don't think it's a stretch to ask economists to communicate better. I’m an advocate for accessible information, that can be reached by as many people as possible. So, if what you are doing only reaches a small niche of folks, you are not understating the political and social context we are living in. And your responsibility as an expert. 

Three economists, three different problems

On the walk home, my political scientist brain kicked in. Deborah Stone argues in Policy Paradox that how you define a problem decides which solutions look sensible, and that defining the problem is a political act, not a technical one. Super is a textbook case.

Bagrie treats it as political economy. The bill is rising, voters won't wear the tax increases or the cuts, and we can't keep kicking the can down the road.

St John treats it as distributional. Too much of the money goes to retirees who don't need it. Her fix is through the tax system: keep Super universal but claw it back from people with high other income.

Rosenberg treats it as a revenue question. Net off the tax and the growth in cost looks much more modest, so the real question is whether we're willing to raise revenue progressively to pay for it.

We're fighting over the smallest lever

In July, Treasury published modelling on what it would take to hold Super's gross cost steady as a share of GDP using the age alone. The answer is an eligibility age of 72 by 2065 and 75 by 2100. Each extra year saves roughly a sixteenth of the cost. Treasury's own conclusion is that no single lever will do the job, and that we'll need a mix. So the whole public argument, 65 or 67 or 68, is a fight over a couple of sixteenths.

The bigger lever is indexation. Super goes up with inflation each year, but it can't fall below 66 per cent of the net average wage for a couple. When wages grow faster than prices, that floor kicks in and Super rises faster than inflation. Treasury's companion paper modelled dropping the wage floor and indexing to prices only. By 2065, Super would cost about 5.7 per cent of GDP instead of 8 per cent. That's a much bigger saving than raising the age to 67.

Before anyone emails me: I'm not arguing for it. Treasury's modelling has the pension ending up about a quarter lower than it otherwise would be by 2065. Around 40 per cent of over-65s have virtually no income other than Super.  This is the bit that bothers me most. No government agency is responsible for analysing NZ Super itself.

The Retirement Commission reviews retirement income policy every three years, but the minister writes the terms of reference. The 2025 review's terms, set by then-Minister Andrew Bayly, left out the age, indexation and means testing. Treasury models Super as one line in a long-term fiscal projection. MSD pays it but doesn't evaluate it. Victoria's Chair in Public Finance, the main academic unit doing this work, closed in 2022. The main longitudinal survey tracking New Zealanders into retirement was discontinued after 2010 and never replaced. 

Responsibility is split across three ministers: Nicola Willis owns the fiscal projections, Louise Upston owns the payment, and Cameron Brewer owns the Retirement Commissioner. There's also a Minister for Seniors. Nobody is accountable for the settings, and the Coalition Agreement's commitment to keep the age at 65 takes it off the public service's work programme entirely.

There's a twist. Earlier this month Bayly, on his way out of Parliament, published a personal proposal to raise the age to 68, switch to price indexation, and allow early access for people in poor health or physical jobs.

And the equity questions are the ones we can least afford to skip. At 65, Māori men can expect about 15 more years of life, compared with nearly 20 for non-Māori men. If you model raising the age to 72, the first thing I'd want to know is who dies before they get there. As far as I can tell, Treasury's notes don't break the results down by ethnicity or occupation.

Why the silence makes sense (for politicians)

Political scientist Kent Weaver calls this blame avoidance. When a policy imposes clear losses on an identifiable group, politicians will go a long way to avoid being the one holding the knife. 

Rob Muldoon won in 1975 partly by promising to scrap Labour's compulsory savings scheme. Voters rejected a compulsory retirement savings scheme at the 1997 referendum by a landslide. Labour campaigned on raising the age to 67 in 2011 and 2014 and lost both times.

The polling explains why nobody's in a hurry. An RNZ–Reid Research poll in July found 58 per cent want the age kept at 65, and about 35 per cent support raising it to 67. Means testing wealthier retirees got the most support of the reforms tested, at around 47 per cent. Compulsory KiwiSaver on its own had 70 per cent support, but when it was bundled with raising the age, support fell to 38 per cent.

So National released the popular half in June, compulsory KiwiSaver, and has sat on the unpopular half since. Winston Peters says 65 is "not a bottom line, it's a top line." Labour has ruled out change altogether. 

There's one more wrinkle. The public seems more open to means testing than to raising the age. But Treasury warns that means testing would have to kick in at fairly low levels of other income to save as much. 

Is it a stretch to ask economists to communicate better? No. Asking them to state their denominator is the bare minimum. Is it the younger generations' job to care and understand? I'd push back hard on that one. It's hard to do your homework when the official numbers don't line up, the review wasn't allowed to look at the question, and the data stopped being collected fifteen years ago. They're being asked to engage with a debate that nobody has set up to be understood.

The job of explaining Super belongs with whoever owns it, and right now nobody does. That's the first thing to fix, before the age, the floor or the means test. Someone in government needs a standing mandate to analyse NZ Super in the open, with a denominator, and with the distributional numbers attached.

I still don't know what we should do about Super. I do understand better why none of us can tell. With seven weeks until the election, a good place to start is asking every candidate who knocks on your door three questions: which number, which lever, and who pays.

*Natalia Albert is a political scientist specialising in New Zealand politics. She is a regular contributor on RNZ Nights with Emile Donovan, Afternoons with Jesse Mulligan and writes for interest.co.nz. Less Certain is her weekly newsletter. Albert stood as a TOP candidate in the 2023 election.