Superannuation and health will be major drivers in government spending in the future, Finance Minister Nicola Willis says, meaning all parties “have a requirement to go into the next election with a policy setting out where they’re at on superannuation”.
Speaking at this year’s Bloomberg Address in Auckland on Friday, Willis told the audience: “As we all know, these are very long held things and we need to signal very clearly, very much ahead of people who aren’t even thinking about retiring now, what those settings will look like.”
This is a repeated call - at the Financial Services Council conference in September, Willis told the crowd no serious political party could go into next year’s election without a policy that tackles the rising cost of superannuation.
“We as a party have proposed changes in this area in the past. We haven’t committed to whether we would make changes in the future, but I think we have shown our hand at this recent budget by increasing those contributions to KiwiSaver,” Willis says.
At this year’s budget announcement, changes were made to KiwiSaver with mixed reception.
This included a rise to employer and employee contribution rates. These will increase to 3.5% from April 2026 and move to 4% in April 2028. It’s currently at 3%, KiwiSaver members can choose to stay at the current 3% rate and still be matched at this rate by their employer.
At the Bloomberg Address, Willis told the audience that increasing those contributions “shows a commitment, I think, from all three parties in the coalition that this is an important vehicle for New Zealand’s future savings".
Other KiwiSaver changes the government made includes allowing people aged 16 and 17 to be eligible for KiwiSaver so they can access employer and government contributions.
The Government decreased its contribution rate however, going down to 25 cents for each dollar a member contributes. This was previously 50 cents for each dollar, which meant receiving a maximum government contribution of $521.43.
And people with an income of more than $180,000 will no longer be able to receive the government contribution.
Willis says she’s proud employer and employee contribution rates were changed.
“I think it speaks to intent, speaks to our longer term vision,” she says.
Willis’ comments come after Treasury’s Long-Term Fiscal Statement repeated a key message it had mentioned four years ago, eight years and 12 years ago: the Government will run out of money to pay for pensions and healthcare if they don’t make some policy changes.
If policies are left unchanged, government spending per person will rise from $18,300 today to $35,900 in 2065 (not counting inflation). Tax revenue won’t be able to keep up and debt would explode to 200% of gross domestic product.
Treasury modelled a hypothetical scenario in which no corrections were made to policy until 2065, just to demonstrate the costs of drastic policy changes.
“Our modelling suggests if we delay tax increases to 2066, everyone born before 2030 is better off, but people born afterwards end up paying significantly higher taxes over their lifetimes and have lower after-tax pensions,” it wrote.
When it comes to this scenario, Willis says; “I think that’s a theoretical exercise that has no bearing on reality, because governments have proven that they do react to the circumstance in front of them”.
When it comes to the retirement age, National and Act have previously announced that they want to raise the age of eligibility.
Labour’s finance spokesperson Barbara Edmonds previously said the party would not be looking to change the superannuation age, but KiwiSaver was unfinished business.
New Zealand First has already put forward a proposal on KiwiSaver with leader Winston Peters announcing a policy to make KiwiSaver compulsory and to increase employee and employer contributions to 10%.
At the party's annual conference in Palmerston North, Peters said KiwiSavers and employers would receive tax cuts to cover the increases.
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