The Retirement Commissioner is calling for cross-party action when it comes to New Zealand’s retirement system, saying we need to stop “piecemeal policy change.”
“More New Zealanders are living longer, working differently, and facing new pressures around housing and caregiving,” Retirement Commissioner Jane Wrightson says.
“These shifts mean we need to continue to check that the system is doing its job, and make improvements where it isn’t."
Wrightson’s comments come as Te Ara Ahunga Ora Retirement Commission released its Review of Retirement Income Policies 2025 on Friday.
The Commission is required to undertake a triennial review of retirement income policies and provides the Government with independent advice on how these policies are going - and what changes may be needed.
As part of its review, the Commission estimates the Government would spend $545 million on KiwiSaver subsidies in the 2025/2026 financial year - this is how the Commission looked at ways to target government contributions to offset the costs of implementing its proposed KiwiSaver reforms, assuming no extra funding is available.
Wrightson says the message is clear.
“We need a long-term political accord to focus on providing certainty for future generations of retirees and stop piecemeal policy change. That means improved governance, inclusive policy and a retirement income system that works for everyone.”
This includes the development of a 10-year roadmap for the retirement system which Wrightson says would be a plan that extends beyond political cycles and takes into account “multiple lenses, not just fiscal.”
“Decisions, such as whether to change the age of eligibility for NZ Super or make KiwiSaver compulsory, cannot be made without considering the system as a whole," Wrightson says.
The current system
The report says while New Zealand’s current retirement system is strong - the world is changing.
Over the next 10 years, half a million KiwiSaver members will reach 65.
“The current debate about retirement income is too narrow. It often overlooks the diverse experiences of older New Zealanders and does not fully account for how retirement outcomes vary by gender, ethnicity and employment type.”
The report says today’s policy settings are not set in stone. “Future generations will face different challenges and opportunities.”
What's changed
There’s rising financial stress among older people with the report saying research has shown many people are concerned about living costs, housing security and whether NZ Super is enough to meet their needs.
Currently NZ Super after tax is about:
- $1076.84 if you live alone or with a dependent child
- $994 if you live with someone who is either 18 or older or visiting and staying more than 13 weeks in any 26 week period
- $828.34 each if you and your partner meet the NZ Super criteria
- $828.34 if between you and your partner, only one of you meets the NZ Super criteria
(These numbers are with the M tax code and would change if you're on a different tax code such as S, SH, ST and SA).
The report says while 56% of New Zealanders feel financially comfortable or very comfortable, 32% feel financially exposed and a further 12% say their situation is financially poor.
This highlights a growing diversity in retirement experiences, the report says.
Alongside this, a growing number of older people who are over 65 are staying in the workforce.
The report says nearly half of people between 65 to 69 are in paid work compared to 15% at the start of the century.
Housing security has also changed.
“The ‘golden assumption’ of home ownership, based on the idea that most New Zealanders would retire mortgage-free, has broken down.
“This shift highlights the importance of housing security for older people,” the report says.
The proportion of people who own a home mortgage-free has decreased from 83% in the mid-1990s to 71% in recent years.
“Around 13% of older adults are still paying a mortgage, and a similar proportion are renting.”
Among people aged 45 to 64, renting has doubled since the 1990s (going from 10% to 23%) while mortgage-free ownership has fallen from 60% to 32%.
“This points to a future cohort of retirees who are more likely to enter retirement with ongoing housing costs, increasing the risk of financial stress.”
Gaps in the system
Groups such as women, Māori, Pacific Peoples, low-income families and the self-employed face distinct challenges, the report says.
“Addressing these disparities is not just a matter of fairness, it is central to the system’s long-term effectiveness."
“NZ Super continues to play a vital role as a universal, inflation-protected income that provides stability and security for all older New Zealanders, particularly those with limited private savings.”
The report also points out that people over 65 and those on temporary visas are treated differently to other employees.
“People on temporary visas are excluded from enrolling in KiwiSaver, and employers do not have to make KiwiSaver contributions to employees after the age of 65.
“This limits the ability of older workers and migrant workers who ultimately settle here to build long-term wealth.”
The report says: “As KiwiSaver becomes a larger part of the retirement income system, differences in saving will matter more. People with smaller balances will have less to draw on in retirement, potentially widening income gaps among older New Zealanders.”
Sustainability and fairness
The report says the system is connected to broader questions of intergenerational equity.
“This reflects the structure of the welfare state, which redistributes resources across the life course by supporting the young through education, the elderly through superannuation and health services, and everyone through shared public goods.”
The report refers to fiscal incidence analysis showing that older New Zealanders are “significant net recipients of government spending, while working-age adults are not contributors”.
“In 2019, the 65-79 age group received over $8 billion more in government services than they paid in taxes, and the 80+ group received over $5 billion more."
“These net transfers are largely driven by NZ Super and health spending, which are concentrated in older age groups.”
The report says this redistribution is not inherently unfair but it raises questions about sustainability and fairness between generations, “especially as demographic pressures grow”.
“In recent years, governments have returned to running fiscal deficits. This means that instead of passing on a stronger balance sheet, current policy settings are now shifting more of the cost burden to future generations,” the report says.
“The ‘implicit debt’ created by current pension policies, especially the growing cost of NZ Super, will require future taxpayers to fund a larger share of retirement income and aged care.
“This could result in higher taxes, reduced public services, or increased debt for younger and future generations.”
The report says economic growth through improved productivity could help ease fiscal pressure.
“A stronger revenue base gives governments greater capacity to meet rising costs such as NZ Super and healthcare, without resorting to higher taxes, reduced services or increased debt.”
It also creates “fiscal headroom”, the report says, enabling governments to maintain current NZ Super settings, invest in public services and support internationally competitive tax rates.
“It also strengthens the system’s resilience to economic shocks and demographic change.”
But the report also points out that productivity growth won’t automatically reduce retirement costs, especially with NZ Super indexed to wages.
Actions
The review report provides a “practical plan for action for improving New Zealand’s retirement income system”.
The report says actions can be taken when it comes to targeted policy reforms through reallocation of existing spending on the government contributions.
These are:
- Extend the KiwiSaver parental leave government contribution to $1000 regardless of whether the member makes contributions
- Increase KiwiSaver government contribution for low-income earners
- Remove unnecessary KiwiSaver exclusions, mandate employer contributions for people over 65 and allow those on temporary visas to join KiwiSaver and receive matched employer and government contributions
- Ban the use of total remuneration policies in KiwiSaver employer contributions
When it comes to system improvements and innovations, actions the report says can be taken now are:
- Work with KiwiSaver providers and supervisors to enrich the regular, anonymised reporting of balances, contributions and withdrawals (including hardship) and improve integration with other administrative data sources
- Improve KiwiSaver administrative processes including standardising and optimising hardship withdrawals, and update payroll systems to better support employer contributions during parental leave
- Design and trial emergency savings accounts
- Develop a nationally consistent decumulation framework
“The review also recognises that lasting progress depends on more than just short-term fixes,” the report says.
The Retirement Commission is calling for:
- A new retirement income cross-party accord put in place
- The establishment of a Parliamentary working group to set the strategic direction for a 10-year retirement income roadmap
- The establishment of a pan-sector group, led by the Retirement Commission, to develop and implement the roadmap under the guidance of the Parliamentary group
- The 10-year retirement income roadmap to address KiwiSaver, NZ Super and innovation in retirement planning
“Some decisions, such as whether to change the age of eligibility for NZ Super or make KiwiSaver compulsory, raise significant questions,” the report says.
“We do not support making these changes before the long-term plan is developed. If and when they are considered, a careful approach is crucial to ensure public trust in the retirement income system is protected.”
Wrightson says the problems identified in the review won't go away.
“It is crucial that the political leaders of today work together on long-term solutions.”
“These actions are designed to improve adequacy, close savings gaps, and ensure the retirement income system remains fair, sustainable and trusted,” Wrightson says.
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