Tony Negline: Raising the age of Super eligibility
OPINION: Next year across the Tasman, eligibility for the Age Pension starts its gradual rise to 67 years. New Zealand is still thinking about it.
The number one lesson New Zealand can learn from the Australian experience is that advocates for change face a hard slog.
The Australian experience of raising the age of eligibility for that country's Government Age Pension shows this is incredibly difficult policy-making territory.
Proponents of raising the age of eligibility are asking citizens, in effect, to give away something they had looked forward to, or expected, in return for the feel good factor of shouldering a fairer share of the Government's overall costs.
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That is, take one for the team.
Polls show Aussies are not so inclined. But based on New Zealand public opinion, the situation is a bit more hopeful for supporters of change in this country.
The Retirement Commissioner Diane Maxwell has suggested increasing the minimum age for receiving New Zealand Super from 65 years to 67, something Australia is already committed to doing, starting mid next year.
The moves are similar in a number of ways.
Both are driven by a recognition that booming retirement numbers will make government Super, called the Age Pension in Australia, unsustainable, or in the case of no change, only available at an unfair cost to the tax payers of the day who will have to foot the bill.
Each have relatively long lead in times. Australians were given a seven-year heads up on next year's Age Pension eligibility move; in New Zealand the proposal is for a 10-year wait.
On both sides of the Tasman, the shift from 65 to 67 will be gradual. In Australia, the eligibility age increases to 65.5 years from the middle of next year, increasing another six-months every two years after that until July 2023 when it reaches 67 years.
In New Zealand the Retirement Commissioner's proposal is to lift the eligibility age by three months a year over eight years until eligibility arrives at age 67.
There are very good reasons for this slow and steady approach. One is fairness.
These changes represent change to the Super rule book. Those affected need time to adjust their affairs.
Secondly, they're deeply controversial.
According to a recent poll, only one in four Australians supports lifting Age Pension eligibility to 67. Most want it to stay at 65 while a substantial number (17 per cent) want to drop the eligibility age to 60 for women and 65 for men.
The move to 67 years has been deeply unpopular since it was unveiled in 2009. Undeterred, the Turnbull Australian Government in 2014 announced plans to lift Age Pension eligibility to 70 by 2035.
It has since run for cover.
The Australian 67 eligibility test proposal has survived eight years thanks, firstly, to the then (briefly) popular Rudd Labour Government's willingness to ride out the initial wave of public disapproval and also to the bi-partisan recognition at the time that change was necessary.
The Opposition was relatively quiet on the issue – it's even more staunch attitude became obvious when the then Abbott Government proposed 70 as the age of eligibility.
Kiwis, however may be more well-disposed to change than their trans-Tasman cousins. A Chartered Accountants ANZ survey conducted last year showed 62 percent of Kiwi respondents thought the age of eligibility should be increased to take into account the ageing population.
The Government has declared it won't be putting any eligibility-raising policy on the table, saying Super will be affordable.
The Retirement Commissioner says it's not, with the number of 65-plus Kiwis doubling in the next 30 years and the costs of super tripling in the next 20.
The Retirement Commissioner is about to embark on a public push for its proposal. New Zealanders need to take notice and seriously think about this debate.
Key questions to think about include:
Is the cost of Super sustainable given future improvements in life expectancies and increased health and age-care expenditure?
How will Super, based on the concept of retirees owning their own home, cope with falling rates of home ownership?
Tony Negline Chartered Accountants Australia and New Zealand (CAANZ) head of superannuation, based in Sydney. He has worked for more than 25 years in financial services in Australia in a variety of senior roles.