Superannuation age to gradually rise toward 67 starting in 20 years time
Prime Minister Bill English has announced the age for state superannuation will rise to 67 in gradual steps starting in 20 years time.
The changes will be phased in from July 2037 and will not affect anyone born before June 1972.
The age would lift to 67 in 2040.
English said Kiwis were living longer and healthier lives so adjusting the long term settings for superannuation while they had time to adapt was the right thing to do.
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The law would be changed next year to bring the new qualification rules into effect.
The plan would see the age of entitlement for NZ Super rise by six months each year from July 2037 until it reached 67 in July 2040.
So everyone born on or after January 1, 1974 will have to wait till; they are 67 to be eligible for NZ Super.
There would be no change to the indexation or universality of superannuation.
But the Government is planning to double the residency requirements for NZ super so that applicants must have lived here for 20 years, with five of those after the age of 50.
English said even after the change, someone who retires at age 67 in 2040 was likely to receive NZ Super for longer than someone who retires at age 65 today.
"That is because average life expectancy is increasing by about 1.3 years each decade."
He said the Government had a strong track record of supporting older New Zealanders. Since 2008 weekly payments to superannuitants had increased by 35 per cent after tax while inflation had increased by 14 per cent.
"Gradually increasing the retirement age from 2037 will more fairly spread the costs and benefits of NZ Super between generations, ensure the scheme remains affordable into the future and give people time to adjust.
"It will also bring New Zealand into line with other countries like Australia, the United Kingdom, Denmark, Germany and the United States which are all moving to a retirement age of 67."
English said the Government is announcing the change now so that political parties can debate superannuation transparently in the lead-up to the election.
But he immediately came under fire from other parties.
Labour leader Andrew Little said he did not support the lifting the eligibility age by two years. The plan gave the appearance of doing something but did nothing at all.
He said the best immediate step would be to resume payments to the New Zealand Superannuation Fund.
The leader of National's support party ACT, David Seymour, said English was delaying the issue for too long.
"This change won't affect anyone born older than 45, meaning the Prime Minister is protecting baby boomers, while pulling the rug out from under young people. It's intergenerational theft – cynical political calculus in place of leadership."
ACT would take the Retirement Commissioner's advice and begin raising the age in 2020 – 17 years sooner than National's plan.
But the first reaction from NZ First leader Winston Peters, who has long campaigned on protecting the current age and entitlements, was more muted than expected.
He said changing the age of entitlement at 20 years from now was an effort to look responsible whilst not actually doing anything,.
"Clearly Mr English has been caught in a maelstrom of his own making and any promises of indexation or universality must be set against his having gone back on that, three times in his political career."
He said the good news was that he had listened to NZ First's call for a fairer residency qualification "albeit taking up to 20 years is five years short of what would be fair".
English said Peters had taken his position on not supporting a government that changed the age was taken before the announcement.
He said the policy would "probably enhance" National's chances at the election.
"People expect a government to deal with the long term issues and we now have the opportunity to do it."
He said people knew it was going to change - there was now a clear path.
"I think the issue for election year is going to be other parties arguing why there should be no change ever - because that's really the position they would be taking."
But English reJected calls from the Maori Party to allow Maori and Pacific retirees to receive their pensions early because they had a lower life expectancy.
He said a review in 2030 could look at how the policy was tracking.