The number that reframes the debate
Here is the figure that makes the case hard to dodge. In the 2024 tax year, 9% of all New Zealanders aged over 65 earned more than $100,000, 3.6% earned more than $150,000, and 2.1% earned more than $180,000 – all while banking the full NZ Super payment on top.
Means-testing superannuation has long been treated as political poison. It still is. But the group of economists now saying it out loud is growing, and their argument rests on arithmetic that is only moving one direction.
The fiscal wall coming into view
Treasury’s March 2026 working paper, built on an overlapping generations model, projects pension expenditure rising from 5.6% of GDP now to roughly 8.0% within 40 years and 8.8% by 2100. The kicker sits in the tax numbers. Under status quo settings, the model implies marginal tax rates on labour income must climb by 10.4 percentage points over the next 40 years, reaching 18.0 points by 2100, simply to fund an ageing population.
That is the part business owners should read twice. If nothing changes, the bill lands squarely on working-age taxpayers and the employers who pay them.
Super already eats a large slice of the pie. A 2023 Treasury OIA response showed NZ Super consumed 16.63% of total taxation revenue in 2022/23, projected to hit 21.35% by 2036/37 – more than one dollar in five. The Spinoff reported in June 2026 that Super now costs $39 million a day, tripling to a projected $120 million a day by 2040. The NZ Super Fund only softens the blow: Treasury’s modelling shows Fund withdrawals covering just 3.3% of pension spending in 2040.
What a third off the bill would take
Westpac chief economist Kelly Eckhold told RNZ on 8 July 2026 the answer is not a single lever but a package: “some increase in the age, some change in the indexation away from wages and perhaps to just the CPI, and some element of means-testing as well would be a sensible part of the package.”
His modelling is concrete. If New Zealand adopted Australian-style means and asset tests, roughly 33% of single pensioners and 54% of couples would receive less, with 18% of singles and 26% of couples losing all Super. The payoff: “you can reduce your Super spend by roughly a third.”
On the standard objection that testing is too hard to administer, Eckhold was blunt: “We manage it for everything else but somehow it would be completely undoable when it comes to Super.”
Simplicity chief economist Shamubeel Eaqub put the principle plainly in The Spinoff: “I much, much prefer means testing because there is no reason why rich people should get welfare.”
The serious counter-argument
This is not a settled case, and the strongest objection is not sentimental. NZ Initiative chief economist Eric Crampton argued in the same Spinoff piece that surcharges create punishingly high effective marginal tax rates, discouraging older people from working and saving. He favours a health-tested benefit for those unable to work past 65. That is an efficiency argument about labour supply, not a defence of universality, and it deserves weight.
Max Rashbrooke, in the same debate, called means testing “the best of a bad set of options” while warning that income testing alone lets the genuinely wealthy shelter assets. In January 2024, the NZ Society of Actuaries concluded no reform was a silver bullet and preferred fixing KiwiSaver instead.
The precedent nobody mentions
The $180,000 line is not arbitrary. The government has already drawn it once, restricting KiwiSaver member tax credits to those earning below $180,000. That established the principle that high earners do not need state retirement subsidies. The unanswered question is why the same person then collects a full weekly Super cheque.
What business should watch
Eckhold’s timeline is the whole game. He conceded “there’s not enough urgency in the issue right now” but warned the numbers start appearing in fiscal forecasts by the early 2030s, and “arguably by then a bit later to be doing much about it.” That is one election cycle away.
For now the politics are frozen. As of 8 July 2026, National has ruled means-testing out, and Labour finance spokesperson Barbara Edmonds said the party had not considered it, insisting “consensus is required across parliament.” Consensus is a comfortable way of doing nothing. The government that keeps refusing to touch it simply hands a larger, compounding problem to the next one, and to the working-age taxpayers who will fund the gap.
Sources
- Economists say means-testing NZ Super makes sense (2026-07-08)
- What should we do about New Zealand’s soaring superannuation bill? (2026-06-09)
- Working Paper 26/01: An overlapping generations model to investigate the fiscal implications of New Zealand’s ageing population (2026-03)
- Official Information Act Response 20230155 – Superannuation data (2023-08)
- New Zealand Superannuation: An actuarial view on reform (2024-01)