New Zealanders may need to keep working into their 70s to make superannuation sustainable, an investment firm warns.
In a debate held at the New Zealand Economic Forum at Waikato University, Milford Investments chief executive Blair Turnbull notes that 40% of retirees depend solely on superannuation income, with zero personal savings.
He sees a rise in the superannuation age. and means-testing. as inevitable.
He pointed out that the Treasury is unequivocal: without raising the retirement age to 72 or 73, New Zealand won’t be able to afford superannuation.
“By 2030, we’ll have over one million people over the age of 65, and we want New Zealanders to retire with dignity and in a lifestyle they deserve,” Turnbull said.
“That is just going to compound. Why? Looking back, in the 1970s you had seven workers for every person over the age of 65. Today that’s about four workers for every person over the age of 65, and by 2060 it’ll be two workers for every person over the age of 65.”
“The truth is we cannot afford the superannuation system, because we don’t have the workers and we don’t have the productivity – and just to bring the productivity point to life – in terms of the 37 OECD countries, we are 27th in the rankings in terms of productivity.”
“And here’s the killer stat that follows that: in terms of our savings, we’re 33rd, so if we have lower productivity and lower wages, that, unfortunately, really hurts our ability to save because we literally don’t have the money to save for the future, even though we know we need to save.”
“50% of people today are just surviving pay cheque to pay cheque, and the news isn’t any better for retired people because 40% of them arrive at 65, and they have little to no private savings, and they’re fully reliant on income from New Zealand Super, which we simply can’t afford.”
Former cabinet minister David Parker urged the conference that New Zealand must match Australia’s superior superannuation savings rate.
“I’m in favour of following Australia into compulsory KiwiSaver, and there should be a tax incentive,” Parker said.
Meanwhile, former Aged Care Association chief executive Tracey Martin argued that the superannuation age debate requires a far broader national conversation.
For ANZ chief economist Sharon Zollner, healthcare costs for seniors must factor in, noting that needs for those over 85 run five times higher than for 65-year-olds.