This paper is one of a number of background papers commissioned by the Commission for Financial Literacy and Retirement Income for the 2013 Review of Retirement Income Policy. These papers help set the scene for consultation and debate.
This paper focuses on New Zealand's longevity trends and their relevance to the age of eligibility for New Zealand Superannuation (NZS). The age of eligibility for NZS was a key issue in the 2010 and previous Reviews.
- The 2010 Review highlighted the increasing cost of NZS as more New Zealanders live to the age of eligibility (currently 65 years) and live longer in receipt of NZS. The 2010 Review proposed increasing the age of eligibility to 67 years, considering it likely that people will want to keep working for longer, that the increasing cost of NZS will need to be tamed, and that any unfair disadvantage caused by a higher age can be mitigated.
- Since 2010, new projections from Statistics New Zealand indicate further improvements in life expectancy. Other proposals have been made to increase the age of eligibility in New Zealand. More countries have decided to increase their eligibility age or hastened existing plans, citing continuing lengthening of lifespan as a key driver.
Reform of New Zealand Superannuation could cover other drivers (such as costs, or different views of equity) and other aspects of its structure (for example PAYGO vs. SAYGO, eligibility criteria based on income or residency). These potential reforms are considered elsewhere.
Whether or not some of these other reforms happen, longevity trends are still a reality and raising age of eligibility is a potential response. The paper investigates longevity trends as a driver for considering reform of the age of eligibility, including possible ways in which the age of eligibility could be linked to forecasts of future life expectancy.