Cost of living: Economist Brad Olsen says NZ's superannuation age needs to be urgently reviewed

An independent economist is calling for a review of the age of entitlement for superannuation, saying it's an issue that's been kicked down the road for far too long.

Debate is raging over the future of the pension, with calls for it to be raised to 70 and not given to the rich. 

It follows protests and riots in France following a proposed move by the French Government to raise the retirement age there from 62 to 64. The reforms themselves are controversial, as is the process by which President Emmanual Macron is going about the change, skipping a debate in the country's lower house. 

In New Zealand, the retirement age is set at 65. This is the age at which people can begin to access superannuation, with the amount received depending on an individual's income, marital status and living situation. It was increased on Saturday as part of an annual adjustment. 

Infometrics principal economist Brad Olsen told AM Early on Monday it's time for New Zealand to revisit the age people are eligible for the pension. 

"Super is an issue that New Zealand has kicked down the road for far too long and you think about at the moment the large number of people that are going to be moving into retirement in New Zealand over the next few decades," Olsen told AM Early host Michael O'Keefe. 

"You multiply that by the high costs we see every year because of wage increases or inflation and the fact that now people are spending longer periods of time on super because New Zealanders are living longer and you can see that there's a really big cost pressure coming forward."

The cost of the New Zealand Superannuation is $55.7b and Olsen warns it's only going to increase in the decades to come. 

"I mean, let's be realistic, New Zealand spends just about as much on New Zealand super each year as we do on the entire education budget, and with an extra one million New Zealanders over the age of 65, over the next 50 years or so, there is going to be an increased pressure," Olsen explained. 

"This is going to be an increasingly expensive cost to New Zealanders and it means that something else in the Government budget simply won't be able to get funded. The time was ten years ago to start changing these sorts of settings, the second best time is now."

Infometrics principal economist Brad Olsen.
Infometrics principal economist Brad Olsen. Photo credit: AM

Another reason why Olsen wants New Zealand to consider raising the age of superannuation is the slow growth in the current working-age population.

"My worry though is you take all of that but also a slower amount of growth coming from the current working-age population and by the 2060s you're going to have two people having to support every retiree with their tax income. That's up from four at the moment and six back in the 1980s or so," Olsen said. 

It's not just Olsen calling for the superannuation age to rise, the Organisation for Economic Cooperation and Development (OECD) has said it needs to increase to help keep debt levels in check. Aotearoa's ageing population means the scheme is going to become more and more expensive.

But not everyone is in favour of raising the age of the pension, with Retirement Commissioner Jane Wrightson releasing a report last year recommending the age of eligibility for superannuation "must remain the same" or "a more complicated system be considered to reduce the inevitable inequity such a change would bring". 

"Any increase to the age of people accessing NZ Super will only further disadvantage women, Māori, and Pacific people," Wrightson said.

Watch the full interview with Brad Olsen in the video above.