Brad Olsen says New Zealand should consider lifting superannuation age

A leading economist says New Zealand should consider raising the superannuation age but warns it has to be done correctly or it could cause harm to some Kiwis. 

It comes as New Zealand's major political parties have contrasting beliefs about raising the age of the super. 

Deputy Prime Minister Carmel Sepuloni confirmed on Saturday Labour would keep the super age at 65 

National's policy is to raise the super age to 67 - a plan which would mean people would miss out on $50,000, according to Labour. 

But National said Labour was whipping up anxiety among voters ahead of the election.

"This afternoon, we have seen a desperate Labour party more interested in political attacks and scaremongering about the National Party than actually governing," National campaign chair Chris Bishop said on Saturday.

“They’re just resorting to political attacks and clichés about the National Party and I think it’s pathetic and they should be ashamed of themselves.”

Speaking with AM on Monday, Infometrics Principal Economist Brad Olsen said it's a slippery slope if the super age is raised as it could leave people worse off. 

"I think we do have to think about doing something like lifting the age. Treasury has highlighted if we were to lift the age and take back some of those additional costs that would otherwise be incurred, there would probably be wider economic benefits," Olsen told AM Early host Nicky Styris. 

"At the same time, Treasury has warned that of course there are some in society that would feel that hit a lot harder." 

Olsen pointed to Māori and Pasifika who would be the worst hit because generally, they die younger. He also highlighted manual workers who would be negatively affected. 

"We know as well that of course manual workers are really struggling to make it to 60, let alone 65 at the moment or any further. When you've been working that hard your entire life, it's pretty difficult," he said. 

Treasury has warned since New Zealand has an aging population and more people are heading for retirement, it could lead to an “unsustainable level of debt” and increased health costs.

But Sepuloni claimed it would still be affordable if investments into the Super Fund were continued.

Olsen said currently it costs New Zealand about 5 percent of its gross domestic product (GDP) but it will raise to 7.7 percent in about 2060. 

While there are risks to raising New Zealand's superannuation age, Olsen believes there is a way that it could be done so those groups who would be affected are supported. 

"We could well, in my mind, look at lifting the New Zealand super age to something like 67, save ourselves some money over time so we have greater options to where government spending goes," Olsen told AM Early. 

"But at the same time provide better support to those groups that would be hardest hit by the move."

He thinks the Government could invest in a transition payment for manual workers to help them transition into retirement earlier and also fix inequalities affecting Māori and Pasifika. 

"Let's fix the inequalities that mean that they die younger, they don't get the same level of health care rather than trying to pay them out earlier in their life. I think over time there is an ability to do both. But there is, of course, a balance," he said.

Brad Olsen.
Brad Olsen. Photo credit: AM

The debate between Labour and National over New Zealand's super age is "interesting" Olsen believes, as just a few years ago, the roles were reversed. 

"I think it's interesting, particularly when you think about the politics of this. About a decade ago, the Labour Party was very staunchly looking at raising the retirement age and at the time the then-governing National Party said there was no way they'd look at it," Olsen told AM Early. 

"You come through to 2023 and the reverse is true. Labour ruling out any changes to the super age, but National has a policy to raise it." 

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