Latest news with #NZSuper
NZ Herald
an hour ago
- Business
- NZ Herald
Inside Economics: Should you take New Zealand Superannuation if you don't need it ... plus, is the Reserve Bank's focus too narrow?
This hit home for me since it's a bit of a bone of contention in our family. I'm a Gen X-er and my Baby Boomer parents both get the pension despite owning assets worth millions. It's not a case of the family home skyrocketing in value – they both own very large, very expensive properties (separately; they're divorced), nice vehicles and live very comfortable lives. I'm really happy they're healthy and enjoying life, but I – and my siblings – think it's a bit gross that they draw the pension when they very obviously don't need it. My Dad's a bit embarrassed about it, but says he's asset-rich but cash-poor. My Mum gets defensive and says she's worked all her life and deserves it. Both my parents are smart and socially aware, so I'm surprised by their stance. My question is: how many retirees actually choose not to take NZ Super? Is there a mechanism to opt out? – Name withheld A: Fascinating question, thanks. I was curious about the numbers too and asked at the Ministry of Social Development (which administers New Zealand's pension scheme). There is no specific mechanism to opt out. But the way the scheme works is that you have to sign up (or opt in) when you turn 65. So, essentially, if you don't need the money, you can just do nothing, and you won't get it. I'm also told you that when you do apply, the registration process does point you to various charities you can donate it to if you think you don't need the money. is one such charity organisation purpose-built for the task. The Ministry of Social Development didn't have any numbers to hand as to how many Kiwis over 65 haven't signed up even though they are eligible. So I've put in an Official Information Act request and hopefully someone in the system will dig that out (watch this space). Benefit or right? The bigger question is the one you implicitly raise with your parents: should people take the super payment if they don't really need it? Framed in even more basic terms: is the super payment a benefit or a right? Everyone who is eligible does have the right to claim it. But the money is also part of the consolidated pool of Government revenue. It isn't held in a special fund, like the New Zealand Superannuation Fund (the Crown investment fund with the annoyingly similar name). That fund will be used eventually to help fund the cost of NZ Super as it balloons, based on the ageing population. NZ Super is also very different to KiwiSaver, which is actually your money that you have worked for over the years. Ultimately, the existence of the state pension (and how generous or universal it is) remains at the mercy of Parliament. It is a benefit, but for many Kiwis, especially those of a certain generation, it feels like a right. It has been promised to us by politicians over the years. That's one of the reasons even changing the age limit or means-testing it has been seen as a political no-go zone. But that seems to be changing as the sheer weight of the cost to the economy becomes apparent. According to Budget 2025 data, NZ Super costs $4352 per person per year, making it the third-largest area of government spending after welfare ($6181 per person) and health ($5804 per person). From the Treasury's long-term fiscal projections, spending on NZ Super is projected to grow from 4.3% of GDP in 2010 to 7.9% in 2060, an increase of 3.6 percentage points. National under Sir Bill English first proposed lifting the age to 67 in the election campaign of 2017. And National campaigned on a similar platform in 2023 with a commitment to keep the age at 65 until 2044, when it will be gradually lifted to 67. This change wouldn't affect anyone born before 1979. Finance Minister Nicola Willis has suggested National will campaign on a similar policy again in 2026. In my view, it will inevitably have to rise. I also understand why people are inclined to accept it as a right. It is free money, right? It will eventually pass through the generations. Perhaps those who want to enjoy the extra cash but feel some guilt could look to spend it with local businesses or support local artists. Does the Reserve Bank need a wider focus? Q: Kia ora Liam, I was reading your column on the future of the Reserve Bank under a new governor. I wonder how the bank can set its policy direction without a clear national economic strategy to work within. New Zealand doesn't seem to have one that I could clearly identify, the closest being the Reserve Bank's inflation target and that's about it. Is this because the nation is happy to muddle along on the global currents of laissez-faire economics instead? After watching a documentary recently on Xi Jinping and his 'China Dream' policy that has seen China become a global economic force, I found myself asking: where is the (suitably less authoritarian) New Zealand equivalent that I think we actually need? A more orderly economy could be highly beneficial in underpinning the woeful state of our physical and social infrastructure, but only if the politicians involved were actually competent enough to plan and execute successfully over multiple decades. Which begs another question: we had decades of stable government in the 20th century that built all the infrastructure, which we have failed to keep updating. If it could be done then, why can't it be done now? Regards, Steve-Tipene Callagher A: Some really interesting thoughts there, Steve. I agree that a more structured and orderly economic approach would benefit New Zealand. But I'll start with your point about the Reserve Bank (RBNZ) and try to explain why it has such a limited scope. The main reason that the central bank primarily targets inflation is that it is the one thing that monetary policy has some real control over. US economist Milton Friedman once said: 'Inflation is always and everywhere a monetary phenomenon.' What he meant was that at some point, we can always trace inflation back to the supply of money in an economy. If we create too much money (unbacked by an increase in real physical wealth), then we always get inflation. By moving the cost of borrowing (and saving) up and down, central banks can control the money supply. When interest rates are low, there is less incentive to save and more incentive to borrow and spend, so the money supply expands. When interest rates are high, there is more incentive to save and it is harder to borrow, so the supply contracts. This has proved to be very effective at controlling inflation over the years. But even the world's top central bankers will admit that monetary policy isn't particularly effective at controlling more nuanced aspects of the economy. It is often described as a 'blunt tool'. Unemployment is sometimes included in central bank mandates because there is seen to be a correlation between unemployment and inflation. But even that is debatable and we've seen the new Government reverse Labour's policy, which had added unemployment to the mandate. The argument is that keeping inflation stable is such an important platform for an economy that central banks should do that one thing and do it well. The rest of the economic equation is left to the Government and/or markets to sort out. I don't want to completely dismiss any criticism of the monetarist approach to central banking. There are alternative ideas out there, like Modern Monetary Theory. I'm not going to do it justice here, but it effectively argues that Governments should focus on real resource constraints rather than financial constraints. It says Governments aren't the same as businesses or households and they can print money and ignore deficits and get away with it. Perhaps it might work in a world where it was universally adopted and well-regulated by efficient Governments around the world. It requires more trust in efficient Government than I have. Regardless, the current system is so deeply embedded in the global economy that even US Presidents are wary of messing with it. So we're kind of stuck with it. I wouldn't like New Zealand's chances of going it alone with a new system. More structure Ultimately, when it comes to the lack of coherent strategy in New Zealand's economic approach, I think a lot of it has to do with the inability of the two major parties to find a bipartisan agreement on big areas like infrastructure. So I agree that it is frustrating, given that we built so much amazing infrastructure in the 20th century, that we seem so bad at it now. Quite why is hard to say. Perhaps it is MMP? There is a lot more trading-off of policy than there used to be under First Past the Post. It also seems to take much longer to get construction started on things, which means we often see Governments change before plans come to fruition. Perhaps we need longer political terms. Or perhaps we just need to streamline the process to get construction under way sooner. I know I'm not alone in wishing we could get some sort of bipartisan accord done on a long-term infrastructure pipeline. Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. To sign up to my weekly newsletter, click on your user profile at and select 'My newsletters'. For a step-by-step guide, click here. If you have a burning question about the quirks or intricacies of economics send it to or leave a message in the comments section.
Otago Daily Times
3 days ago
- Business
- Otago Daily Times
Budget rates relief ‘necessary'
Oamaru. PHOTO: PETER MCINTOSH Rates relief for potentially hundreds of Waitaki senior citizens through Budget 2025, is "timely and necessary", Age Concern Otago says. The Budget last week announced a rise in the income abatement threshold for SuperGold Cardholders and their households to be eligible for the maximum rebate from $31,510 to $45,000, about the same rate as a couple receiving superannuation. "In the Waitaki District alone, over 5700 people receive NZ Super, many of whom will benefit directly from this support," Age Concern Otago chief executive Mike Williams said. "While we don't have exact figures on how many will qualify, we do know that around 40% of New Zealanders aged 65 and over have virtually no other income beyond NZ Super. With nearly a quarter of Waitaki's population aged 65 or older, and rates set to rise by an average of around 10% across the district, this support is both timely and necessary." The maximum rebate for the scheme will also increase from $790 to $805, while those SuperGold cardholders with income higher than $45,000 will be eligible for a smaller rebate. Ratepayers can apply for the new maximum rebate under the new abatement thresholds after July 1. Application forms will be available from councils and will also be able to be downloaded from the New Zealand Government website ( and then submitted to local councils. Waitaki district mayor Gary Kircher is positive in his support for the move. "It's a tough budget for many, though I see some benefits in the budget for our community," he told the Oamaru Mail. "It is good to see that more of our Super Gold Card holders will be eligible for rates relief, as the government recognises the pressures on local government and their ratepayers. "This is welcome news for many of our Waitaki ratepayers, especially those on fixed incomes who own their own homes." Any over-65s with questions about eligibility can contact Waitaki District Council on 03 433 0300 or by contacting service@ Mr Kircher said there were other good news items in the Budget. "An increase of $2.7b for roads schools and hospitals will help, though at least some of those increases had already been announced. "From a council perspective, it will be extremely helpful if the government increases the ability of NZTA to match more of our funding to help councils make progress on the overall underinvestment in roading. "There will be general benefits for our community with the sensible changes to prescriptions, and improvements to our after-hours healthcare, along with an extra $1b for new health infrastructure. "However, the zero increase to many budgets and the decrease in others will be difficult for most government agencies. "I doubt that it has been an easy task for the government, and there is some good logic behind a number of changes. "Unfortunately, many people are doing it bloody hard right now and there will some who are going to be slightly better off, but not all of those most affected." Waitaki MP Miles Anderson said the district would also benefit from Budget 2025's new Investment Boost initiative, which would provide "a major new tax incentive to encourage businesses to invest, grow the economy, and lift wages". "This is great news for farms and businesses in the Waitaki and the initiative is already seeing a strong positive response from the sector. "With our region's strong rural and supporting industries we need businesses to invest in productive assets — like machinery, tools, equipment, vehicles and technology. Investment drives productivity improvements, makes firms more competitive and supports employers to improve workers' wages. "Investment Boost allows a business to immediately deduct 20% of the cost of a new asset, on top of depreciation, meaning a much lower tax bill in the year of purchase." That meant better cashflows, which in turn, makes potential investments "stack up financially", he said. On top of a $164m investment in rural health, including expanded and improved after-hours health services in Oamaru, the Budget also strengthened education provision with $1.5billion to improve student achievement, including $646m of initiatives to ensure earlier identification of, and better help for, children with additional physical, learning and behavioural needs, he said. Another $700m would deliver new schools and classrooms. "We are making smart improvements in education that will make a real difference for young people here," Mr Anderson said.
National Business Review
23-05-2025
- Politics
- National Business Review
Pushing NZ Super age to 67 a ‘no brainer'
Prime Minister Christopher Luxon says National will look to increase NZ Super qualification age to 67 and will go to the next election on that platform. 'I can look at Canada, the UK and Australia which are either there or heading there. Every 10 years, the life expectancy of New Zealander's
1News
23-05-2025
- Business
- 1News
Benefits, KiwiSaver to be means-tested — so why aren't pensions?
A Government decision to means-and-income-test support available to children and younger people, but not alter the eligibility for NZ Super, has prompted questions from some commentators. As part of Budget 2025, the Government announced it would income-test eligibility for the Best Start payment in the first year of a child's life. This will affect about 60,000 families who previously would have been able to access the money, before being income tested in the child's second and third year. Teenagers who are receiving JobSeeker benefits will be assessed against a "parental assistance test" which will determine whether their parents could provide them financial support. The member tax credit in KiwiSaver will be halved and not available to anyone earning over $180,000. But anyone earning at that level was still entitled to the full NZ Super payment. "As one of my team members commented — this Budget was all about taking away from young people and giving to the older generation [through] extra cancer treatment, rates relief for Gold Card members and continuation of NZ Super," said Rupert Carlyon, founder of Koura KiwiSaver. "For young people, we are now means testing KiwiSaver contributions, Best Start payments and not providing welfare to those under the age of 20." He said younger people would also be affected by a lower level of investment in infrastructure. Financial journalist Frances Cook told Breakfast she was 'very concerned' by some of the changes made to KiwiSaver. (Source: Breakfast) "The Budget is described as a budget forcing people to pay their own way where they can. Though NZ Super remains untouched, despite hundreds of thousands of Kiwis receiving it that do not need it." He said NZ Super should be means tested in the same way but it was not politically feasible for the government to do so. "Young people need to be better at voting to drive through change that benefits them." Shamubeel Eaqub, chief economist at Simplicity, said he too thought it was interesting that the KiwiSaver incentive would not be available to people earning more than $180,000 but no such test applied to the pension, which costs nearly $25 billion a year. "It's incoherent... incentives for Kiwis to save for their future is means-tested, but New Zealand Super — which is universal welfare for older people — is untouched." Asked on Nine to Noon her thoughts on means-testing superannuation, Nicola Willis said it was not the Government's policy. "We remain committed to universal New Zealand superannuation." She said National had not yet had a caucus discussion on changes to superannuation. "But I'm on the record at the last election campaign that we campaigned for the age of eligibility for New Zealand superannuation to be lifted. That was to make New Zealand superannuation more affordable, and more sustainable, and to reflect the fact that New Zealanders are working for much, much longer. We campaigned on that because I believe it was the right thing to do… Labour weaponised that against us."
RNZ News
22-05-2025
- Business
- RNZ News
Budget 2025: High earners can't get KiwiSaver credit - but they can get the pension
National Finance Minister Nicola Willis. Photo: RNZ / Samuel Rillstone A government decision to means-and-income-test support available to children and younger people, but not alter the eligibility for NZ Super, has prompted questions from some commentators. As part of Budget 2025, the government announced it would income-test eligibility for the Best Start payment in the first year of a child's life. This will affect about 60,000 families who previously would have been able to access the money, before being income tested in the child's second and third year. Teenagers who are receiving JobSeeker benefits will be assessed against a " parental assistance test " which will determine whether their parents could provide them financial support. The member tax credit in KiwiSaver will be halved and not available to anyone earning over $180,000. But anyone earning at that level is still entitled to the full NZ Super payment. "As one of my team members commented - this Budget was all about taking away from young people and giving to the older generation [through] extra cancer treatment, rates relief for Gold Card members and continuation of NZ Super," said Rupert Carlyon, founder of Koura KiwiSaver. "For young people, we are now means testing KiwiSaver contributions, Best Start payments and not providing welfare to those under the age of 20." He said younger people would also be affected by a lower level of investment in infrastructure. "The budget is described as a budget forcing people to pay their own way where they can. Though NZ Super remains untouched, despite hundreds of thousands of Kiwis receiving it that do not need it." He said NZ Super should be means tested in the same way but it was not politically feasible for the government to do so. "Young people need to be better at voting to drive through change that benefits them." Shamubeel Eaqub, chief economist at Simplicity, said it was interesting that the KiwiSaver incentive would not be available to people earning more than $180,000 but no such test applied to the pension, which costs nearly $25 billion a year. Asked on Nine to Noon her thoughts on means-testing superannuation, Nicola Willis said it was not the government's policy. "We remain committed to universal New Zealand superannuation." She said National had not yet had a caucus discussion on changes to superannuation. "But I'm on the record at the last election campaign that we campaigned for the age of eligibility for New Zealand superannuation to be lifted. That was to make New Zealand superannuation more affordable, and more sustainable, and to reflect the fact that New Zealanders are working for much, much longer. We campaigned on that because I believe it was the right thing to do… Labour weaponised that against us." Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
