Strong opposition to changing retirement system

Friday 11 May 2018

New survey reveals strong opposition to changing retirement system,
despite rising costs

A new survey has revealed New Zealanders don’t want further changes to the retirement system, despite an acceptance of growing costs to support our ageing population.

The results expose the difficult position politicians are in when it comes to addressing retirement issues.

The survey commissioned by Chartered Accountants Australia and New Zealand (CA ANZ) asked more than 1000 residents for their thoughts on how to make the retirement system sustainable.

The strongest opposition across all age groups was to across-the-board reductions in the amount paid.

Tony Negline, CA ANZ’s Superannuation Leader [photo attached], said the Ageing Population: do we understand and accept the challenge? report showed politicians face difficult decisions with the community divided on how to improve the sustainability of the retirement system, despite a clear recognition costs are increasing.

“The New Zealand public’s dominant preference is for the status quo to remain in place and that the government pension should be provided universally, without a means test,” Negline said.

“New Zealanders are resistant to change, including the prospect of increasing taxes to fund the inevitable increase in costs.

“There was mixed support for increasing the age of entitlement, amending how adjustments occur by linking to prices rather than wages, or pre-funding through increased taxes.”

The survey, done as part of the Ageing Population report, compared attitudes to superannuation among both New Zealand and Australian residents, as governments in both countries prepare to deal with challenges presented by ageing populations.

In New Zealand, the Government has pledged to retain the age of eligibility for New Zealand Super at 65, while in Australia, the age of eligibility is increasing to 67 with a planned further increase to 70.

“Our survey has revealed there’s high awareness of New Zealand Super, at 87% of respondents, with around half ‘thinking somewhat’ about retirement planning.”

Gaps in knowledge

“But there’s a real gap when it comes to knowledge about the level of payment and how the schemes are funded. And, especially amongst Kiwis, whether income and asset testing is applied.

“Despite that, almost three-quarters of New Zealanders are aware that with an ageing population, New Zealand Super will cost more in the future.”

Forty-eight percent of couples and 24% of singles believe they could ‘get by’ on current New Zealand Super levels. Only 16% of couples and 8% of singles feel they could ‘live comfortably’ on New Zealand Super at current levels.

“There was also a marked difference in attitudes between generations in terms of continuity of the scheme with 39% of younger Kiwis believing the scheme will exist in its current form, compared to 89% for those aged over 65,” said Negline.

“There’s a strong view against increases in the minimum pension age, protection of the family home from asset tests, and that the NZ Super is an entitlement.

“The strongest opposition is to reductions in the amount paid across the board. The least unpopular was for use of income and asset testing to determine how much government should pay to New Zealand Super recipients.

“The clear finding from our survey is that we need more than public education to change this debate.

“The survey split respondents into two groups – one that received supplementary information and one that did not – but there was no real difference between the two.

“That points to the fact it’s extremely unlikely public education on population ageing will, on its own, move the debate forward.

“And politicians are between a rock and a hard place – the public don’t want change, despite knowing the system will cost more in the future.

“People clearly want to see the status quo remain and the government pension provided universally without means testing.

“Meaningful and successful reform will need a range of supporting factors – an electoral mandate, leadership, cohesion and persistence.”

A full copy of the report, written by the New Zealand Institute of Economic Research (NZIER), can be found here

Key findings:

· Half of New Zealanders are ‘thinking somewhat’ about retirement planning.

· Awareness of New Zealand Super is high at 87%

· Almost three-quarters of New Zealanders are aware that New Zealand Super will cost more in the future.

· 39% of younger New Zealanders believe the current scheme will exist in its current form, compared with 89% of Kiwis over 65.

· New Zealand residents are far more confident about policy stability compared with Australians, reflecting the frequency of changes.

· New Zealanders and Australians were reluctant to contemplate major changes to the government retirement benefits and were divided about tax increases.

· The survey found little evidence of a distinct generational divide on policy options for dealing with the increased costs of New Zealand Super and Australia’s Age Pension.

· In New Zealand, 48% of couples and 24% of singles believe they could ‘get by’ on current New Zealand Super levels. Only 16% of couples and 8% of singles feel they could ‘live comfortably’ on New Zealand Super at current levels.

ends

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