Retiring With Dignity

With pension funding set to treble in cost, calls to restrict eligibility are growing. Though many are willing and able – or financially forced – to work past 65, what happens when we want to stop?

- Sarah Catherall

When the equivalent of today’s New Zealand superannuation scheme was introduced back in 1898, it was a world first. There were limits, though: our first pension was means-tested, and our first pensioners had to be of good moral character. They also had to show they had lived in New Zealand for more than 25 years, which ruled out many MÄori whose births weren’t registered.

Around 120 years ago, the pension was designed to protect elderly citizens aged 65 or older, even though only half the population lived long enough to get it.

Whereas retirement often lasted only a year or two in the scheme’s early days, today it can stretch to decades. Today, 756,100 New Zealanders receive the pension, costing taxpayers $30 million a day. As we survive diseases that once killed us, the cost of pensions is projected to treble to $98 million a day in 20 years.

The very idea of what is deemed “elderly’’ has changed over generations. The reality, though, is that research shows current retirees and those heading for retirement are ill-prepared for living an average of 16 years out of the workforce. Meanwhile, there are growing calls for New Zealand to restructure the pension to cope with our greying population – by 2065, the number of over-65s is projected to rise to 1.7 million.

A recent member’s bill by New Zealand First MP Mark Patterson proposes to increase the minimum residency requirement for NZ Super from the current 10 years to 20 years. At the same time, a growing number of pensioners are struggling to live on NZ Super alone: hardship grants paid to over-65s have more than doubled in five years, a trend that is expected to worsen as more retirees leave work without owning their own home and need to pay rent from a pension not intended to cover it.