The Super bill keeps growing: Can KiwiSaver bring down the cost?

Tuesday, 23 June 2026

The Government pays about $1 billion in superannuation costs every second Tuesday to around 900,000 recipients, with the bill forecast to grow.

National Party finance spokesperson Nicola Willis has signalled the status quo is unsustainable, stating that super’s rising cost in the next year alone almost equals her entire $2.1 billion operating allowance.

NZ First’s Winston Peters has rejected any prospect of limiting super entitlements. Labour leader Chris Hipkins warns that increasing or making KiwiSaver compulsory must not be used to justify reducing super entitlements or raising the eligibility age.

Simplicity chief economist Shamubeel Eaqub states that a universal super system cannot be sustained long-term, but counsels that the Government cannot alter superannuation settings until KiwiSaver is strengthened enough to support a managed transition.

Can New Zealanders transition away from superannuation, and instead rely on KiwiSaver? Political reporter Glenn McConnell looks at the mounting cost of retirement.

Every second Tuesday, the Government pays about $1 billion in superannuation costs.

The bill will only grow larger in the months and years ahead, unless big changes are made to New Zealand’s universal pension. But any sudden change to superannuation comes with its own costs for those relying on the universal benefit for their retirement.

National Party finance spokesperson Nicola Willis says her party will release a superannuation policy ahead of the election, but there will be major hurdles for any change to NZ Super.

The main hurdle for the current coalition is NZ First. Winston Peters has rejected any prospect of limiting super entitlements.

On Monday, Labour leader Chris Hipkins also ruled out changes to superannuation eligibility.

He said National’s policy of increasing KiwiSaver deposits, making retirement savings compulsory, and starting that saving at birth - with a $1500 grant from the Government - should not be used as justification to change superannuation entitlements.

“If the National Party's ultimate long-term plan is to make KiwiSaver compulsory so that they can reduce the cost of superannuation through means testing or increasing the age, then they should come out upfront and say that,” Hipkins said.

He said the country could afford the cost of superannuation if the Government increased funding to the Super Fund, a Government-owned investment fund meant to offset the cost of the ageing population.

“KiwiSaver contributions should be additional income for people in retirement, not instead of New Zealand superannuation,” Hipkins said.

The National Party hasn’t confirmed what its superannuation policy would be. Willis said that would be announced later, but she has clearly signalled that the party believed the status quo was not sustainable.

Is KiwiSaver the antidote to rising super bills?

Shamubeel Eaqub, the chief economist of Simplicity, said it was inevitable that New Zealand’s superannuation settings would need to change.

Quite simply, he said: “We cannot sustain a universal super system in the future.

“Already, we can’t raise taxes. Already, our health and education investments are being rationed. The only thing that seems untouchable at the moment is New Zealand super, but that can’t last forever,” he said.

Eaqub, and other economists at not-for-profit investment firm Simplicity - including Stuff columnist Sam Stubbs - have been speaking to all political parties about their KiwiSaver and retirement policies ahead of the election.

The firm’s KiwiSaver policy document encouraged parties to increase contribution rates gradually by 0.5% to 12.5%.

“We also wanted to see things like baby KiwiSaver, so when we did polling late last year, it was very clear that people really support the idea of getting kids started early,” Eaqub said.

Both National and NZ First have launched KiwiSaver policies to automatically start KiwiSaver funds for babies.

With those changes, Eaqub said, eventually New Zealand will have a lot of people reaching retirement age with enough savings to not require a pension at 65 years old.

He said that should eventually create a way for the Government to save money on superannuation, but it would need to be a managed transition.

“You cannot have a conversation about Super until you've made KiwiSaver strong enough,” he said.

Super growth underway

As of March, around 900,000 people received a superannuation payment each fortnight.

In the coming years, New Zealand’s population is forecast to get older. As a proportion of the population, there will be fewer workers and more people in the 65-plus demographic.

Last year, Stats NZ populations estimates spokesperson Victoria Treliving said there were 500 people entering that 65-plus age bracket each week.

“One in six New Zealanders is now aged 65 and over. By the mid-2030s this will be one in five, and by 2060 about one in four will be in this age group,” she said.

Anyone living in New Zealand as a permanent resident or citizen, who has lived in New Zealand during their life (for about 15 years), and is aged 65 years or older, can receive superannuation payments.

A single person living alone receives $1294 each fortnight, if you have a flatmate you get slightly less, $1191 per fortnight, and if you’re in a relationship you receive $984.

You can still receive these payments if you’re working.

On Budget Day, Willis ruffled feathers in the coalition by directly targeting the cost of superannuation during her Budget Day speech.

Associate finance minister Shane Jones, an NZ First MP, said her comments were out of line as it was not Government policy to change superannuation entitlements.

But Willis did put the case forward for doing so.

“The increasing cost of New Zealand superannuation, in the next year alone, is almost as much as my entire operating allowance,” she said. In Budget 2026, the allowance was $2.1 billion.

She continued, gesturing towards Jones, to say: “What that shows you, I think - and I’m conscious here that others to my left might have another view - but actually in the absence of doing anything about our setting for the future, we will be committing a huge act of intergenerational inequity.”

That would mean workers now would have to pay for an entitlement they would be unlikely to receive, and workers in the future would have to pay higher taxes to pay for the debt borrowed to sustain the super scheme.

But other politicians don’t share her view on that.

Some politicians say change will come, but what, and when, is unclear

Only ACT and National have indicated any support to change superannuation eligibility.

Willis said every serious political party should be fronting up with a plan for how to pay for the growing superannuation bill over time.

National has not confirmed it will change the settings, but it has strongly hinted that it will announce a policy to do so ahead of the election.

The Green Party and Te Pāti Māori have also campaigned, previously, against limiting access to NZ Super.