Nicola Willis agrees NZ superannuation settings must change after OECD warning
Thursday, 7 May 2026
The Government should make sweeping changes to superannuation, overhaul the electricity market, and consider investing in the likes of pumped hydro generation, the Organisation for Economic Cooperation and Development has advised.
The former reforms should include raising the age ofeligibility for superannuation and partial means-testing, it recommended.
Responding to the report, Finance Minister Nicola Willis said “the position of the current Government” was that it would not change the age of eligibility.
“But my view is that if we want to ensure that every New Zealander in their retirement can be afforded a good retirement, then there will need to be changes to our superannuation settings,” she said.
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The OECD said ageing would push New Zealand’s health and pension costs up by about 5% of GDP by 2060, putting public debt on “an unsustainable path without reform”.
It recommended responding by linking the age of superannuation eligibility to average life expectancy, with a maximum age of 69, and means-testing superannuation payments for the top 10% of earners.
Willis said having no policies to change superannuation settings was the same as saying “what you want to do is tax New Zealanders more and more and more, and that's not a good proposition for the New Zealand economy”.
“Whether or not it is through the approaches that the OECD suggests is another question. But is reform required to our superannuation settings? Yes,” she said.
The Paris-based OECD publishes a report on the New Zealand economy every two years and has a history of making bold policy prescriptions that can rankle incumbent governments.
It has previously suggested New Zealand should fall into line with the OECD norm by implementing a more comprehensive capital gains tax.
Its penultimate report, in 2024, garnered attention by also recommending the Government break up some big businesses, including the supermarket chains, to boost the country’s lagging productivity.
The OECD again took aim at what it described as New Zealand’s “chronic productivity problem” in this year’s report.
But it opened new fronts, making detailed policy prescriptions for the power market and superannuation, while morphing its call for tax reform into a “windfall tax” of 50% on capital gains from land rezoning.
The OECD is best known as a collator of economic statistics, as an economic forecaster, and for implementing a crackdown on multinational tax avoidance and profit shifting on behalf of its members.
It said the New Zealand economy had begun “a gradual recovery” but was lagging its peers in the 38-member developed nations club and made little reference to fallout from the Middle East conflict.
It expected economic growth would recover to 1.4% this year and climb to 2.3% next year.
The OECD’s policy prescriptions make for uncomfortable reading for the shareholders of the country’s major power companies.
Electricity prices were “structurally too high” and the dividend pay-out ratios of the gentailers “far exceed international norms”, it said.
The OECD suggested the Government should reduce the pay-outs, set up a separate market for so-called “firming” power, and consider making minority investments in the likes of biomass generation or pumped hydro with the goal of slashing wholesale prices by 20%.
Any investment in pumped hydro should be in something smaller than the proposed Lake Onslow scheme, it advised.
The OECD said “accelerating transport electrification” would reduce exposure to fuel price shocks.
“Preserving and, if necessary, strengthening incentives for EV uptake should be treated as a strategic national priority,” it said.
Other recommendations included raising government contributions to NZ Super, accelerating AI adoption in the health sector, continuing to raise KiwiSaver contribution rates, and a variety of steps to help high-growth businesses access more capital.