Is it possible to achieve a truly fair superannuation system?

Sunday, 14 September 2025

Kelly Dennett is the assistant editor of the Star-Times, she is on explainer duty while Kevin Norquay is on a well deserved break.

EXPLAINER: The Boomers are well off and don’t really need it. My generation won’t get it by the time we’re ready to retire. Raising the age is tough on people who do physical labour. Means testing is unfair on people who worked hard to accumulate wealth.

Sound familiar? As New Zealand’s superannuation system comes under the microscope for becoming increasingly unaffordable, we’re hearing endless arguments for and against proposals to tweak the scheme that’s designed to help Kiwis enjoy their golden retirement years.

Super is largely seen as a right, not a benefit; a recoup of all those taxes paid, yes, but also a recognition that older New Zealanders should be able to comfortably retire - whatever that means to the individual. Thus, Kiwis’ entitlement to superannuation is about financial security, but it’s also a discussion that frequently centres around fairness and people’s perceptions of fairness. Which means it quickly becomes emotive.

Super’s bill has inched up by an average of $1.4 billion a year and is expected to be $29b by 2029. It’s a growing strain on the Government’s finances and it will need to figure out how to keep paying for it.

One of the potential mechanisms is reducing the cost of the scheme itself. The retirement age has largely been unchanged - in the 90s it was raised from 60 to 65 and in 2017 the Bill English National Government upped it to 67 - which was changed back by the Jacinda Ardern Labour Government.

In a recent The Post/Freshwater Strategy poll, 43% said means testing high income retirees was the best way to reduce the cost, 26% said raising the age (to 67). Just 8% said taxes should be raised to pay for super.

But 15% said super should stay the same, which will be appealing to generations in line to receive the payment, but unappealing to younger generations who will be paying for it.

So - is there a fair system that could broadly appeal to most? And what’s wrong with the one we have?

“Like all systems, there are strengths and weaknesses,” says Retirement Commissioner Jane Wrightson, who is previously on the record as saying the system is affordable, relatively equitable and easy to administer.

The current system is universal, with a qualifying age that’s reasonable and right in the middle of other OCED retirement ages, she says.

But Wrightson acknowledges it’s not perfect, citing common arguments about whether it’s fair for Māori, who tend to earn less and die earlier, and whether there should be the ability to access it earlier.

University of Auckland honorary associate professor Susan St John, who has researched and written extensively about superannuation, says the “halcyon” days of super were in the 70s and 80s when her parents’ generation was starting to retire.

Critically, she says, it was non contributory which meant it was very fair for women who largely did unpaid labour. In the case of her mother, she says, “Her state pension was not reduced for [her husband’s] income and it was taxed in her hands as an individual.

“The national super pension was set in relation to wages and was adequate in the context of wide home ownership, good access to healthcare, poverty was minimal, [and] rents were supported with subsidies where needed for the minority without their own homes,” she says.

“Middle income retirees were often also covered by workplace superannuation and other savings that enabled then to largely sustain their 'working' standard of living.”

But by the mid 2020s St John says superannuation was no longer adequate, particularly for those who don’t own homes. The number accessing super and the increasing average lifespan along with growth of the wealth divide, largely driven by house values, have all contributed, she says.

“A widening of the ability to sustain fulltime employment with many unable to supplement NZS at age 65 with paid work would make raising the age very unfair,” she says.

“But it is now widely perceived that a universal (even though it is taxed) payment to all at 65, including those in full time well paid work or with considerable passive income and wealth, makes little sense when there is so much widespread hardship and ill health among both the old and the young.”

What’s the answer then? St John says raising the age would only burden those already living on the breadline in their 60s. St John says what would make the scheme fairer would be expanding the broader support for people so super is not their main source of income - through things like Working for Families, the accommodation supplement, and hardship assistance.

There is a disagreement between St John and Wrightson about the wealthy Boomer trope - St John has argued the number of over-65s who own an expensive home and earn a good wage make up a “sizeable” group and says there are many superannuitants who don’t even know how much money flows into their bank accounts every fortnight.

But Jane Wrightson says the “European river cruise cohort”, as she calls them, amount to around 5% of retirees. While older New Zealanders tended to “fight quite hard for NZ Super and to be against change”, she puts that down to their generosity of spirit of wanting future generations to reap the same benefits. She scoffs at the suggestion that Millennials won’t have super to look forward to.

But like St John she says the squeezed middle should be the focus for future retirement-proofing, as those who not only need super but will rely on it weren’t typically in that position because of profligacy. It was because they had worked low wage careers or suffered a life crisis at some point.

And on choosing a fair system, Wrightson says the question should be more about how that system is implemented. “When systems flex and change - because they should over time - it is how to do it in a reasonable, predictable, stable and generally agreed way. The worst thing … is policy lurches.”

What do you think? Email sundayletters@stuff.co.nz. Please include your full name and address.