NZ Super’s $33 billion side hustle
Monday, 14 July 2025
There is a crunch coming to government finances as Super recipients balloon - but is this really a crisis, or just a matter of choices? This series takes a closer look.
More than 82% of pensioners also have other taxable income which totalled $33.6 billion in the last full financial year, recently released figures reveal.
A leading economist says retirees not relying on the pension is “exactly what we want” and need as New Zealand careens towards a super system which he and many others say is unaffordable.
Inland Revenue data, crunched and released under the Official Information Act, shows that for the 2022/2023 financial year, 852,380 pensioners received a collective $36.8b in taxable income.
This includes the $19.5b the Government spent on pension that year as well as other income sources. The figure also includes carry-forward tax losses and anyone who hadn’t done their tax returns, which is why the combined number isn’t higher.
More than 700,600 pensioners - or 82% - had other incomes on top of their super payments totalling $33.6b, with an unknown number receiving income from multiple sources.
The largest quantum of income was work, with more than 185,000 earning collectively $9.1b. This number will include Kiwis who transitioned to the pension from work during that tax year.
But by far the most common source of other income was interest or dividends - 648,500 received collectively $4.2b from interest or dividends. This includes anyone who received 1 cent or more of interest.
Other income sources were business income, including self-employment and shareholder salaries ($2.6b), residential and commercial rent ($916m), overseas income ($693m) and what IRD defined as “other income” ($1.2b).
The data does not include non-taxable income of the recipients, such as withdrawals from retirement savings schemes.
Chief economist at Simplicity, Shamubeel Eaqub, said retirees having income sources other than superannuation was exactly what we wanted for more Kiwis to ensure they had enough for their lifestyle or obligations.
“Having more resources gives people dignity and choice.”
But Eaquab said we also wanted a welfare safety net that was affordable and sustainable for those who needed it.
Eaquab has long called for superannuation to be means-tested like other forms of welfare and for the entitlement age to rise.
There were two reasons for this, he told The Post.
“First, because it is horribly unfair to future generations. There used to be eight working age people per superannuitant 50 years ago, it’s four now, and it will be just two in 50 years’ time.
“Second, it's because we want NZ Super to be available for those who need it. To protect it, it needs to be affordable and perhaps more generous. We should be helping people save for their retirement.”
New Zealand could do that by increasing contribution rates to KiwiSaver, making employer contributions compulsory, exploring some incentives for people to save more in their KiwiSaver and reconsidering hardship rules.
Of course means testing would change behaviour - all policies do at the margins he said.
“But you cannot keep an unaffordable and unfair policy in place just because it may cause some distortions. It’s about finding the right balance.
“The choices are between a simple universal and unaffordable scheme, versus one that is affordable with some distortions at the edges. I would choose the latter, because we absolutely want to preserve a fair safety net for older people to avert poverty.
“We do means testing for every other welfare payment and NZ Super is just another welfare payment.”
Retirement commissioner Jane Wrightson also believes the Government should be considering means testing because she considers it a fairer way to reduce expenditure compared to raising the age of eligibility.
Especially for those earning “significant” income, she said.
Wrightson doubled down on this position last month when census data revealed more than 9000 people aged over 65 earn more than $200,000 a year, and 33,000 earned between $100,000 and $200,000.
In late June’s The Post/Freshwater Strategy Poll, those surveyed were asked both about raising the retirement age and means-testing NZ Super. Forty-three per cent of those surveyed said that means testing higher income or wealthy retirees would be the best way to reduce the financial impact of the Baby Boomer bubble, while 26% said that gradually raising the retirement age from 65 to 67 would be the way.
The Post’s Politics, Business and Economics Editor Luke Malpass says the age of superannuation won’t rise while NZ First is in government and means testing, although popular with a larger slice of the population, also comes with problems
When the quantum of the pension scheme in the Budget was pointed out to NZ First leader Winston Peters, he defended the cost saying it only made up about 5% of GDP.
“And nearly all of it is spent in a country called New Zealand in communities all round this country which keeps them alive and then they do billions of dollars of volunteer work for free. If it wasn’t for them, this country would collapse.”
‘Don’t means test my Super’
Anna Purushotam is very nearly 74, but still hasn’t retired - she still works 38 hours a week with special needs children because she needs to.
Her husband is 75 and still works as a kitchen assistant full time. He only recently stopped working two jobs at her insistence.
“We don’t even see each other,” she said.
“I undergo the same life pattern like how I was in my 20s and 30s. Luckily my health is permitting me now. I’m able to do some work now, but how long?”
The Auckland couple own their home but need to keep working to afford rates, insurance, groceries, petrol and an ever-increasing number of $25.50 doctor’s appointments.
“God forbid if I get sick two times, three times in a month.”
It’s a Catch-22 for Purushotam: she doesn’t get a community services card for GP visits because she’s working, but she’s working so she can afford to see her GP.
She suggested docking Super so pensioners get free appointments annually.
Raising the age of superannuation entitlement and means-testing were both bad ideas, she said.
“Everybody cannot wait until 67 and some ethnicities die so early.”
Purushotam said superannuation shouldn’t be means tested because she’s still working because she’s earned her pension and needs it even if others are better off.
“Throughout life we suffered and we paid extra taxes. Even now we are working … and we’re paying taxes.”