Flexible NZ Super options could make it more affordable

A new report commissioned by Chartered Accountants Australia and New Zealand highlights flexible options for receiving NZ Superannuation that could make the government scheme more affordable while preserving universal access to it. CA ANZ's New Zealand country head Peter Vial stated that nearly all their members expressed concerns about the country's ability to fund NZ Super in the future.

Modelled by the New Zealand Institute of Economic Research, the benefits of flexible NZ Super uptake were explored, allowing eligible superannuitants to delay receiving it in exchange for a higher lifetime rate. While raising the eligibility age to 67 or later does not significantly reduce costs, spreading uptake over the first five years of eligibility could lower NZ Super's long-term cost compared to current Treasury projections.

In 2048, NZ Super currently costs $26.5 billion annually, projected to rise to $72.8 billion without changes. However, if 40% of eligible people delayed uptake, annual expenditure in 2048 could be around $7.5 billion - 10.4% less than Treasury's current estimate. CA ANZ Tax and Financial Services Leader John Cuthbertson emphasized that flexible uptake should be part of a broader set of policy changes to make NZ Super more affordable.

Suggested policy changes include indexing NZ Super to consumer prices, introducing stronger incentives for private retirement savings, and offering tax incentives for salary sacrifice contributions into KiwiSaver accounts. While no single change will solve the issue, a combination of flexible NZ Super uptake, sustainable indexing, and increased private savings could make a significant difference to the scheme's affordability while keeping it accessible to everyone.