It’s likely even higher now.
The number of workers younger than 65 has declined and is expected to continue, from 4:1 today to 2:1 in 20 years.
That’s an enormous burden for the next generation of workers to shoulder.
The cost of NZ Super will balloon from $39 million a day now to $115m a day in 20 years ... $120m a day by 2040.
Willis has said superannuation cost less than $20 billion a year when she took on the job, but will pass $30b a year in 2030.
“In the next year alone,” she said, “the cost of superannuation will rise by around $1.8 billion.”
Willis has made it plain that she wants to confront this issue and campaign on raising the age of eligibility in the upcoming election.
National did so in 2017 and 2023.
Based on the policy proposed back in 2017, the age of entitlement would start to rise from 65 in 2037, progressively until it reached 67 in 2040.
“If that was the case, I believe, Liam, you’d be a winner, and I’d be a loser,” Tamsyn Parker says, speaking on The Economy of Everything podcast to (the older) Liam Dann.
It is a popular idea with those who understand the huge cost superannuation is going to be to future taxpayers, Dann says on The Economy of Everything podcast.
“Yeah, I’d be okay with that. I would be over the 65 threshold by then and wouldn’t actually lose any money.”
But a single person receives nearly $30,000 a year in NZ Super after tax.
“So you’re looking at missing out on two years, and I’m going to be about $60,000 better off than you are based on that,” Dann says.
“That doesn’t sound very fair, does it?” Parker says.
“When you put it that way, is it fair that I get 60 grand less? Have I worked any less hard? Have I paid any less tax?”
The conversation highlights the difficulty politicians will have selling this idea. But both Dann and Parker broadly agree with the need to address superannuation costs.
“I think go sooner, go slower,” Dann says. “I don’t mind being caught, if [the entitlement age] is moving slow enough that I can adjust.”
“Maybe someone needs to be brave and say, look, this needs to happen inside the next 10 years, and we move more slowly.”
This week’s episode also looks at what we learned from last week’s Monetary Policy Statement and where interest rates are headed next.
It also looks like plans for a new levy on the banks and what’s coming up on the economic calendar in the next week.
Correction: An earlier version of this article said National’s 2023 policy was to raise the Super age from 2037. In fact, that was its policy in 2017.
Listen to the full episode for the full conversation.
The Economy of Everything is available on the iHeart app or wherever you get your podcasts.
The series is hosted by Liam Dann, business editor-at-large and Tamsyn Parker, business editor for the NZ Herald. Thanks to CMC Markets.
