27 Feb 2013

Claim NZ will have to raise its retirement age to 70 by 2050

10:06 am on 27 February 2013

A British superannuation expert says New Zealand will have to raise its retirement age to 70 by 2050 so the country can sustain its current pension system.

Chris Daykin is the chairman of the Social Security Subcommittee of the Groupe Consultatif's pension commission and was the UK actuary from 1989 to 2007.

The author of the Sustainability of Pension Systems in Europe - the Demographic Challenge, he has been speaking to the New Zealand Society of Actuaries.

He says New Zealand is better off than most European countries but it should start raising the retirement age soon.

Mr Daykin says New Zealand has a younger population and higher levels of fertility than many European countries, although the retirement age in New Zealand will still have to go up over time, perhaps by a year a decade.

He says it would be wise to flag the need for such increases to give people the opportunity to prepare for the higher retirement age.

"The sensible planning approach, it would be to look at the long term costs and say yes it is going to go up, and that's commensurate with people's expectation of life because people are going to be living much longer."

Mr Daykin says KiwiSaver is a good model for retirement savings and parts are being copied in the UK, but contributions are too low.

And he says cost of the pension system should be more transparent and more closely monitored.

Mr Daykin says one concern is how regularly the future costs of that scheme are subject to a proper actuarial evaluation, because it's important to keep the future cost profile well analysed and publicised.

He says as the scheme goes forward it will impose a larger burden on the fiscal balance and the way to keep that in sight is to have a regular review done by an actuary to look at the costs going forward.