8 Dec 2010

Commission wants retirement age raised

5:24 am on 8 December 2010

The Retirement Commission is recommending the retirement age be increased to 67 by 2033.

The recommendation comes in the commission's review of retirement income policies tabled in Parliament on Tuesday.

The review says the age could be gradually increased from 65 years starting in 2020, and would rise by two months per year until it reaches 67 years in 2033.

The review also recommends a transitional, means tested-benefit should be introduced while the age in increased.

And it wants the Government to change the way superannuation is adjusted annually.

From 2020, NZS rates should be adjusted each year by the average of the percentage change in consumer prices and earnings, subject to no less than price inflation in any year.

Retirement Commissioner Diana Crossan says the ageing population brings with it many social and economic challenges, and the cost of retirement income is but one.

She says the current superannuation scheme is unaffordable, and without changes, other things will have to be sacrificed.

Ms Crossan says the costs of meeting the pension are forecast to rise from 4% of GDP to more than 7% of GDP by 2030.

"It could be housing, it could be roads, it could be hospitals, it could be prisons, it could be something else but we have to find it somewhere. What I want is for New Zealanders to be sure.

"Now I don't want to be sitting at the beach in 10 years' time and have a government say in 2010 they knew all this and they did nothing about it."

PM says no

Prime Minister John Key says he won't go back on his election year pledge not to change the retirement age.

Mr Key said during the election campaign that he would resign rather than raise the retirement age.

On Tuesday he said he won't go back on that.

Labour and Green parties agree the age should remain at 65.

Labour leader Phil Goff says raising the retirement age is not his party's policy but there should be a full discussion about the recommendation and the costs involved.