8 Dec 2010

PM rules out change to retirement age

10:05 pm on 8 December 2010

A call for the retirement age to be raised has been ruled out by Prime Minister John Key, who says he stands by his promise to resign rather than change the superannuation eligibility age.

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

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.

On Tuesday, Mr Key said he stood by his 2008 election campaign statement that he would resign rather than raise the retirement age.

Labour and the Greens agree the retirement age should remain at 65 but Labour leader Phil Goff says there should be a full discussion about the recommendation and the costs involved.

Retirement Commissioner Diana Crossan says politicians must discuss the issue and make long-term decisions.

Retirement age 'will have to rise'

Despite the thumbs-down from politicians, the man who chaired the Taskforce on Superannuation in the 1990s says the age of eligibility for national super will have to go up to keep the scheme affordable.

Jeff Todd says people need to be warned early about any change, however, he feels the suggested timeframe is fairly timid.

Figures from Work and Income show single pensioners get a net $327 a week, which costs 4% of the total economy now, but according to the Treasury research will cost more than 9% by 2050.

Unions warn of inequality

The Council of Trade Unions (CTU) thinks not all workers would be able to cope equally with an increase in the superannuation age, such as some manual workers who are worn out by the age of 65.

Under Retirement Commission proposals, they would be able to argue for means-tested special help rather than get it as a right, which the CTU opposes that in principle.

The CTU is also calling for some form of compulsory superannuation savings based on the KiwiSaver model.

The Retirement Commission explicitly rejected that, and is supported in this by Business New Zealand.