24 Oct 2013

Govt urged to think fast on retirement

6:24 am on 24 October 2013

The Government is being warned it may have to increase GST if nothing is done to address the ballooning cost of superannuation.

A report by the New Zealand Institute of Economic Research is calling on MPs to make some tough decisions about taxes and Government spending.

It says the decisions are needed now to avoid a fiscal crisis similar to that in the United States in future.

Labour Party finance spokesperson David Parker says while the country's finances may be in a healthy state now, the rising cost of retirement will force a policy change in the coming years.

He says if nothing is done, GST would have to increase from 15% to 17%, at the same time as the country would have to meet the additional health costs of an ageing population.

The co-director of Auckland University's Retirement Policy and Research Centre, Michael Littlewood, says while there is plenty of time to have that discussion, MPs must avoid a last-minute change.

He says even in 2060, the cost to the GDP of retirement will still only be two-thirds of the OECD average.

Mr Littlewood says the much-needed national debate around superannuation needs to be led by people other than politicians.