Visual Capitalist, an online business and investment website based in Canada, released a report late last year comparing pensions plans around the world, to showcase which countries are best equipped to support their older citizens. So how did New Zealand fare?
The study used data from Melbourne Mercer Global Pension Index, focusing on measures which are seen as universal indicators that lead to adequate and stable support for older people, including:
- Adequacy – the base-level of income, as well as the design of a region’s private pension system.
- Sustainability – the state pension age, the level of advanced funding from government, and the level of government debt.
- Integrity – regulations and governance put in place to protect plan members.
Out of 37 different countries around the world (representing over 63% of the global population), New Zealand was ranked eighth, with an overall score of 70.1. The number one ranked country was the Netherlands (with an overall score of 81), while our trans-Tasman neighbours closed out the top three with an overall score of 75.3. The top 10 ranked countries were:
- Netherlands (81)
- Denmark (80.3)
- Australia (75.3)
- Finland (73.6)
- Sweden (72.3)
- Norway (71.2)
- Singapore (70.8)
- New Zealand (70.1)
- Canada (69.2)
- Chile (68.7)
So what does it all mean?
Overall, it’s good news for the ageing population in New Zealand, as it means that our pension plan is generally working well. But of course, just like every country on the list, there is room for improvement.
Like many other countries, New Zealand scored low on the ‘sustainability’ index. A major factor for this is likely our country’s comparatively low retirement age of 65 (Netherlands’ retirement age is currently 66 years and 4 months and will be 67 years by 2024). Couple that with a population that is steadily ageing and a birth rate that has been in decline since the mid-1970’s, and it’s easy to see why we weren’t ranked higher on the list. With the number of kiwis aged 65-plus set to hit 1.3 million by 2034 (more than a fifth of the population), now’s the time for our government to look at how they could improve our current pension plan.
What is the New Zealand’s current pension plan?
New Zealand Superannuation (NZ Super) is the government pension paid to Kiwis over the age of 65. Any eligible New Zealander receives NZ Super regardless of how much they earn through paid work, savings and investments, what other assets they own or what taxes they have paid. To be eligible, you must be aged 65 or over and meet length of residency and other requirements. Other overseas living arrangements may also give you eligibility.
A single person living alone gets $878.88 a fortnight after tax on the M tax code (as at 1 April 2021). If you have paid work you will still get NZ Super although it may affect your income tax rate. If you have a non-qualifying partner, they will no longer be able to be included in your payments. Instead, they may be able to apply for other assistance.
Single people or those considered to be single and living alone (including those whose partner lives in residential care) may be eligible to receive the Living Alone rate of NZ Super or Veteran’s Pension.
A Veteran’s Pension, paid at the same rates as NZ Super, may be available to those who have qualifying operational service (confirmed by Veterans’ Affairs) and who meet other criteria.
For more information about pension payments, head to the Work and Income website.