Do you know what the role of NZ Super is? Is what many still call ‘the pension’ there to ensure dignity in old age? Is it there to provide a basic standard of living? Or is it a reward for working hard and paying taxes?
If you can’t decide, you are not alone – even the Retirement Commissioner, Jane Wrightson, found a range of views and no consensus on the subject when she took up her role in February.
Now there is – following consultation with an Expert Advisory Group of academics and policy specialists, the commissioner has released a statement defining the purpose of New Zealand’s retirement income system and what it aims to achieve.
The ‘system’ is more than just NZ Super, it is also retirement savings plans such as KiwiSaver. With that in mind, Wrightson and the advisory group came up with the following statement:
- A stable retirement income framework enables trust and confidence that older New Zealand residents can live with dignity and mana, participate in and contribute to society, and enjoy a high level of belonging and connection to their whānau, community and country.
The statement goes on to spell out the different roles of NZ Super and Kiwisaver or other savings in achieving a sustainable retirement income framework:
- To provide NZ Superannuation to ensure an adequate standard of living for New Zealanders of eligible age. NZ Super is the government’s primary contribution to financial security for the remainder of a person’s life.
- To actively support New Zealanders to build and manage independent savings that contribute to their ability to maintain their own relative standard of living.
“This statement acknowledges the dual role of government and the individual in preparing for their retirement,” says Wrightson. “The review recommended that NZ Super be retained at its current settings in the medium term, and made a number of recommendations to strengthen KiwiSaver. Whether people use KiwiSaver or another vehicle to build independent savings, they must be supported in putting money away for retirement because for many, NZ Super alone will not be enough.”
Wrightson considered policy in areas such as healthcare and housing should also be viewed through a retirement lens, as they had significant bearing on standards of living in retirement.
“This is particularly true for many Māori, whose disparity in living standards throughout their lives affect their quality of life as they age,” says Wrightson. “I hope to influence progress in addressing these disparities before people reach retirement.”
Wrightson thanked the Expert Advisory Group for their help in formulating the statement.
You can read the full version of the Retirement Commissioner’s statement here.