The Star: September 15, 2016

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Thursday September 15 2016 25
Business
Young take dim view of NZ super
• By Tasmyn Parker
MOST YOUNG people expect
New Zealand Superannuation
will be means-tested and the age
of entitlement lifted by the time
they retire – and fewer than a
quarter think it will be enough
to live off.
The findings are the latest
update from a longitudinal study
being undertaken by Massey
University’s Fin-Ed centre.
The study began in 2012 with
a sample group of about 300
people aged between 18 and 22
and will follow their financial
situation for a 20-year period.
In April a survey put to the
group asking them about planning
for their retirement found
84 per cent expect the age of eligibility
for NZ Super to increase
and 73 per cent expect means
testing to be introduced.
Currently the pension is paid
at 65 and is not means tested.
Only 23 per cent believe NZ
Super will be sufficient in retirement.
Claire Matthews, co-author
of the report, said it appeared
young people were being realistic
about the future of New Zealand
Superannuation.
“There has been a lot of talk
about the age of eligibility needing
to go up.”
While Prime Minister John
Key has said that won’t happen
under his watch Matthews said
young people recognised there
was still a lot of time before they
retired.
“In their case it is 40 additional
years plus before they are going
to get to that point and in
that time there is likely to be
changes,” she said.
“The truth is it’s not sustainable
for NZ Super to be available
at 65. The Government needs to
move sooner rather than later
because the longer they leave it,
the harder it is going to be,” she
said.
“With enough time, the age of
eligibility can be raised gradually,
which lessens the impact on
everyone.”
Ms Matthews said the survey
provided evidence that younger
New Zealanders accept that they
will not retire with the same level
of government support as today’s
retirees.
“The people who are most
opposed to the age of eligibility
increasing are those currently
retired or close to retirement,”
she said.
“Yet younger people, who
will be the most affected, are
already getting the message that
receiving New Zealand Superannuation
at age 65 is reasonably
unlikely.”
The research also showed
young people were acting on
their concerns, with 90 per cent
signed up to KiwiSaver and twothirds
contributing more than
the minimum 3 per cent to their
retirement savings.
But that action may not be
enough for all, with just 49 per
cent of participants expected to
meet their retirement goal based
on their current level of income
and savings rate.
The shortfall was up to
$500,000 for some.
The research also revealed that
young people were overly optimistic
about owning a debt-free
home at retirement - a key plank
in getting to retirement in a good
position.
The current rate of home ownership
is 64.8 per cent but 86 per
cent of participants believed they
would have a freehold home by
retirement.
Ms Matthews said she hoped
home ownership would not drop
further and said getting New
Zealand’s rampant housing market
under control would be key
to maintaining that.
Higher contribution rates to
KiwiSaver could help young
people get a foot on the property
ladder, as well as other decisions
such as choosing to live outside
of Auckland.- NZ Herald
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