Current Superannuation Landscape
Currently most retired New Zealanders receive their income from two main sources, their personal savings and / or New Zealand Superannuation.
New Zealand Superannuation is a regular income (often referred to as a pension) paid by the State to most New Zealand residents, currently from age 65 until death.
On its own, New Zealand Superannuation will provide an annual income of less than $20,000 for a single person, or less than $30,000 per annum for a married couple.
Could you afford to live the lifestyle you want in retirement on New Zealand Superannuation alone?
*Based on a single person living alone from the age of entitlement to New Zealand
Superannuation, currently age 65.
For most New Zealanders the New Zealand Superannuation income will not be enough to sustain their current lifestyle in retirement. The reality is that you may need to save for your retirement to supplement your income.
One of the most effective ways to build your retirement ‘nest-egg’ is through regular contributions into a diversified portfolio of investments, and this is why we created superSTART®, the simple way to invest for your retirement.
New Zealand’s current universal superannuation policy was introduced in 1977. Since then there have been many changes to entitlements and we now have ‘65 at 65’. Here is some useful background information and a summary of what to expect in the near future.
| What is ‘65 at 65’? |
’65 at 65’ is a publicly-funded pension of 65% of the average wage payable from age 65. New Zealand Superannuation operates a ‘pay as you go’ system, whereby superannuation is paid out of annual tax revenues. |
| An Aging Population |
The structure of our population is changing, and our average age is increasing. This aging population is one of the key issues facing us as a nation and has significant implications on the affordability for New Zealand Superannuation. |
| 2050 Population Projections |
In 2006, 12% of the population was over 65. This figure is expected to climb to 27% by 2050. Combined with an increase in life expectancies and falling fertility rates, this means there will be a significantly lower ratio of working-aged people to retired people. In government terms - fewer people to fund superannuation from annual tax revenues. |
| The Government’s Solution |
Our Government’s response to-date has been three-pronged:
- Deferring Eligibility and Reducing Entitlements
Over time, successive Governments have extended the age of eligibility for New Zealand Superannuation and have decreased the benefit payable.
- The New Zealand Superannuation Fund
The Government have started saving for our retirement. The New Zealand Superannuation Fund (also known as the ‘Cullen Fund’) was established in 2001, and has a target of $120 billion by 2050 to fund part of the superannuation cost of New Zealand’s aging population. As at 30 June 2010 the fund held $15.63 billion.
- KiwiSaver
The Government has established and will encourage workplace savings through the introduction of KiwiSaver. This is the Government’s voluntary work-based savings scheme. Financial service providers are able to offer KiwiSaver-compliant registered superannuation schemes by meeting specific criteria.
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| For more information on KiwiSaver |
Go to KiwiSaver at a glance |
| For an employer’s perspective on superannuation |
Go to Superannuation in the Workplace |