Craig
McCulloch Deputy Political Editor
Outgoing
National MP Andrew Bayly is using his final days in
Parliament to urge all parties to start raising the
superannuation age from next term, warning further delay
will make the eventual fix more painful.
In an
interview with RNZ, Bayly said the age of eligibility should
be increased by one month every year from 2029, climbing to
68 by 2065.
He also wanted the dollar amount of the
payments to rise more slowly, and said some people should be
able to access the pension earlier – but at a lower rate –
if they had poor health, shorter life expectancies or
physically demanding jobs.
Bayly’s proposals were set
out in a research paper published last month in the
International Review of Public Administration, which he
co-authored with economist Leonard Hong and data analyst
Emmanuel Jo.
He told RNZ he had deliberatedly
published in Asia to make it clear he was not speaking on
National’s behalf, but was instead setting out his own
“considered view based on economic and demographic
modelling”.
Bayly said he had sent his paper to all
party leaders in Parliament, arguing there was a “burning
economic imperative” to act.
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“This is the biggest
economic issue facing New Zealand,” he said. “The cost of
superannuation is growing exponentially, and we can’t just
keep pushing it out for another day.”
Under the
current settings, Bayly and his co-authors estimated
superannuation would consume almost 30 cents of every dollar
of government tax revenue by 2065, up from about 19 cents
today.
They said spending on super, health and
education together would swallow nearly 80 percent of all
tax revenue by then.
“This is a freight train coming
down the line,” Bayly said. “What we’re advocating is a
graduated approach now, rather than something being done in
the middle of a crisis… we will have to be brutal if we
delay it.”
In 2023, National campaigned on gradually
lifting the super age to 67. National initially said “very
slow, staged” adjustments would begin in 2037, but later
pushed the start date back to 2044.
Bayly said that
plan was “worthwhile but insufficient”, reducing super’s
share of tax revenue to 26.5 percent by 2065.
Starting
the increases in 2029 would shrink it further, to about 25
percent.
“The approach is gradual, planned, and
provides successive cohorts with greater certainty for
retirement planning,” the paper said.
Bayly said
significant savings could also be made by treating the
pension the same as other welfare payments and indexing it
to general inflation rather than wage growth.
He
suggested a “moderated” approach with regular reviews to
allow adjustments if pensioners fell too far behind the
wider population.
The paper also proposed a limited
early-access scheme for people who could no longer work
because of reduced capacity, lower life expectancy or
physically demanding jobs.
The authors said that would
address one of the biggest objections to a later age of
eligibility and make reform “more politically
durable”.
They also backed compulsory KiwiSaver
contributions and continuing payments into the NZ Super
Fund.
An RNZ-Reid Research poll in July found
58 percent of voters wanted the super age to remain at
65, compared with 35.3 percent who supported an increase
to 67. Another 6.8 percent were unsure.
The poll found
more support for means-testing the pension, with 46.6
percent in favour, 40.7 percent opposed and 12.7 percent
undecided.
Bayly’s paper discounted that option,
arguing it would be “exceedingly difficult” to win support
across Parliament for “such a radical
change”.
Treasury forecasts released in May showed the
annual cost of super rising from $24.7 billion this
financial year to $31.2 billion in 2029/30.
National
has yet to set out the details of its policy for this year’s
election, but finance spokesperson Nicola Willis warned in
May that parties ignoring the rising cost were
robbing young people for “their own political
expediency”.
ACT campaigned in 2023 on rapidly
increasing the super age to 67 by three months a year,
starting almost immediately.
New Zealand First leader
Winston Peters last week reiterated his party’s long-held
opposition to changing access to current
entitlements.
Labour and the Greens also
supported keeping the age at 65. Te Pāti Māori last
year argued Māori should be able to receive super up to 10
years earlier because of their lower average life
expectancy.
Bayly announced in June he
would step down at the election, bringing his 12-year
career at Parliament to an end.
He became a minister
outside Cabinet in 2021, holding the commerce, consumer
affairs and small business portfolios. He resigned from
those roles in February 2025 after what he described as an
“animated discussion” with a staff
member.
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