New Zealand may have to take drastic measures, such as slashing benefits, increasing taxes and moving the eligibility age to 68, to ensure the survival of the government's pension scheme
New Zealand is facing an age crunch that could lead to increased taxes, longer working lives and shrinking pensions, according to a report prepared for the government.
Drastic steps could be necessary to pay for the future retirement of young New Zealanders. The numbers of those aged 65 or more will grow from the current 12 per cent of the population to 27 per cent in the next 50 years, according to published reports in New Zealand.
The report said workers under 55 will likely have to work longer, get their pension later and receive less when it comes through,.
A paper put together for the government on addressing the problem calls for increasing the eligibility age for the pension to 68 over a six-year period starting in 2013. It also outlines the benefit to the economy of having workers retiring at 70.
The full impact of the changes would hit people currently aged 20 to 40, while the measures would have lesser effect on those aged 40 to 55. Those over the age of 55 would still enjoy the current retirement age and pension.
Michael Cullen, New Zealand’s Finance Minister, has the report and is preparing a response.
Vance Arkinstall, chair of the Public Report Group 2003, the authors of the report, said the changes are a tough pill for a government to swallow because the changes have no short-term benefits. But he said something must be done to address the problem, and the government needs to get a clearer message to New Zealanders about the current pension.
“Quite frankly, politicians are misleading us,” Arkinstall told Stuff, a New Zealand news and information Web site. “Are we as individuals quite happy to exist on $12,000 a year? If we don’t do something and we are forced to increase tax on younger people to support the expanding number of people receiving (pensions), those young people will say, ‘Blow this, I’m going to Australia’ and this country will go backwards at a faster rate.”
Drastic steps could be necessary to pay for the future retirement of young New Zealanders. The numbers of those aged 65 or more will grow from the current 12 per cent of the population to 27 per cent in the next 50 years, according to published reports in New Zealand.
The report said workers under 55 will likely have to work longer, get their pension later and receive less when it comes through,.
A paper put together for the government on addressing the problem calls for increasing the eligibility age for the pension to 68 over a six-year period starting in 2013. It also outlines the benefit to the economy of having workers retiring at 70.
The full impact of the changes would hit people currently aged 20 to 40, while the measures would have lesser effect on those aged 40 to 55. Those over the age of 55 would still enjoy the current retirement age and pension.
Michael Cullen, New Zealand’s Finance Minister, has the report and is preparing a response.
Vance Arkinstall, chair of the Public Report Group 2003, the authors of the report, said the changes are a tough pill for a government to swallow because the changes have no short-term benefits. But he said something must be done to address the problem, and the government needs to get a clearer message to New Zealanders about the current pension.
“Quite frankly, politicians are misleading us,” Arkinstall told Stuff, a New Zealand news and information Web site. “Are we as individuals quite happy to exist on $12,000 a year? If we don’t do something and we are forced to increase tax on younger people to support the expanding number of people receiving (pensions), those young people will say, ‘Blow this, I’m going to Australia’ and this country will go backwards at a faster rate.”
