The first statement defining the purpose of New Zealand’s retirement income system has been released by Retirement Commissioner Jane Wrightson.
New Zealand Superannuation and retirement savings plans such as KiwiSaver together form the retirement income system, but until now there has been no definition of what that system should achieve. There is no definition of the role of NZ Super in the Superannuation and Retirement Income Act.
“During the Review of Retirement Income Policies last year it was clear New Zealanders had deeply held views on the role of NZ Super, but they differed,” says Wrightson. “Some considered it was there to prevent poverty and ensure people retained dignity in old age, others saw it as providing a basic standard of living, as a gesture of care for the elderly or as a reward for working hard and paying taxes.
“My role as Retirement Commissioner requires me to monitor and advise Government on retirement income issues, but to do that I need to start from a base of what our retirement income system is for. This purpose statement will also enable me to test proposals that may affect people’s retirement income in the future.”
Wrightson formed an Expert Advisory Group of academics and policy specialists with expertise in various areas to assist her to test and debate issues. Together they have settled on the following purpose statement for New Zealand’s retirement income system that will be used by Wrightson’s office, the Commission for Financial Capability (CFFC):
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.
To help current and future retirees to achieve this, a sustainable retirement income framework’s purpose is twofold:
- 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.
The retirement income system sits within the broader government provision of infrastructure also needed to enable older New Zealanders to live well, such as health care, housing, and transport.
“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 health care 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.”
She thanked the Expert Advisory Group for their help in formulating the statement.
“It will help me serve New Zealanders and keep their retirement income needs front of mind when mooting or assessing any policy that might affect their standard of living in their later years. My aim is to ensure a stable income system to enable people, now and in the future, to retire with confidence.”
Members of the Retirement Commissioner’s Expert Advisory Group:
Alison O’Connell, Independent Director and longevity policy analyst
Associate Professor Claire Matthews of Massey University and author of its Retirement Expenditure Guidelines
Dr Kay Saville-Smith of the Centre for Research, Evaluation and Social Assessment
Malcolm Menzies, senior research analyst
Ngahiwi Tomoana, Chair of Ngāti Kahungunu Iwi and a specialist in hapū and iwi development
Simon Chapple, Director of the Institute for Governance and Policy Studies at Victoria University
Associate Professor Susan St John, Director of Auckland University’s Retirement Policy and Research Centre
Vui Mark Gosche, Chair of Counties Manukau District Health Board, Chair of Kāinga Ora - Homes and Communities.