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Govt to raise super age to 67 in 2040

NZ Newswire logoNZ Newswire 6/03/2017 Karen Sweeney
Bill English © Hagen Hopkins/Getty Images Bill English

The government will raise the retirement age to 67 in two decades' time, a decision criticised as protecting baby boomers.

Changes will be phased in from July 1, 2037 and will come fully into effect in 2040 meaning they only affect those born after mid-1972, Prime Minister Bill English revealed on Monday.

It's a "fair and reasonable" response to increases in Kiwi life expectancies, according to Mr English, who says it gives people time to adjust their circumstances if necessary.

"Gradually increasing the retirement age from 2037 will more fairly spread the cost and benefits of NZ Super between generations, ensure the scheme remains affordable into the future and give people time to adjust," he said.

Finance Minister Steven Joyce said the age of entitlement would increase by six months every year from July 2037, until it reached 67 in July 2040.

The new retirement age of 67 will only apply to those born on or after January 1, 1974.

Announcing the decision six months out from an election will give voters a chance to have their say on the issue, but Mr English anticipates a positive response.

"We're doing it deliberately in a way that means it gets discussed in an election year and voters have the opportunity to take it into account," he said.

KiwiSaver access eligibility will remain at 65.

But Act leader David Seymour criticised it as "intergenerational theft".

"People under 45 will pay more and more tax for unsustainable baby boomer superannuation before having the same snatched away," he said.

"It would be fairer to begin the change as soon as possible but phase it in over a longer period of time, so the effect is shared between generations."

He wants to see the age raised from 2020, in line with the Retirement Commissioner's advice.

Labour leader Andrew Little doesn't back the move and said he would not raise the age of eligibility beyond 65.

"We might have a longer life expectancy but bodies still wear out and if you're doing heavy, physical work for most of your working life you are starting to wear out in your 60s and you shouldn't have to work an extra lengthy period of time before you qualify for superannuation," he said.

He did however support the government's announcement that it would change eligibility for migrants, doubling the time they must spend in New Zealand to become eligible to 20 years, from 10.

Government figures reveal around 120,000 fewer people will be eligible for super, as at July 2040, under that change.

NZ First leader Winston Peters said the announcement was an effort to look responsible while not doing anything.

He praised the changes to the residency qualification, but said it still fell short of the 25 years his party sees as fair.

United Future leader Peter Dunne urged the government to introduce his party's FlexiSuper policy, which would let people choose when they take up their superannuation.

A person wanting to retire at 60 could do so, at a reduced rate, under the policy.

SUPERANNUATION ELIGIBILITY AROUND THE WORLD:

* New Zealand - increase to 67 by 2040.

* Australia - increase to 67 in 2023.

* Canada - 65.

* United Kingdom - increase to 67 in 2028, then 68 (timing TBC).

* Denmark - increase to 67 between 2022-30.

* Netherlands - increase to 67 by 2024.

* Ireland - increase to 68 by 2028.

* Germany - increase to 67 by 2030.

* Italy - increase to 67 by 2022.

* United States - increase to 67 in 2027.

(Source: NZ Government.)

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