New working papers from the Retirement Policy and Research Centre at the University of Auckland

New RPRC Working Papers now available online

WP 2014-2 Turning silver to gold: Policies for an ageing population

The latest demographic projections show that the number of people aged 65+ doubled between 1984 and 2014 to reach 650,000 and is projected to double again by 2039. It is expected that about 22% of New Zealanders will be aged 65+ by 2032, compared with 14% in 2014 (Stats NZ 2014). The expected future costs of New Zealand Superannuation are easily estimated, but there are multiple other state-funded expenditures for those aged 65+ that are less readily available. This paper compiles the expected costs of providing all services and support for the older population for 2013, 2017 and 2022. Assuming that wage rates in the care sector will continue to stagnate although demand will continue to rise, by 2017, total Government costs of all aged care services and NZS will approach $15 billion (in 2013 dollars) compared to $13 billion in 2013 and by 2022 it will reach almost $17 billion. The paper suggests possible policy options that could be applied in the future to ‘turn silver to gold’: to anticipate increasing numbers of older citizens with enthusiasm or at least equanimity rather than dread. 

WP 2015-1 Improving the affordability of New Zealand Superannuation

Under existing policy settings, the costs of retirement income, health, and welfare for the rapidly growing older population lift markedly over the next decades both in absolute terms and relative to other state spending. If the cost of New Zealand Superannuation is to be reduced, raising the age of eligibility is not the only possible policy approach to consider. This Working Paper examines a way in which the tax system could be used to reduce the net cost of NZS by effectively clawing it back from people with high incomes. The innovation here is to take a basic income approach and pay the pension as a tax-free grant at the same level for everyone.  Other income is then taxed on a separate scale, which, it is argued, has advantages over other methods of income testing. Cost saving comes from the claw-back and from gradually aligning the single rate of NZS to the married rate. A saving of around 10% of net NZS costs should be feasible and timely without causing hardship or creating unmanageable complexity.