The Value of NZ Super

The debate about NZ Super affordability has largely focused on raising the age of eligibility. Our report takes a different approach. 

First, we quantify what NZ Super is worth to someone turning 65 today. Second, we compare two reform options head-to-head: (a) CPI-linking the annual NZ Super indexing; (b) Raising the age.

Key insights:

• NZ Super is worth $591,000 to the average 65 year old

• There are large differences in this value between different groups in society, driven by expected lifespans

• CPI-linking generates fiscal savings equivalent to raising the eligibility age to approximately 67 years and 9 months

• The two reform options have very different distributional effects: CPI-linking varies by demographic group ($41K–$80K per person), while raising the age to 67 affects all groups nearly equally (~$63K)

• CPI-linking affects all 923,000 current recipients immediately; raising the age to 67 initially affects only new entrants

• CPI-linking would reduce NZ Super from 7.8% to 5.7% of GDP by 2065; combined, both CPI-linking and raising the age would reduce NZ Super to 5.0% of GDP by 2065.