Introduction

We were very disappointed with the Retirement Commissioner’s 2016 review of retirement income policies.  The findings, cloaked in a jokey, cartoon-like presentation on the web site of the Commission for Financial Capability (CFFC - accessible here), amounted to a series of 34 recommendations and observations with little to no supporting evidence for most of them[1].

For example, 15 of the 34 recommendations or observations were about KiwiSaver.  The underlying message was that the KiwiSaver regime needed ‘strengthening’ (more restrictions, fewer options, higher contributions etc.).  However, there was no supporting evidence that KiwiSaver is ‘working’ – in fact, that question was not even asked; nor was the more fundamental question: does New Zealand even need KiwiSaver?  We do not know the answer to that question.  We list the questions that should have been addressed in section 14 (KiwiSaver in the new environment).

Another example: the 2016 Review recommended increasing the pension age from 65 to 67 and increasing the length of residency to qualify for New Zealand Superannuation from 10 years to 25 years.  The implicit assumption was that New Zealand Superannuation is ‘unsustainable’ – we say ‘implicit’ because there was no discussion in the Review as to what ‘sustainable’ and ‘unsustainable’ mean and why New Zealanders should be even concerned today about what might happen in 30 or 40 years. 

Since then, the government has announced two future changes to New Zealand Superannuation – an increase in the state pension age from 65 to 67 and an increase in the qualifying number of years of residence from 10 to 20 – both changes becoming effective in 20 years.

We think the government’s decisions are also not founded on a proper, evidence-led policy-making process.  It chose just two of 13 possible changes that could have been made to the state pension with little to no justification for ignoring different possible reforms or even modelling the impact of the two reforms it chose.  We explain in section 6 (Framing the debate on New Zealand Superannuation) what should have happened.

We conclude that, with respect to retirement income policies:

  • There is a range of things that only the government can do – it should do those things.
  • There is another range of things that, based on the evidence, the government seems unable to do - it should stop doing those.
  • Finally, there are things that the government is doing but, based on the evidence, seem not to be effective – it should also stop doing those.

This is evidence-based policy-making - if it works, based on the evidence, then do it; if it doesn’t work, stop doing it.  If we do not know whether it works, gather the evidence before deciding what to do.  For New Zealand, this approach to policy–making on retirement incomes would be a change but it’s time New Zealand tried it.  Before that process can even start, there is a lot of information to gather.

The Retirement Commissioner’s 2016 Review was a wasted opportunity; an evidence-free zone[2].  Asking people what they think about retirement and saving issues is particularly unhelpful; finding out what they do is much more important.  That requires the gathering of evidence.

Given that 2017 is an election year, we can’t escape the feeling that the government’s decisions on the changes to New Zealand Superannuation from 2037 are politically motivated; setting itself up for the horse-trading that might be needed once the election’s results are known. 

We have decided to fill in some of the gaps because we worry that, in an election year, those gaps will be exploited by politicians wanting to attract attention to their parties’ agendas – saying what it takes to get elected.  We think the government’s announcements on 6 March 2017 about New Zealand Superannuation’s age and residency qualification have us heading into once-familiar territory – the politicisation of retirement incomes.  The government’s decisions have a political overtone that has been illustrated by the responses of other parties (Labour going back on 2014 policy; the Maori Party wanting a lower state pension age; New Zealand First rejecting change).

New Zealand’s political history shows that retirement income policies are particularly unsuited to political campaigns.  We do not want New Zealand to re-learn that lesson.

[1] A written version of the report (to “satisfy the requirements of the New Zealand Superannuation and Retirement Income Act (amended 2005))” is here.
[2] The government has responded to the 2016 Review.  In a letter to the Retirement Commissioner of 7 June 2017 (accessible here), it has rejected many of the Review’s recommendations in an evidence-free kind of a way.  We will comment on those at the appropriate points later in this report.


Page 2

Asking people what they think about retirement and saving issues is particularly unhelpful; finding out what they do is much more important.  That requires the gathering of evidence.

Given that 2017 is an election year, we can’t escape the feeling that the government’s decisions on the changes to New Zealand Superannuation from 2037 are politically motivated; setting itself up for the horse-trading that might be needed once the election’s results are known. 

We have decided to fill in some of the gaps because we worry that, in an election year, those gaps will be exploited by politicians wanting to attract attention to their parties’ agendas – saying what it takes to get elected.  We think the government’s announcements on 6 March 2017 about New Zealand Superannuation’s age and residency qualification have us heading into once-familiar territory – the politicisation of retirement incomes.  The government’s decisions have a political overtone that has been illustrated by the responses of other parties (Labour going back on 2014 policy; the Maori Party wanting a lower state pension age; New Zealand First rejecting change).

New Zealand’s political history shows that retirement income policies are particularly unsuited to political campaigns.  We do not want New Zealand to re-learn that lesson.


Michael Littlewood
E MichaelR.Littlewood@gmail.com
P +64 9 5200 367
M +64 21 677 160

Michael Chamberlain
E Michael@mcanz.co.nz
P +64 9 930 7772
M +64 21 890 999

A footnote about this report: Whoever runs the research-led, national discussion that we think is a necessary next step, will need to address the 125 questions that we identify in this report.  As new evidence emerges or additional issues arise, those 125 questions will need updating.  This report will be a living document and will be updated by that new information.