The Related to Any Change in Thee Ligibility Age for Receiving New Zealand Superannuation

| The related to any change in thee ligibility age for receiving New Zealand Superannuation |

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In the past, many older workers, particularly single men who had no family in New Zealand suffer unemployment and cannot feed themselves by a certain age. With the development of social welfare, every citizen has the right to get superannuation at the eligibility age. Superannuation is an organizational pension plan which created by the company for the benefit of retired employees, it is usually defined-contribution and defined-benefit. For example, the New Zealand Superannuation payments are paid every two weeks on Tuesday. For the majority of people, superannuation is compulsory contributions begin when the person starts work and the company paying superannuation for the company. Similar to other developed countries, New Zealand has a scientific public pension system. New Zealand superannuation is a government pension paid to the New Zealand citizen or permanent resident over the age of 65. Furthermore, Kiwi saver is a New Zealand voluntary long-term pension fund, it is an affordable and easy way to save for the superannuation. The main purpose of the Kiwi saver is for the retirement saving and improving New Zealand’s low average rate of saving. For some reasons, the eligibility age for receiving New Zealand Superannuation are not stable in the past few years. In the condition of rapid population and economic change, the superannuation fund facing many new problems, and the New Zealand government has attempted to improve its pension system.

New Zealand Superannuation is New Zealand issued to the elderly who in the age eligibility age and correspond with residency requirements. And New Zealand Superannuation is non-payment and the unified standard tax financing of the national pension. The eligibility of people can get New Zealand Superannuation should be aged 65 or over. The citizen must have lived in New Zealand for 10 years since he or she turned 20 years old, otherwise for 5 years since he or she turned 50 years old (2013, New Zealand Superannaion overview).

In 1898, New Zealand made the Old Age Pensions Act passes into law. “New Zealand had one of the early public pensions in the world (Littlewood, 2012).”People aged 65 years and over, had good moral character, had lived in New Zealand for a few years and through the income and asset test can get the pension.
“This innovative social policy was a pragmatic response to prolonged depression during the 1880s. Its need arose primarily because, as a young developing nation, New Zealand did not enjoy the community and traditional family structures that in other countries might have been expected to provide for the elderly poor. There was no time to institute a contributory scheme, or to encourage private provision.” (St John and Ashton 1993, p.8.)
The “Long Depression” after 1880s, the economy of New Zealand also had been impacted. A lot of work lost jobs. Most of them are elderly. The increasing numbers of poor elderly people made the government should have a scheme to solve the problem. In 1881, the people aged 65 or over just 1.3% of the population. So the government introduced the Old Age Pensions Act and 65 years old is the eligibility age.

In 1938, New Zealand introduced a dual pension system for people which is called the Social Security Act. People had been resident in New Zealand for twenty years, when they get to the retirement age, they can choose two ways: first is Age Benefit, which start from age 60 and no taxed but must through an income test. Second is Superannuation Benefit, which start from age 65 and do not need a test but it is taxable. However, the dual pension system is not very perfect. “A number of people were receiving the Superannuation Benefit even though they would have been financially better off receiving the Age Benefit to which they were entitled. Furthermore, there was a view by some that income testing of older people was demeaning (Ministry of Social Development , 2003).”

Nowadays, the system of NewZealandSuperannuation is based on the 1977 with the introduction of National Superannuation. “National Superannuation was taxable and payable at age 60 (Ministry of Social Development , 2003, p. 3)”

Source: Statistics New Zealand, Demographic Trends (various years); National Population Projections (2006-base), series 6 (assuming medium fertility, medium mortality and annual net immigration of 10,000), 2006-2061.

The reason about New Zealand change the eligibility age for receiving New Zealand Superannuation is the baby boomers coming and the labor force remaining. The limited jobs for increasing labor have to lead to the unemployment problem, in order to work out this problem, the government decided to change to eligibility age of receiving New Zealand Superannuation.
In 1977, New Zealand had almost 3.1 million population. However, the people at age 60 or over is just 10% of the population. From the figure, the age-sex structure of the New Zealand population is like a pyramid shape in 1961. The broad base means New Zealand experienced a baby boomers. A lot of babies became the adults, they became the main labor force. National Superannuation plays a very important factor inreducingthe labor force participation rates of older workers.

From 1977 to 2001, the population of New Zealand almost increased 1 million people. The age-sex structure of the New Zealand population from a pyramid shape gradually changes to a barrel shape. It means that the New Zealand stepped into aging.

(The New Zealand official yearbook, 1977)

“On 1 April 1992, the qualifying age was increased from 60 years to 61 years. The qualifying age was then increased from three months every six months from 1 April 1993, until it was fixed at 65 years from 1 April 2001 (New Zealand Superannuation website, 2013).”

In addition, the migration trade also affects the eligibility age for receiving New Zealand Superannuation. The mass immigration greatly increases the pressure of local employment ,
The change in the eligibility age of National Superannuation has another reason is increasing longevity. Because medical improved constantly, the life of the people became longer than before. Mostly, the people around 60 years old still have the ability to work and feed themselves. The national superannuation considering this special situation, and make a change about the eligibility age to receiving superannuation.

(McCulloch & Frances, 2003)
From the figure we can clearly find that from 1977 to 2001 the average year of eligibility increased. It means the life of people increased, at the same time, it has generally led to the increased the eligibility age of National Superannuation. If the government still insisted 60 as the eligibility age for receiving National Superannuation, the government will pay a lot of money for pensions and may lead to financial deficit.

Another very important reason is the economy of New Zealand. The figure shows that from 1991 to 1992 the GDP of New Zealand has a slight increase. But after that the GDP stepped into decrease. At that time the world was during the depression, as well as the economy of New Zealand is not very good. At the same time, the government should bear population growth and aging. All these reasons lead to the the eligibility age increase.

Since the implementation of National Superannuation, it is already 35 years. In 2001, New Zealand had nearly 4 million people. The 65 or over elderly population accounted for about 14% of the country’s population. In 2050, the number of the population expected to reach 118 million. And the New Zealanders the life increasing. The New Zealand government retirement finance will increase, at the same time, the New Zealand pension system will through a severe challenge. New Zealand National is one of the country with the lowest saving in the world. The government in order to fundamentally solve the problem about old people totally dependent on the Superannuation, the government launched Kiwisaver to encourage national savings.

In a conclusion, superannuation is a great way to make sure that older people have the ability to take care of themselves. Since 1898, the eligibility age from 65 to 60 then return 65. The main change in the eligibility in the 1977 and 2001. A lot of factor impact the eligibility age. Such as: economy, population, aging problem, and so on. With the changing of the environment, in the future, the eligibility age will change. But the average age is applicable in the specific period. Even though the New Zealand demographics and the economy could change the eligibility age of receiving superannuation.

Reference:

Littlewood. M (14 February 2012 ) Pensions briefing Message posted to http://docs.business.auckland.ac.nz/Doc/PB-2012-1-Part-of-our-pensions-past.pdf McCulloch, B. & Frances, J. (7 May, 2003)Government of public pension funds: New Zealand Superannuation Fund ,2nd Public Pension Fund Management Conference, World Bank Headquarters
Message posted to http://www.treasury.govt.nz/government/assets/nzsf/gppf-nzsf-wb.pdf Ministry of Social Development (July,2003) Description of New Zealand’s Current Retirement Income Policies
Message posted to http://www.treasury.govt.nz/publications/reviews-consultation/prg/background/prg-msd-dnzcrif.pdf New Zealand Superannuation overview (2013 )
Message posted to http://www.workandincome.govt.nz/individuals/65-years-or-older/superannuation/superanuation-overview.html New Zealand Superannuation (2013)
Message posted to http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/statistical-report/statistical-report-2008/superannuation-and-pensions/superannuation.html St John, S. and T. Ashton (1993). Private pensions in New Zealand: Can they avert the crisis? Wellington, Institute of Policy Studies
Statistics New Zealand(2006).Demographic Aspects of New Zealand's Ageing Population.

The New Zealand Official Year Book (1977)
Message posted to
http://www3.stats.govt.nz/New_Zealand_Official_Yearbooks/1977/NZOYB_1977.html#idchapter_1_9116