While means-testing for NZ Super had the potential to disqualify some retirees from getting retirement payments, it would save the government money to redirect to other retirees, an investment fund manager says. Photo: 123RF
Introducing asset and income testing for NZ Super is one way to address the rising cost of the scheme, an investment fund manager says.
KiwiSaver provider Kōura's managing director Rupert Carlyon suggests taking a leaf out of Australia's book by means-testing for the pension here.
With New Zealand facing the perfect storm of an older population of retirees to support, and a lower proportion of tax payers to fund them, some changes were required, Carlyon said.
"We do have a big ageing population issue that we need to start having some honest conversations about," he said.
While means-testing NZ Super had the potential to disqualify around 20 percent of retirees from getting retirement payments, it would save the government money to redirect to other retirees.
"In Australia it is means tested - it's based on an asset test and an income test," Carlyon said.
"[In Australia] about 80 percent of people get some form of pension payment, so 20 percent get nothing.
"It is scaled, so it's not as though it's a hard yes or no.
"I think that's not a bad objective if we're still trying to give something to 80 percent - that feels fair to me."
Means-testing could also have the benefit of holding off any change to the pension age.
Australia's model also offered tax incentives for people to save more in their working years.
"People are offered incentives to save," he said.
Carlyon said there was pressure on the government's books in a variety of areas due to the changing demographics.
"It's not just NZ Super it's also healthcare costs," he said.
"'How are we going to afford healthcare into the future, how are we going to afford pensions into the future?" he said.
