More to think about on NZ Super from the Herald's Liam Dann....
Should rich people opt out of NZ Super?
Q: Hi Liam, I was interested in the post-Budget chat about New Zealand Superannuation. A Herald commenter said they were embarrassed to be entitled to Super when they didn’t really need it, and that it was clearly (for the nation) unaffordable but off-limits politically.
Other commenters answered by saying either “don’t be embarrassed, you worked for it” (I’m paraphrasing), or “you don’t have to take the pension if you don’t need it”.
This hit home for me since it’s a bit of a bone of contention in our family. I’m a Gen X-er and my Baby Boomer parents both get the pension despite owning assets worth millions.
It’s not a case of the family home skyrocketing in value – they both own very large, very expensive properties (separately; they’re divorced), nice vehicles and live very comfortable lives.
I’m really happy they’re healthy and enjoying life, but I – and my siblings – think it’s a bit gross that they draw the pension when they very obviously don’t need it.
My Dad’s a bit embarrassed about it, but says he’s asset-rich but cash-poor. My Mum gets defensive and says she’s worked all her life and deserves it.
Both my parents are smart and socially aware, so I’m surprised by their stance. My question is: how many retirees actually choose not to take NZ Super? Is there a mechanism to opt out?
A: Fascinating question, thanks.
I was curious about the numbers too and asked at the Ministry of Social Development (which administers New Zealand’s pension scheme).
There is no specific mechanism to opt out. But the way the scheme works is that you have to sign up (or opt in) when you turn 65.
So, essentially, if you don’t need the money, you can just do nothing, and you won’t get it.
I’m also told you that when you do apply, the registration process does point you to various charities you can donate it to if you think you don’t need the money.
Sharemysuper.or.nz is one such charity organisation purpose-built for the task.
The Ministry of Social Development didn’t have any numbers to hand as to how many Kiwis over 65 haven’t signed up even though they are eligible.
So I’ve put in an Official Information Act request and hopefully someone in the system will dig that out (watch this space).
Benefit or Right?
The bigger question is the one you implicitly raise with your parents: should people take the super payment if they don’t really need it?
Framed in even more basic terms: is the super payment a benefit or a right?
Everyone who is eligible does have the right to claim it.
But the money is also part of the consolidated pool of Government revenue. It isn’t held in a special fund, like the New Zealand Superannuation Fund (the Crown investment fund with the annoyingly similar name).
That fund will be used eventually to help fund the cost of NZ Super as it balloons, based on the ageing population.
NZ Super is also very different to KiwiSaver, which is actually your money that you have worked for over the years.
Ultimately, the existence of the state pension (and how generous or universal it is) remains at the mercy of Parliament.
It is a benefit, but for many Kiwis, especially those of a certain generation, it feels like a right.
It has been promised to us by politicians over the years.
That’s one of the reasons even changing the age limit or means-testing it has been seen as a political no-go zone.
But that seems to be changing as the sheer weight of the cost to the economy becomes apparent.
According to Budget 2025 data, NZ Super costs $4352 per person per year, making it the third-largest area of government spending after welfare ($6181 per person) and health ($5804 per person).
From the Treasury’s long-term fiscal projections, spending on NZ Super is projected to grow from 4.3% of GDP in 2010 to 7.9% in 2060, an increase of 3.6 percentage points.
National under Sir Bill English first proposed lifting the age to 67 in the election campaign of 2017.
And National campaigned on a similar platform in 2023 with a commitment to keep the age at 65 until 2044, when it will be gradually lifted to 67. This change wouldn’t affect anyone born before 1979.
Finance Minister Nicola Willis has suggested National will campaign on a similar policy again in 2026.
In my view, it will inevitably have to rise.
I also understand why people are inclined to accept it as a right. It is free money, right?
It will eventually pass through the generations.
Perhaps those who want to enjoy the extra cash but feel some guilt could look to spend it with local businesses or support local artists.
ANALYSIS: Framed in even more basic terms: is the pension a benefit or a right?
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