New research has sparked calls for a rethink of the way we deal with New Zealand Superannuation in order to better care for our ageing population.

The New Zealand Initiative has suggested raising the age in its latest report.

Lead researcher, Jenesa Jeram told Mike Hosking the current system works really well but there is room for improvement. 

"It's actually a good news story about superannuation. We currently have a system that works really well for a lot of New Zealanders [...] and it's relatively cheap."

"[But] one of the recommendations is to link the pension age to health expectancy. We know that with an ageing population that people are going to get older and we also know that they are working for longer."

She said linking it to health expectancy would mean the age of superannuation would rise, but it would also allow for more flexibility within the system.

"People age at different rates and have different health outcomes. One of the difficulties with a universal system is that it doesn't differentiate."

"Linking the pension age with health expectancy would free up money to target it to those who need it most, so those who cannot work  up until the pension age should be able to get support through the welfare system and freeing up money by reducing the cost of superannuation is one way to do that." 

CHANGE NEEDED

Jeram said the age of eligibility should be linked to health expectancy - a measure for how long people live for without any major health complications.

She said health expectancy rather than life expectancy was a good measure to use because it indicated what age a person may be able to work until.

The health expectancy is currently 71.8 years for New Zealand women and just under 70 years for men.

Some have suggested having a different retirement age for men and women and for different ethnicities to match their health expectancy would make superannuation fairer.

But Jeram said it should be the same for everyone to fit with the universal system New Zealand has.

She said linking the pension to health expectancy would also give flexibility for future adjustments rather than a one off rise with a long lead in which was likely to be out of step with labour force trends by the time it comes into force.

Jeram said super should also be indexed to inflation growth rather than wages and inflation.

"Decoupling NZS from rises in wages is way of ensuring productivity gains reduce the costs of NZS.

"The real purchasing power of NZS should remain the same while the real purchasing power of wages would increase."

Jeram said contributions to the New Zealand Superannuation Fund should not come at the expense of paying down debt.

"The Super Fund should not be relied on to reduce the future costs of NZS (it cannot do that)."

Jeram also urged the Government to focus on increasing productivity as that would make New Zealand Super and everything else more affordable.

But she said any changes needed to be signalled well in advance to give people time to prepare.

"Consecutive governments do taxpayers no favours by refusing to tweak Super.

"Governments could be spending taxpayers' money more efficiently, and the public needs warning of proposed changes to make other arrangements."