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More solved problems: Super

Andrew Little raises a good point about increasing the age of eligibility for NZ Super: some workers are simply unable to continue working past the age of 65. This is a smaller and smaller fraction of workers as health improves and as we shift from physical and manual labour to desk jobs, but it’s a potentially real problem.

It’s also a totally solvable problem for anybody who spends more than 30 seconds thinking past the roadblock to find a solution rather than just throwing up their hands and saying it’s all too hard.

Here’s the solution.

  1. Announce that the age of eligibility for NZ Super increases to 66 in 2020, and increases by six months every (say) three years afterwards until whatever the new desired eligibility age is reached – say 70. Other people can argue about the right ages; the mechanism here doesn’t depend on what the right age is.
  2. Announce a new aged disability benefit equivalent to NZ Super but that requires medical certification as being unfit to work. That benefit is available to those over the age of 65 but younger than the new age of eligibility. You could probably tweak it to have a couple of thresholds, like “fit for part-time work”, where you get a smaller disability benefit while able to work part-time.

Tah-dah, you’ve just raised the age of NZ Super eligibility while also making sure that workers who have spent a lifetime in manual labour and who are no longer physically capable of work are not made worse off for it.

It’s not my ideal pension reform, and I’m hardly claiming to have fleshed out all the details here, but it’s a bit odd that Labour hasn’t suggested something along these lines if their main complain is about manual labourers who are unable to work past the age of 65.

Update: and consider Keith’s framing here:

Update 2: post updated to fix a typo. Thanks Keith.

Previously: solved problems – water pricing.

About Eric Crampton (88 Articles)
I'm Head of Research with the New Zealand Initiative.

2 Comments on More solved problems: Super

  1. People remaining in work are, of course, constipating the entire employment market all the way back to the mouth at very start — the inescapable annual crop of school-leavers.

    Like

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