Prime Minister Bill English has unleashed a political storm by proposing to increase the age for state superannuation from current 65 years to 67 years starting in 20 years’ time.
Currently, to be eligible for NZ Super, a resident needs to be aged 65 or over and needs to have lived in New Zealand for 10 years since age 20, with five of those years since turning 50.
The government is planning to double the residency requirements for NZ Super so that applicants must have lived here for 20 years, with five of those after the age of 50.
There would be no change to the indexation or universality of superannuation.
While political parties and analysts are grappling with the possible outcomes from this announcement suggesting that Kiwi workers would have to work longer and harder before becoming eligible to get pension under the new National Plan, the proposal to increase residency requirement from current 10 years to 20 years has escaped similar attention.
Labour Party, which has long struggled to get their policy right on the ‘sensitive’ issue of age requirement for becoming eligible for Super, was cautious in their criticism of the government.
Labour Leader Andrew Little said that Super entitlements were a sensitive subject, and Mr English's comments would worry New Zealanders.
Mr Little wants the eligibility age to remain same at the current 65 years but has promised to resume contributions in his first Budget once in power. Labour previously has campaigned on a higher eligibility age but abandoned that policy after Mr Little’s become the Party leader.
New Zealand First, which has long advocated for not raising the age requirement for superannuation eligibility, was more vocal on the suggested 20-year wait for the new immigrants and instead called for a 25-year wait for the new immigrants.
There is a seeming disquiet within the community about the fact that new immigrants are being made to wait for 10 more years before becoming eligible for state superannuation.
Nikhil Kalluri, a new immigrant, who gained New Zealand residency recently, said the government’s plan to make new immigrants wait for 10 more years than what it is now before becoming eligible for state superannuation appears to be the government’s effort to change the narrative about immigration in the election year.
“I think [the] government has brought up this proposal just before the election to divert the public attention from seeming inadequacies in our immigration system,” Mr Kalluri says.
Indian Weekender sought comments from key community leaders and academic experts about this change in residency requirement for NZ Super to determine if New Zealand is progressively becoming immigration ‘unfriendly’.
Sunny Kaushal, Labour Party Candidate in General Election 2011 and 2014, said the government’s proposal of doubling the residency requirements for NZ Super to 20 years had hit the migrants with “double whammy.”
“The government must stop generation bashing and its predatory attitude towards migrants. It must revisit the residency requirement policy and restart contributions to the New Zealand Superannuation Fund, which was due to start helping with paying for pensions by 2030,” Mr Kaushal said.
National List MP Kanwaljit Bakshi asserted that the NZ Super changes are about striking the right balance and making it fair to both present and future generations at a time when there is increasing pressure on government finances.
“The changes in residency requirement will apply to people arriving in New Zealand after the legislation is passed. Those who have residency or citizenship before the legislation comes into effect will not be affected,” Mr Bakshi said.
“It’s an issue of fairness—with those who have not made as long a contribution to New Zealand during their working lives are, after living here for only 10 years, receiving the same support as people who have paid taxes here for their working life,” Mr Bakshi further asserted.
Similarly, another National MP Dr Parmjeet Parmar reiterated the “issue of fairness” which has gained ascendancy in most recent messages coming out from the National Party in the election year.
“We believe instead of increasing it from 10 years to 25 years, increasing it to 20 years is fair and appropriate. Presently, people aged 65 and over are able to claim New Zealand superannuation once they have been residents for 10 years. This does create an issue of fairness,” Dr Parmar said.
NZ First MP Mahesh Bindra could not respond to Indian weekender’s request for comments at the time of going to print.
Meanwhile, Labour’s candidate Maungakiekie in the 2017 General Election Priyanca Radhakrishnan also appeared to be convinced with the government’s proposal to increase the residency requirement to 20 years.
“With regard to doubling the residency requirement to immigrants, the government’s proposal is in line with international best practice and the Retirement Commissioner’s recommendations.
However, she drew inspiration from residency requirement prevalent in other OECD countries.
“As far as I’m aware, most OECD countries require immigrants to have been resident in the host country for longer than 10 years,” Ms Radhakrishnan said.
Manukau Indian Association President, Veer Khar, was also of the opinion that the 20-year wait is still the lowest as compared to the other OECD countries.
“The residency requirement is a must change in the view of the fact that the life expectancy is increasing and the ratio of 15-64-year-olds in comparison to 65 plus-year-olds in New Zealand population is decreasing which are contributing to the rising cost of NZ Super,” Mr Khar said.
However, a quick check of aged pension schemes of Australia and Canada – the two popular migrant attracting destinations - reveals otherwise.
Canada's Old Age Security (OAS) pension and Australia's Age Pension, which broadly corresponds to New Zealand's superannuation, have a residency requirement of “continuous period of at least ten years”.
Distinguished Professor Paul Spoonley, an authority on demography and social migration expressed similar views about the proposed change in residency requirements.
“My understanding about this increase in the residency requirement is that it is taking us more towards the position of European countries and away from the countries like Australia and Canada,” Professor Spoonley said.
Another expert, Professor Jacques Poot, who is University of Waikato’s Professor of Population Economics and the director of National Institute of Demographic and Economic Analysis (NIDEA), was also unsure about the proposed residency changes.
“If New Zealand changes to a twenty years residency requirement then that would make the country a less attractive destination than Australia or Canada,” Professor Poot said.
However exercising caution Professor Poot further said “It should be noted that the vast majority of immigrants arrive in their twenties to late thirties. They would therefore still easily satisfy the 20-year residence rule by the time they are 65.”
Regardless of this cautious statement, it is clear that the government’s latest plans on NZ Superannuation are set to raise bars for the new immigrants in this country.