NZ Super has recently been accused to be unfair in its operations, as soon-to-be retirees doubled as high income earners are receiving large amounts of super payments despite not having the need for them.
Recent statistics released to RNZ’s checkpoint show that over 30 000 of NZ Super recipients are earning double the median wage. Not only are the retirees earning over $100 000 a year, but their ability to be paid Super funds after 65 years of age is also costing the New Zealand workforce $608 million a year. The annual income figure of $100 000+ does not take into account any capital gains, investments nor incomes through Kiwisaver either.
The latest Inland Revenue figures from the last two years also show that the number of retirees earning over 6-digit salaries is on the upswing, having tripled in number already since 2009. With New Zealand already having one of the least proportional tax systems in the western world, economists are concerned over the overcharging in taxes of workers in the lower-income brackets, especially when it has now been revealed that old-age high income earners are also receiving large amounts of equally distributed money through NZ Super that are unavailable to younger people.
Additionally, experts are looking to find a fairer and more proportional method of distributing the $608 million in tax, hoping to redistribute the money from high-income earners who don’t need the extra $20 000 per year from NZ Super. Economists are also debating on whether or not the age to receive such pensions should be increased to also reflect the increasing retirement age.
Pension researchers claim to be proud of the NZ Super benefits, however, believe it to be fairer for the broader New Zealander community if high income earners and soon-to-be-retirees were to either be taxed more in an effective proportional tax system or have their NZ Super payments reduced relative to their income stream (while taking into account their assets). This way, only top brackets would really be affected by the structural changes and when considering their revenue, the effects would be minimal.
Currently, NZ Super is the government pension paid to all Kiwis over the age of 65 and any eligible New Zealander receives NZ Super regardless of how much they earn through paid work, savings and investments, what other assets they own or what taxes they have paid. While an “equal” system, the fairness of NZ Super is now attracting controversy.
