A University of Otago study commissioned by Te Ara Ahunga Ora Retirement Commission has shown widespread opposition to means-testing superannuation and raising the age of eligibility but a willingness to increase taxes now rather than burden future generations.

Almost 1300 people throughout New Zealand across all demographics were surveyed to examine their preferences over seven aspects of retirement income policy. Five of the seven aspects related to NZ Super, including the amount, the age of eligibility, means-testing, willingness to increase current taxes to pay for the pension, and willingness to increase taxes on future generations to pay for the pension. The other two aspects related to savings, comprised desirability of accumulated savings and the importance of saving flexibility.

The same study was conducted in 2014 and has been replicated to ascertain whether attitudes to retirement income settings have changed. It is designed so that respondents are asked to indicate their preferences about two scenarios that have different combinations of two criteria (or aspects) of a choice, such as keeping the age at 65 and paying more tax now or moving the age to 67 and not paying more tax now. The responses result in the ranking of each of the seven features by area of importance.

The results in the 2022 study are broadly similar with the results from 2014. The three highest-ranked criteria still relate to means-testing, future taxes rates, and the age of eligibility.

Almost a quarter of people ranked keeping the age of eligibility at 65 as the most important aspect of NZ Super (compared to almost a fifth of people in 2014). The number of people who ranked the age of eligibility as the least important has fallen by 4%.

Raising the age of eligibility to 67 was ranked by 61% of respondents as the worst policy (of the seven options), making it the option ranked worst by the largest number of people. The unpopularity of this policy has increased relative to 2014.

• Respondents expressed a strong preference for universal rather than means-tested pensions.
• Respondents were also opposed to policies that result in steep increases in taxes on future generations.

Lead author of the study, Dr Andrew Coleman, says the results suggest that New Zealanders’ preferences about the structure of the Government’s retirement income programmes have not changed much between 2014 and 2022.

“Where we did see small change this time round was more people wanting the age of eligibility kept at 65 years than was the case in 2014.

“Secondly, support for universal pensions rather than a means-testing regime is less pronounced than was the case in 2014. Nonetheless, it is still comfortably the most important policy to the largest number of people.

“The findings showed a greater opposition to increases in current taxes than in 2014. Despite this reduced support, a majority of the respondents still would support higher current taxes to reduce the size of future tax increases, given plausible investment returns.

"This means there is still considerable willingness amongst people of all ages to support initiatives such as the New Zealand Superannuation Fund that reduce the costs on future generations."

Interestingly, the results indicate that even though preferences about retirement income are diverse, they still do not depend much on observable characteristics such as age, education, income or ethnicity. Rather, New Zealanders’ preferences reflect unobservable characteristics, “people differ more by how they think than how they look,” says Dr Coleman.

The 2022 results have shown more people are feeling less confident they will have a comfortable retirement (15% difference compared to 2014).

Retirement Commissioner Jane Wrightson says these latest findings further support the key recommendation made as part of the 2022 Review of Retirement Income Policies to maintain the NZ Super age of eligibility at 65.

“It’s once again been demonstrated just how critical the role NZ Super plays to large numbers of New Zealanders now and in the future.

“Today, 40% of people aged 65 and over have virtually no other income besides NZ Super and another 20% only have that, and a little more.

“To provide good retirement outcomes we need to maintain NZ Super at current settings and explore other mechanisms to support those where this is not enough on its own.”

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