New Zealand Superannuation

New Zealand Superannuation (NZ Super) is a pension paid by the State to most New Zealand residents from age 65 until death.

Who Qualifies?

To be eligible for New Zealand Superannuation you need to be aged 65 or over and a legal resident of New Zealand, having lived here for ten years since age 20. Five of those years have to be since you turned age 50. If you are close to retirement and want to know more precisely the level of New Zealand Superannuation you would be entitled to (and information about supplements, overseas pension issues, etc) contact Work and Income on 0800 552 002 or at www.workandincome.govt.nz.

How much is it?

Current after-tax rates of New Zealand Superannuation

Why am I not getting the same amount as my neighbour?

Different tax rates apply to different people according to how much income they have. Your entitlement to NZ Super is treated as income, and is added to any other income you have. All your income is then taxed. A higher or lower tax rate will apply to you depending on how much income you have. If you think you're not receiving the correct amount of NZ Super call Work and Income free 0800 552 002. They will be able to tell you exactly what you are entitled to, because they look after NZ Super payments.

Does the amount change from time to time?

Yes, the level of payment is reviewed each year and is adjusted to take account of increases in cost of living (inflation) and wages. When wages increase, New Zealand Superannuation is adjusted so that it stays between 65% to 72.5% of average ordinary time earnings after tax. This means for couples both over 65, their pensions, after tax, will not fall below 65% of the average ordinary time wage after tax. For single people the pension is about 40% of that average wage.

Is the pension guaranteed into the future?

Here's one of those "No, but...." answers.

No, future pension payments are not guaranteed, but Parliament needs to approve any signficiant change. New Zealand has had a form of state-funded retirement income for over one hundred years. Eligibility, payment levels and other conditions have changed many times over that period. The changes have reflected different political views as well as changes in New Zealand's society, economy, the labour market and other factors.

The present Government's policy is to retain the existing entitlements for the foreseeable future. Comments from other major parties suggest that changes for people currently in and near retirement are unlikely.

However, there are aspects of retirement income policy which continue to be debated. As governments change and society's views change no one can rule out the possibility of future amendments.

We can't foresee what those changes will be. Our expectation is that any possible changes would:

• be widely debated and come under close public scrutiny
• need to be supported by a majority of New Zealanders to get parliamentary support
• be introduced in stages to protect the financial security of those in or near retirement
• be made with plenty of notice so people planning for retirement can make appropriate arrangements.

What allowance should you make for New Zealand Superannuation in your retirement plan?

Our advice is, firstly, to ignore the scaremongers who say to younger people "by the time you retire there'll be nothing from the State".

No New Zealand Government can ignore the reasonable needs of older people. The type of pension available could change over time, but there will be some financial support for people in retirement.

Secondly, plan on the basis of current levels of New Zealand Superannuation. If you are, say under 50 and are able to save, you may want to be a bit conservative and reduce the level of New Zealand Superannuation you put into your plan. That's not a bad move because it will encourage you to save more. Our calculators allow you to do that.