By Antonia Watson
CEO, ANZ New Zealand.
New Zealand’s retirement system is no longer aligned with the realities of the country we are becoming.
It is limiting any government’s ability to restore fiscal discipline and invest in other urgent needs.
Treasury says we are now spending more than $20 billion a year on New Zealand Superannuation.
That is about 5 per cent of GDP — and it is rising by more than $1 billion each year.
Our first pension was introduced in 1898 based on the idea that the state had responsibility for citizens in old age, and this was changed by successive governments to become universal with different ages of eligibility.
Since those days, the world has changed.
People are living longer, the ratio of workers to retirees is shrinking and productivity growth is weak.
In the 1960s, there were around seven working-age New Zealanders for every person over 65 (the current age of eligibility).
Today, there are roughly four.
By 2065, Treasury projects that number could fall to two.
Public finances are under pressure from health, education, infrastructure, and the cost of adapting to a more uncertain world.
If we want to preserve dignity and security in retirement, we need to be prepared to reform the settings that support it.
Because retirement policy is not just a fiscal question. It is a social contract between generations.
It shapes whether working New Zealanders believe the effort they put in today will translate into security tomorrow.
If we look across the Tasman, Australia offers an important contrast.
Since the early 1990s, Australia has built a culture of compulsory, long-term retirement saving.
It has created a much deeper pool of private retirement assets, and reduced reliance on the means-tested state pension.
New Zealand, by comparison, remains much more dependent on universal public provision and housing wealth.
For many Kiwis, the plan was simple — sell the family home once the kids had left, buy somewhere smaller, and put the rest into a term deposit or managed fund.
The pension, plus the return on that investment, was often enough to get by in retirement.
But that strategy depends on assumptions that no longer hold for everyone — rising house prices, relatively high interest returns, low volatility, and home ownership itself.
The lesson from Australia is that durable retirement security requires a stronger savings culture than we have today.
So, how should we think about reform?
New Zealand’s retirement income framework now rests on three pillars — or, as they have been described, the three legs of the retirement stool.
The first leg is the New Zealand Super Fund.
Introduced by Sir Michael Cullen, it began investing in 2003 to help meet future pension costs.
It now has a total value of about $94 billion. Government contributions to the fund are forecast to total more than $3 billion over the next four years,
Withdrawals from the Super Fund are now expected from 2054 onwards.
The remarkable thing is that, according to Treasury, the Fund is still expected to keep growing, even with drawdowns, well into the 2070s.
The second leg is New Zealand Superannuation itself.
It is funded by today’s taxpayers, for today’s retirees. And it is universal. The amount someone receives depends on their living situation and tax code — not on their personal income, savings or assets.
The third leg is KiwiSaver.
It started in 2007 as a voluntary retirement savings scheme to supplement the pension.
According to the Financial Markets Authority, there was more than $123b of funds under management in 2025.
KiwiSaver has come a long way — despite successive governments changing incentives around it —but it has so much more potential.
The Super Fund, the pension and KiwiSaver each need to be considered as part of one coherent long-term system.
This year’s election provides an opportunity to signal meaningful change to this broader system.
First, the Super Fund should be protected, consistently contributed to, and grown.
Second, KiwiSaver needs to become a much stronger vehicle for private retirement savings.
KiwiSaver employer and employee contribution rates should gradually increase over time and we should move carefully and deliberately toward a compulsory model.
As New Zealand’s biggest KiwiSaver provider, ANZ’s surveys show younger Kiwis understand the importance of the scheme and that they cannot simply rely on the pension.
Any government contribution should be targeted where it has the greatest impact — particularly toward lower-income New Zealanders, and younger people who benefit most from starting early.
A stronger KiwiSaver system would reduce our reliance on housing as the main vehicle for wealth accumulation.
Third, we need to have the hardest and most politically sensitive conversation of all — the future settings of New Zealand Superannuation itself.
The pension has served New Zealand well, but we should discuss whether some form of income or asset testing should play a role, whether the age of eligibility should remain fixed indefinitely and whether current indexation settings are still appropriate.
Any change must be phased carefully, especially for current retirees and those close to retirement who have planned around the existing rules.
Over time, the recommendations I have suggested here would mean the pension becomes more of a backstop than the primary vehicle for retirement income, with KiwiSaver and private savings carrying more of the load.
It’s a significant rebalancing of retirement incomes policy that will challenge some ideologically.
But this rebalancing, done well, can preserve what matters most — dignity in retirement, fairness between generations, and a system that remains sustainable and credible for decades to come.
This article first appeared in The Post 29/06/26