We need to stop asking if NZ can afford its superannuation scheme. It’s the wrong question

Getty Images Like many countries, New Zealand has an ageing population.

Retirees are living longer while fertility rates have fallen .

The number of workers relative to retirees will decline.

If nothing changes, NZ Super will consume an increasing share of GDP and government revenue .

The Treasury is therefore right to ask whether current arrangements are sustainable.

And Finance Minister Nicola Willis is also right to want a “ mature, grown-up conversation ” about it.

But whether we can afford NZ Super – and whether the entitlement age should be raised – are the wrong questions.

What we should be asking is: how can we provide New Zealanders with an adequate and dignified retirement at a sustainable cost for future generations? That distinction matters because NZ Super is only one part of the retirement system.

A simple way to think about it is as an equation: adequate retirement equals personal resources plus government support minus the cost of retirement.

Once we think about the problem this way, we suddenly have many more policy options.

Housing and KiwiSaver Take the cost of retirement.

Historically, most New Zealanders reached 65 owning their home, often mortgage free .

That’s important because NZ Super goes much further when you don’t have to pay rent or a mortgage.

But that is changing.