Age Concern New Zealand

Serving the needs of older people
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New Zealand Superannuation

There was a small further increase to New Zealand Superannuation in April, about $6 per week in the hand. This gives an income of around $13,600 – $17,700 per person (after tax) annually. 

For some older people, this isn't enough to cover even a basic standard of living. 

Benefits are up by 6.85 percent over the year,  but this includes a 2.02 percent increase added in October last year as 'GST compensation'.

The increase for married superannuitants of 6.85 percent keeps their Super income equal to 66 percent of the average wage (in line with Government policy, but note this means two people are living on a proportion of the individual wage).

Comment

There has been surprisingly little research on the actual level of income needed for a resonable quality of life in New Zealand. > SEE our discussion on this issue

Age Concern doesn't think this year's increase covers the real cost increases that older people are facing.

  • For example, petrol, public transport, and dairy products have all increased by much more than last October's GST rise.
  • Power: Rises in domestic electricity prices since 2000 have averaged 5% p.a., much faster than inflation.
  • Rates: most older people are home owners on limited incomes, yet local authority rates are still increasing by more than the overall CPI.

Age Concern calls for Super to be increased to the maximum allowed by existing legislation. This would raise it to 72.5% of the net average wage - around an additional $25 to $30 per week after tax.

We also say that the average weekly wage for one person should be compared with the weekly single National Superannuation rate (not for two people, as at the moment) - then New Zealanders would really see how little seniors really get to live on.

How much do I get?

To be eligible,  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. Super is paid fortnightly into a bank account.

NZ Super is treated as income, so will be taxed at the M rate before you get it. If you have significant other income, your Super payment ‘in the hand’ may be less than shown below, because of higher tax rates.

2011/12 rates 

"Temporary GST Assistance" of $4.80 to $6.60 extra per week expired 31 March 2011.

Gross and Net (after tax at ‘M rate’) rates of NZ Superannuation / Veterans' Pension

Category

Weekly rate

Fortnightly payment (net)

Annual rate (net)

Net

Gross

Single, living alone

$339.92

$389.14

$679.84

$17,675.84

Single, sharing

$313.78

$357.40

$627.56

$16,316.56

Married or in a civil union or de facto relationship, both qualify

Total

$522.96

$588.16

$1045.92

$27,193.92

Each

$261.48

$294.08

$522.96

$13,596.96

Married or in a civil union or de facto relationship, non-qualified partner included 

Total

$497.02

$556.62

$994.04

$25,845.04

Each

$248.51

$278.31

$497.02

$12,378.08

Partner in rest home, with non-qualified partner

$251.73

$282.23

$503.46

$14,675.96

Hospital rate

$41.64

$46.47

 $83.28

 $2,165.28

 > SOURCE see Work and Income New Zealand for all the rates

Myths about Super

1. I can’t get it if I’m working, or if I have investments

  • Wrong – even millionaires can sign up when they turn 65. Other Work and Income benefits may have income or asset qualifications though.

2. NZ Super is "the most generous scheme in the world"

  • Mostly wrong – it depends where pundits set the poverty line. If it's defined as 50% of median income, NZ has the lowest proportion of older people in poverty in the OECD. If the bar is raised to a more reasonable 60%, NZ has the highest proportion compared to the EU [c. 34% in poverty]. In other words, most older New Zealanders live on NZ Super and a small supplementary income, and many are clustered at a subsistence-only income level. [Koopman-Boyden & Waldegrave, Family Centre Social Policy Research Unit, 2009. Link to PDF].
  • In OECD countries, the average incomes of over-65s are around 80% of overall household disposable income.  Our comparable figure is 70%, placing us 2nd-bottom in the OECD. [Len Bayliss, quoting Pensions at a Glance, OECD, 2009]
  • New Zealanders also get few of the seniors' subsidies, cold weather bonuses, and emergency payments that other nations have.

3. I’ll just hang back from applying until I really need it.

  • Although choosing to apply for Super or not may be a moral decision, it is available to most senior New Zealanders. You should be also be aware that it can’t be back-dated or recovered once the payment period has passed. Work and Income recommend applying a few weeks in advance of your 65th birthday to ensure you get it from Day 1.

4. It is set at around 65% of the average full-time wage.

  • Wrong – the rate for a couple is currently around 66% of the average per person full-time wage. Income for two people is being compared with income for one. The rate of National Super for an individual is around 40% of the individual average wage (currently $959 per week before tax [March 2010]).

Facts about older people's incomes

  • New Zealand Superannuation (NZS) only gives an annual income in the hand of around $13,500- $17,600 per person ($14,529 to $19,425 before tax).

  • Super is currently around 25% less than even the minimum wage ($520 before tax / 40-hour week or $27,040 annually [from 1 April 2011]).

  • Around 60% rely on publicly provided retirement income (NZS) as their most significant source of income.

  • Their median annual income is significantly less than the national median income of $24,400. For people aged 70-74, the median annual income is just $14,800. Older women earn even less, for example $1000 a year less for 70-74 year-olds.

  • In real terms, older people's incomes have stayed flat since 1988, despite society's overall increases in living standards since then. (Source: MSD Positive Ageing Indicators 2007).

  • Median incomes for Maori, Pacific and Asian older people are lower. Maori and Pacific elders are on average more reliant on NZS and are less likely to have other assets.

  • In terms of standard of living, research indicates around 66,000 older people (13%) are likely to be experiencing some hardship, with more than 35,500 older people in severe hardship. Older people with high accommodation costs are more likely to experience hardship.

  • New Zealanders' unusually high ownership rate of mortgage-free homes has provided a cushion preventing many older people from dipping below the poverty threshold, yet home ownership rates are falling fast.

Resources

> VISIT Work and Income New Zealand for all the rates

>VISIT the Ministry of Social Development Services for Seniors website