In May 2025, the debate over the retirement age in New Zealand has resurfaced, sparked by a new Treasury proposal suggesting an increase in the eligibility age for superannuation from 65 to either 67 or 68. As economic pressures mount and life expectancy continues to rise, the government is weighing its options carefully. This change, if implemented, could significantly impact future retirees, the labor market, and the overall economy.
Why Is the Retirement Age Being Reconsidered?
Treasury’s latest analysis shows that by 2040, New Zealand’s over-65 population is projected to exceed 1.3 million. Coupled with increased life expectancy—currently averaging 82.5 years—this places growing financial strain on the country’s superannuation system.
With annual superannuation spending already surpassing NZD 17 billion, the cost is expected to balloon unless structural changes are made. The proposed shift aims to align retirement policies with demographic and economic realities, mirroring changes already adopted in countries like Australia and the UK.
What Are the Key Elements of the Proposal?
The proposal outlines two main options:
- Option A: Gradually raise the retirement age to 67 by 2035
- Option B: Raise it further to 68 by 2040
The transition would begin as early as 2027, increasing the age by two months each year. This phased approach intends to minimize disruption, giving individuals and employers time to adjust.
Who Will Be Affected?
Anyone born after July 1962 would be impacted under the proposed schedule. For example, someone born in 1970 would retire at 67 under Option A or 68 under Option B. The change would not affect current retirees or those close to retirement.
The table below outlines how retirement ages may shift based on birth year:
| Birth Year | Current Retirement Age | Proposed Age (Option A) | Proposed Age (Option B) |
|---|---|---|---|
| 1960 | 65 | 65 | 65 |
| 1965 | 65 | 66 | 66.5 |
| 1970 | 65 | 67 | 68 |
| 1975 | 65 | 67 | 68 |
Economic and Social Implications
Raising the retirement age could bring substantial savings to the public purse, potentially freeing up billions over the next two decades. However, it also presents challenges:
- Employment Pressure: Older workers may face difficulty finding or keeping jobs, particularly in physically demanding industries.
- Health Considerations: Not all individuals can work into their late 60s due to health issues. This raises equity concerns, particularly for lower-income groups.
- Private Savings Gaps: Many people may need to bolster private retirement savings to cover the extended working years.
To offset these concerns, Treasury is also recommending investment in workplace upskilling programs and age-friendly employment policies.
Political Landscape and Public Sentiment
The proposal has sparked vigorous political debate. The ruling coalition has expressed cautious support, citing long-term sustainability, while opposition parties argue that the move penalizes workers and benefits the wealthy who can afford to retire early regardless.
Public opinion is sharply divided. A recent Horizon poll (April 2025) revealed that 54% of New Zealanders oppose raising the retirement age, while 39% support it, and 7% remain undecided.
What Should You Do Now?
If you were born after 1962, it’s wise to review your retirement plans. Consider:
- Increasing KiwiSaver contributions
- Exploring supplementary investment options
- Seeking financial advice tailored to your future retirement timeline
Adjusting now could cushion the impact of a later retirement age.
Conclusion
The conversation around raising New Zealand’s retirement age is no longer theoretical. With Treasury’s May 2025 proposal gaining traction, individuals and policymakers alike must prepare for change. While the shift could strengthen the nation’s fiscal position, it requires thoughtful planning to avoid disadvantaging vulnerable groups.
Whether the age is set at 67 or 68, one thing is clear: retirement planning in New Zealand is entering a new era.
FAQs
Why is New Zealand considering raising the retirement age?
The government aims to reduce long-term superannuation costs due to an aging population and longer life expectancies.
Will this affect everyone?
No. Those already retired or close to retirement are unlikely to be affected. Changes would mostly impact those born after 1962.
When will the changes begin?
If adopted, the transition could start in 2027, gradually increasing the age by two months per year.
How does this compare to other countries?
Australia is already transitioning to age 67, and the UK has plans to raise the age to 68 in the next decade.
Can people still retire at 65?
Yes, but they would need to rely on private savings or other income sources until reaching the new eligibility age.
What about those in physically demanding jobs?
Treasury has acknowledged this concern and is evaluating targeted support or exceptions for specific industries.
How should individuals prepare?
Review your KiwiSaver plan, consider increasing your savings rate, and consult a financial planner for tailored strategies.
Is this a done deal?
No. The proposal is under review and will likely go through parliamentary debate and public consultation before any law is passed.
What political parties support or oppose this?
The current government supports reviewing the retirement age, while most opposition parties remain against it.
Will there be other pension reforms?
Possibly. Treasury is also exploring means testing and income thresholds to make the system more sustainable.
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