Peter MacDonald
We keep hearing it: New Zealand’s ageing population is a ‘fiscal time bomb’. Economists, Treasury officials and corporate-backed think tanks keep repeating the same old woeful and tired line that the old age pension is unaffordable, that the retirement age must rise and that pensioners are somehow dragging the country down. But none of that holds up to scrutiny. In fact, it’s the exact opposite of the truth.
The NZ Super isn’t a burden: it’s one of the smartest, fairest and most economically beneficial policies this country has ever implemented. And our over-65s aren’t a cost to be managed – they are New Zealand’s most generous, hardest-working and socially valuable citizens.
Every dollar paid to a pensioner doesn’t vanish: it cycles back into the economy. Unlike wealth hoarded offshore or locked away in speculation, pension income is spent locally and supporting supermarkets, healthcare providers, tradespeople and small businesses. Even when it’s saved by better-off retirees, that money typically ends up supporting children, grandchildren or family members, either directly or through inter-generational help like housing, food or education. This is usually called the bank of Mum and Dad.
Pensioners are among the most fiscally responsible citizens in the country. They plan, they stretch their budgets and they spend wisely. That pension money isn’t wasted: it’s spent on food, rent, electricity, clothing, fuel and healthcare – the essentials of daily life. It supports local supermarkets, fuel stations, pharmacies, clothing stores, tradies and landlords. It keeps businesses afloat and creates jobs. Most importantly, it flows directly back into the tax system through GST and, in many cases, income tax, when superannuitants also earn wages. Economists call this a ‘cyclical spend-up’, one of the most effective forms of economic stimulus. In fact, it’s not unlike the post-World War II Marshall Plan, which injected cash into war-torn economies to get them moving again. Our pension system does something similar, keeping local economies humming while offering stability across generations. The idea that it’s a ‘cost’ is misleading: it’s an investment with immediate returns. In fact, NZ Super currently costs about five per cent of GDP, significantly lower than in many developed countries. With sensible fiscal management and the right priorities, it is easily affordable and, arguably, we could lower the age to 60 for those in physical jobs.
Next, the myth that everyone over 65 retires the moment they’re eligible is just that: a myth. A growing number of people aged 65 to 70 and older stay in the workforce, not because they’re struggling financially, but because they enjoy their work, want to stay mentally and physically active or they may have no interest outside of their workplace. These older workers are contributing more than most: they’re earning wages, paying income tax, spending money in the economy and in many cases receiving a reduced pension. Some voluntarily pay their entire pension to charity or choose not to apply for a pension at all. That’s not a fiscal burden – it’s a double contribution.
Beyond paid work, the over-65 age group is by far the most generous demographic in New Zealand. They are the country’s largest volunteer workforce. They staff op shops, food banks, community kitchens, churches, schools, marae, sports clubs, local boards and charities. They give countless hours to causes that matter, simply because they care. They are also the biggest givers to charitable organisations: a level of social generosity that economists and Treasury spreadsheets don’t seem to count. Try replacing that unpaid work with paid labour and you’d quickly find that what pensioners give back to society far exceeds what they draw.
Then there’s the often-ignored engine of our economy: grandparents. Grandparents across the country are raising grandchildren, providing daily childcare, school pickups, after-school care, help with homework and sometimes even putting food on the table for their children and their children’s children. Beyond spending on themselves, many pensioners provide essential support to younger generations. They’re quietly helping cover rent, groceries, school uniforms, medical bills and often contributing toward first homes or vehicles. Without this consistent, informal safety net, tens of thousands of working families would be under enormous pressure or unable to function at all. And in times of family crisis illness, injury or the death of a parent, it’s often grandparents who step in to take full responsibility for raising their grandchildren. These are acts of love and service that go largely uncounted in official statistics but are foundational to keeping families afloat. My late mother, Ruth MacDonald, is just one example. At age 65 in 1998, she took in and raised her five grandchildren full-time for five years while their mother, my sister, battled terminal cancer. Her selfless care allowed their father to keep working full-time to support the household. This kind of unheralded intergenerational commitment is playing out in households across the country every day and it’s time we recognised it for what it truly is: one of New Zealand’s greatest strengths. This deep intergenerational contribution is rarely, if ever, captured in economic statistics, yet its value to society is immense.
It’s also worth remembering that we once had a solid long-term financial plan for funding NZ Super: the Cullen Fund. Set up in 2001 to pre-fund future pension costs, it was a sovereign wealth fund designed to smooth out demographic bumps. It has performed exceptionally well, earning more than expected and is now worth over $70 billion. But it was undermined by successive governments, particularly during the Key–English years, with paused contributions, diverted funds and using it as a political football. Had we stuck with the original plan, we’d be more than prepared today. The issue isn’t that the pension is unaffordable. The issue is that politicians failed to protect the mechanisms that made it sustainable.
So why do we keep hearing this ‘pension crisis’ story? Who gains from the idea that NZ Super is broken? The answer isn’t hard to find. Private finance firms want compulsory savings schemes to generate fees and profits. Profit-orientated neoliberal economists want to shrink the public safety net. And politicians, mostly fiscally ignorant and continuously under pressure from credit agencies and budget hawks, find it easier to blame pensioners than admit to broader economic mismanagement.
The economists pushing this narrative are not neutral experts. Many are politically aligned, funded by interests that benefit from austerity, and trained to see society as a balance sheet rather than a living, breathing, community. They talk of ‘unsustainable burdens’, but ignore the enormous and largely invisible value older New Zealanders bring to our country every day. Their lens is narrow and often ignorant of the true social fabric. What they call a burden, many of us would call a life of contribution and continued giving. As outlined here, pensioners are not just recipients of government support. They are taxpayers, volunteers, caregivers, wisdom holders and often the quiet glue that keeps entire families and communities functioning. That’s not an economic liability that’s one of our greatest national assets.
New Zealand Super is not just affordable: it’s necessary. It keeps older people out of poverty, supports the economy, empowers families and strengthens communities. Raising the retirement age or introducing means-testing would punish generosity, punish work and punish those who have already paid their dues. Raising the retirement age to 70 or beyond, alongside introducing means testing, is, in effect, the quiet dismantling of the pension itself. It shifts the goalposts so far that only the most vulnerable will qualify and even they will be forced to jump through bureaucratic hoops to access what was once a universal entitlement.
We can already see the outcome of this approach in Australia, where means testing has virtually ended the traditional age pension for large portions of the population. This is not reform, it’s erosion. It turns a stable and dignified social contract into a conditional and punitive system that undermines the very idea of retirement. It penalises those who have worked hard, saved modestly or simply want to stay active later in life. And, worst of all, it treats older citizens not as people who have built the country, but as liabilities to be managed. If means testing the pension were introduced in New Zealand, the question is: who really benefits? The answer lies in following the money. Economists who constantly pressure the government to impose means testing often have ties to or are influenced by private financial interests. Meanwhile, private wealth funds stand to gain enormously once pension entitlements are stripped from older New Zealanders – that money flows into private investment vehicles that enrich fund managers and their shareholders. This transfer of public support into private hands comes at a steep social cost: vulnerable people lose the dignity and security of a universal pension and communities lose the broad social and economic benefits that come from widespread pension spending and intergenerational support. Such a shift would be a disaster – not just for individuals, but for society as a whole.
It’s time we stood up and defended pensioners against the scaremongers and spreadsheet tyrants that have lost sight of what society is truly meant to be. New Zealand was founded on Christian values of community, compassion and helping one another, not on creating profit for a privileged few by extracting wealth originally generated by taxpayers. We must honour and protect our elders, recognising their immeasurable contribution to our families, communities and economy, rather than dismantling the social contract that has supported generations of Kiwis.
