This is edition 2025/138 of the Ten@10 newsletter.
Hi all,
This is the Ten@10, where I collate and summarise ten news items you generally won't see in the mainstream media.
Enjoy!
1. On the long-term costs of New Zealand Superannuation: more affordable now?
Michael Littlewood
- 📈 Cost of NZS Rising: As New Zealand’s population ages, the cost of New Zealand Superannuation (NZS) is increasing, but it’s more useful to think of it as a proportion of future GDP.
- 💡 Economic Context: The real cost of NZS depends on future economic growth, and the Treasury’s estimates show that NZS costs in 2050, 2060, and 2070 will be lower than predicted 25 years ago.
- 🏦 Treasury’s Long-Term Projections: Over the last 25 years, the projected net cost of NZS has decreased significantly. For example, the expected cost for 2050 dropped from 9% to 5.4% of GDP.
- 📉 Actual Costs Lower Than Expected: The real costs of NZS in 2025 are lower than earlier projections due to stronger-than-expected GDP growth, driven by factors like increased labor force participation and immigration.
- 📊 Growth Importance: Future economic growth is crucial to keeping NZS costs manageable. Greater economic growth than expected should be a priority in shaping public policy, including retirement incomes.
- 🌍 Global Comparison: In international context, NZS costs are modest, with NZ projected to spend 6.4% of GDP on NZS in 2070 compared to an OECD average of 7%.
- 🔍 Need for Review: While NZS is world-class, there’s a call for a research-led review of the entire system to explore potential improvements.
