In New Zealand there are currently 4.4 people working for every retired person, but this will shift to 2.4 people working for every retired person in 20 years.
The number of people over the age of 65 (and therefore receiving NZ Super) will double over the next 20 years, and the cost of paying for NZ Super will triple.
The Government’s response is to claim that NZ Super is sustainable as long as the spending is “controlled” elsewhere. When you build in the Government desire for tax cuts, that means keeping spending growth under the rate of economic growth, and often under the rate of inflation and population growth. In other words that means other areas of spending will be cut in real terms.
In the eight years of this Government, NZ Super spending has been rising by 6% per annum, while Government spending has been increasing by closer to 3%.
Taking health and Super together, if current trends continue then health and super spending could swallow the whole Government budget by 2074. In the long run it is mathematically impossible to keep a lid on all spending to allow for NZ Superannuation without increasing taxes.