Kerre Woodham: The problem with our retirement system

As you'll have heard in the news this morning, the Retirement Commissioner has called for a 10-year roadmap and cross-party agreement, following the release of its review of New Zealand's retirement system. 

More Kiwis are living longer, working differently, and facing pressures around housing and care. We're facing a huge rise in the number of older people. At the same time, we're facing fewer working Kiwis who can pay for the associated costs of aged care. Current data shows that right now, for every 100 people of working age, we have 28 retirees. Those numbers are changing quickly. By 2050, just 25 years away, we're looking at 38 retirees per 100 workers. By 2060, we'll have twice as many retirees compared to workers. 

In 2019, those older than 65 received $13 billion more in government services, mainly super and healthcare, than they contributed in taxes. I mean, that's just the way it is. You end up using the health system more when you're young, very, very young, like under five, but mainly when you're very, very old. And in the middle, you shouldn't really be accessing it at all. Of course, we're seeing those numbers going up as well, but that's just the way it is. It's the Western world over. It's just life. 

Treasury has been screaming for more than a decade now that we simply don't have enough money coming in to keep the lights on. Last week it gave another warning. Debt is not only being used for capital expenditure, but to cover operating costs. So it's like using your credit card to pay the necessary bills. It's unsustainable. 

And this is occurring as the books haven't yet recovered from Covid and Cyclone Gabrielle, and as the costs associated with an aging population are set to soar. As I said, we're not alone in this. The Western world over is struggling with this. Japan's been staring down the barrel of a shrinking workforce and a rising number of oldies for years now. The Prime Minister Fumio Kishida made an interesting point in January 2023 that Japan is standing on the verge of whether they can continue to function as a society, facing as it does the twin threats of falling birth rates and an ever-increasing elderly population. And when I say elderly, they live a really long time – they've got really healthy oldies who are regularly hitting 100. In 2022, almost half of Japanese firms relied on workers over the age of 70. So they're trying to encourage older people to still participate, to continue if they're up to it, if they can. 

So we could work longer. We could make use of the technology and the digitisation and the AI if you want to continue working. We could shift health to be rather than end-of-life care, try and put an emphasis on preventing people getting health issues and try and keep people out of hospital with preventable illnesses. We could prioritise health and well-being to ensure we stay healthy for longer. 

When it comes to providing a broader tax base, we'll be competing with every other Western country to import workers, because I think it's pointless telling young people, and certainly other countries have found this, to have more babies. There's financial incentives for young couples to have more babies, but a couple of 100 bucks here and there is not going to make people have children.  

What makes young families want to have children is a belief in the future, a belief in the society in which they live, a belief that they can support the children and give them what they need in terms of and it's not just financial things, it's time. If you're working seven days a week to provide for your family, you're going to limit the number of children you're going to have. 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Carrywood and Morning's podcast from News
Talks hedb.

Speaker 2 (00:11):
As you'll have heard no news this morning. The Retirement
Commission is called for a ten year road map and
cross party agreement following the release of its review of
New Zealand's retirement system. More kiwis are living longer, working differently,
and facing pressures around housing and care. We're facing a

(00:32):
huge rise in the number of older people. At the
same time we're facing fewer working kiwis who can pay
for the associated costs of aged care. Current data shows
that right now, for every one hundred people of working age,
we have twenty eight retirees. Those numbers are changing quickly.
By twenty fifty, just twenty five years away, we're looking

(00:54):
at thirty eight retirees per one hundred workers. By twenty sixty,
we'll have twice as many retirees compared to workers. In
twenty nineteen, those older than sixty five received thirteen billion
dollars more in government services, mainly the super into healthcare,

(01:16):
than they contributed in taxes. I mean, that's just the
way it is. You end up using the health system
more when you're young, very very young, like under five
but mainly when you're very, very old and in the middle,
you shouldn't really be accessing it at all. Of course,

(01:37):
we're seeing those numbers going up as well, but that's
just the way it is. It's the Western world over,
it's just life. Treasury has been screaming for more than
a decad now that we simply don't have enough money
coming in to keep the lights on. Last week it
gave another warning. Debt is not only being used for

(01:57):
capital expenditure, but to cover operating costs, so it's like
using your credit card to pay the necessary bills. It's
un sustainable. And this is occurring as the books haven't
yet recovered from COVID and cycling Gabriel and is the
costs associated with an aging population are set to soar.
As I said, we're not alone in this. The Western

(02:18):
world over is struggling with this. Japan's been staring down
the barrel of a shrinking workforce and a rising number
of oldies for years now, and Prime Minister I thought said.
The Prime Minister of Fernio Kshada has made an interesting
point in January twenty twenty three that Japan is standing
on the verge of whether we can continue to function

(02:41):
as a society facing as it does the twin threats
of falling birth rates and an ever increasing elderly population.
And when I say elderly, they live a really long time.
Like they've got really healthy oldies, you know, who are
regularly hitting one hundred. In twenty twenty two, almost half

(03:06):
of Japanese firms relied on workers over the age of seventy.
So they're trying to encourage older people to still participate,
to continue if they're up to it, if they can,
so we could work longer. We could make use of
the technology and the digitization and the AI and if
you can, and if you want to continue working, we

(03:30):
could shift health to be rather than end of life care,
try and put an emphasis on preventing people getting the
sort I mean, there's not much you can do about
getting older as everything starts to peter out. And you know,
if there are ways to make a body that's running
down go a little bit better, all well and good.

(03:52):
But let's try and keep people out of hospital with
preventable illnesses. We could prioritize health and well being to
ensure we stay healthy for longer. When it comes to
preventing a broader tax base. We'll be competing with every
other Western country to import workers because I think it's

(04:13):
pointless telling young people, and certainly other countries have found
this have more babies. There's financial incentives for young couples
to have more babies, but a couple one hundred bucks
here and there is not going to make people have children.
What makes young families want to have children as a

(04:35):
belief in the future, a belief in the society in
which they live, a belief that they can support the
children and give them what they need in terms of
and it's not just financial things, it's time. If you're
working seven days a week to provide for your family,
you're going to limit the number of children you're going
to have.

Speaker 1 (04:54):
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