New Zealand Superannuation

Overview

New Zealand Superannuation provides a source of income to people who have reached a qualifying age (currently 65 years) and who meet other eligibility criteria (eg residency).

Most recipients of New Zealand Superannuation are aged 65 years or over. People who don't meet the eligibility criteria but who are married to a qualified recipient of New Zealand Superannuation may receive this pension as a "non-qualified spouse".

Where one partner or spouse is a non-qualified spouse, there are two options available:

• the qualified spouse only may receive payment at half the married couple rate of the pension
• both the qualified and the non-qualified spouse may receive the non-qualified spouse rate of the pension, subject to an income test.

Clients may at any time choose to include or exclude their non-qualifying spouse from their pension payment.

On 1 April 1992, the qualifying age was increased from 60 years to 61 years. The qualifying age was then increased by three months every six months from 1 April 1993, until it was fixed at 65 years from 1 April 2001.

To meet residency requirements for New Zealand Superannuation, the client must have lived in New Zealand for 10 years since they were aged 20 years, of which five years must have been since they were aged 50 years. People who have reached the qualifying age for New Zealand Superannuation but who don't meet these residency requirements may be eligible to receive an Emergency Benefit if hardship exists.

New Zealand Superannuation is paid by Work and Income, and payments are made gross of tax. Recipients pay tax on this pension at the rate appropriate to their financial circumstances.

New Zealand Superannuation is not income tested except where a non-qualified spouse is receiving New Zealand Superannuation. Clients receiving New Zealand Superannuation are eligible to receive supplementary benefits from Work and Income to assist with meeting necessary costs of living. Supplementary benefits paid these clients are income tested and asset tested in the same way as for other clients.

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Trends in the number of clients receiving New Zealand Superannuation

The number of clients receiving New Zealand Superannuation has increased since 2004 (see table 3.50). This reflects the impact of the ageing of the population, combined with relatively constant cessations of New Zealand Superannuation over the period. Since 2004, around 53% of New Zealand Superannuation recipients have been aged 65-74 years, while around 44% have been aged 75 years or over.

Table 3.50 Trends in the ages of clients receiving New Zealand Superannuation

Age of client at the end of June	Clients receiving New Zealand Superannuation1
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Under 60 years2	4,507	4,205	3,899	3,484	3,179
60-64 years2	12,815	11,971	11,072	10,303	9,781
65-69 years	127,786	135,322	144,867	153,900	158,186
70-74 years	111,757	111,329	111,240	113,201	117,332
75-79 years	94,098	95,021	96,754	97,382	97,581
80 years or over	113,661	117,367	120,993	124,447	128,217
Unspecified	0	0	0	0	0
Total	464,624	475,215	488,825	502,717	514,276

Notes

1. Numbers of clients recorded in SWIFTT as receiving New Zealand Superannuation at the end of June.
2. Clients receiving New Zealand Superannuation while under the qualifying age of 65 years are non-qualified spouses.

Table 8.1 shows trends since 1940 in the number of clients receiving New Zealand Superannuation.

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Trends in the proportion of people aged 65 years or over receiving New Zealand Superannuation

Each year since 2003, around 92% of all people aged 65 years or over in the New Zealand population have been receiving New Zealand Superannuation at the end of June (see figure 3.13). Changes over this period in the likelihood of people aged 80 years or over receiving New Zealand Superannuation appear to reflect a combination of patterns in use of Veteran's Pensions and population changes.

A small number of people aged 65 years or over receive neither New Zealand Superannuation or Veteran’s Pension. This group mainly comprises people who are not ex-service personnel and don’t meet eligibility criteria for New Zealand Superannuation, usually because they don’t meet the residency qualification.

figure 3.13 Trends in the proportion of people aged 65 years or over receiving New Zealand Superannuation, by age

Note

1. Proportion shows:
   1. numbers of clients in age group receiving New Zealand Superannuation, divided by
   2. Statistics New Zealand final estimate of the resident population in age group at the end of June.

See table A3.11 for a summary of the SWIFTT data underlying figure 3.13.

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Trends in New Zealand Superannuation grants

The annual number of New Zealand Superannuation grants has decreased in the last year following increases over the previous three years (see table 3.51). The decrease in the last year reflects in part smaller numbers of people entering the 65 years or over age group in 2008.

Seventy-six percent of the clients granted New Zealand Superannuation in 2007/2008 had not received a pension or main benefit within the previous four years, compared with 71% in 2003/2004 (see table 3.51). The proportion of these clients who transferred from another pension, benefit or district decreased over the same period (from 23% to 18%).

Table 3.51 Trends in the length of periods since clients granted New Zealand Superannuation last received any pension or main benefit

Period since client last received any pension or main benefit	New Zealand Superannuation pensions granted1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
None (clients transferring from another pension or district, or from a main benefit)2	8,216	8,083	8,011	7,907	7,252
Under 6 months	389	362	364	394	337
6-12 months	347	305	383	357	344
12-18 months	268	254	320	322	284
18 months-2 years	240	254	272	264	264
2-4 years	786	897	905	983	991
Had not received a pension or main benefit in previous four years	25,312	28,854	31,118	31,845	30,048
Total	35,558	39,009	41,373	42,072	39,520

Notes

1. Numbers of successful applications for New Zealand Superannuation recorded in SWIFTT during years ended June.
2. Includes only a minority of transfers of New Zealand Superannuation between districts. Most such transfers are accomplished without cancelling and re-granting New Zealand Superannuation.

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Trends in expenditure on New Zealand Superannuation

Increases since 1999/2000 in expenditure on New Zealand Superannuation (see table 3.52) reflect the combined effects larger numbers receiving it, adjustments to the rate at which it is paid, and changes in the use of supplementary benefits (eg Disability Allowance) by clients receiving New Zealand Superannuation. Between 1995/1996 and 1999/2000, expenditure on New Zealand Superannuation was relatively flat, reflecting a combination of:

• incremental increases in the age of eligibility for New Zealand Superannuation which occurred between 1 April 1992 and 1 April 2001 (this had the effect of depressing growth in receipt of New Zealand Superannuation over the period of the change)
• population ageing, through growth in the size of the population eligible to receive New Zealand Superannuation
• adjustments to the rate at which this pension is paid
• increased expenditure on Disability Allowances paid to New Zealand Superannuation recipients, which is included in the expenditure information below.

Table 3.52 Trends in annual expenditure on New Zealand Superannuation

Year ended June	Expenditure on New Zealand Superannuation1,2,3 ($m)
1995/1996	5,158
1996/1997	5,187
1997/1998	5,263
1998/1999	5,253
1999/2000	5,228
2000/2001	5,457
2001/2002	5,638
2002/2003	5,831
2003/2004	6,085
2004/2005	6,307
2005/2006	6,658
2006/2007	7,068
2007/2008	7,585

Notes

1. Expenditure on New Zealand Superannuation in years ended June, including expenditure on supplementary benefits provided to recipients of New Zealand Superannuation.
2. Expenditure is gross of taxation, adjusted to payment periods based on a standard 30-day month and smoothed using a three-month moving average.
3. Expenditure data in this table differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

In general, monthly expenditure on New Zealand Superannuation (see figure 3.14) shows a strong relationship to the number of people receiving New Zealand Superannuation and to adjustments in the rate of payment. Seasonal peaks in expenditure between 1995/1996 and 2000/2001 reflect the impact of a surge of New Zealand Superannuation grants in the quarters beginning April and October each year (as each incremental increase in eligibility age took effect). These peaks no longer occur because the age of eligibility has remained at 65 years since 1 April 2001.

figure 3.14 Trends in monthly expenditure on New Zealand Superannuation

Notes

1. Monthly expenditure on New Zealand Superannuation, including expenditure on supplementary benefits paid to New Zealand Superannuation recipients.
2. Expenditure shown is gross of taxation, adjusted to payment periods based on a standard 30-day month and smoothed using a three-month moving average.
3. Expenditure data in this graph differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Table 8.2 shows trends since 1940 in expenditure on New Zealand Superannuation, including expenditure on supplementary benefits paid to people receiving New Zealand Superannuation.¹

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¹In table 8.2, expenditure data from 1996 onwards reflects deductions for debts established and for clients receiving overseas pensions as well as New Zealand Superannuation. The data in table 3.52 and figure 3.14 doesn't reflect these deductions.