John MacDonald: The $1 billion pension question

If we’re not prepared to stop paying the NZ Super pension to people whether they need it or not, then we need to think very seriously about whether we pay it to people who move here from overseas. Sounds tough, I know. But, hopefully, this revelation today that we are paying $1 billion a year in pension payments to people from other countries - double what it was 10 years ago - will bring us to our senses. Because we can’t keep carrying on the way we are. So, $1 billion a year in pension payments is going to migrants over the age of 65. Which Finance Minister Nicola Willis is OK with, saying changes that require someone to be a New Zealand resident for 20 years - instead of 10 years - are enough. Winston Peters, though, disagrees, saying that we should “watch this space” for some sort of announcement from NZ First sometime soon. But, if we go by what NZ First has said previously, the party could be about to announce that it’s bringing back an idea that it floated about 10 years ago but never got anywhere with. But it’s an idea I like. So what NZ First has talked about previously, isn’t stopping paying the pension to migrants full-stop. But running a pro-rata system, based on how long they’ve lived here between the ages of 20 and 65. Funnily enough, Labour and the Greens supported the idea when it was floated in 2015. But National, at the time, opposed it, with some of its MPs saying the policy was “disgusting, bigoted and racist”. It seems, based on what Nicola Willis is saying today, that it hasn’t changed its tune since then, either. But something needs to change. Because, over the next 30-odd years, the number of pensioners is expected to roughly double. And the cost of the NZ Super scheme during that time is expected to grow 1.5 times faster than the economy. Which is why Winston Peters is right when he says we haven’t gone far enough just requiring migrants to be New Zealand residents for 20 years before they qualify for the pension, instead of 10 years. The thing is, I understand how odd it would be for someone to move here, spend a decent chunk of their working life here, and then - when they turn 65 - be told that there’s no pension for them and to fend for themselves. But when the cost of the NZ Super pension scheme is going to blow out to the extent that Treasury says it is, what do we do? Banning people who move here from overseas from getting the pension would put us at odds with other countries, such as the UK, where you can go and get a pension after being there for 10 years. That’s why I think the pro-rata idea, that NZ First may be about to resurrect, would be a much more realistic approach. Because doing nothing isn’t an option anymore. LISTEN ABOVESee omnystudio.com/listener for privacy information.