John MacDonald: Pension procrastination isn't an option. But this is...

Author: John MacDonald,
Publish Date: Wed, 24 Jun 2026, 12:40pm

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Labour has no plans to change the retirement age. No plan to start means testing the NZ Super pension. Nothing.

Basically, Labour’s plan is for us all to keep sailing into our sunset years with our fingers crossed and the she‘ll be right attitude we’ve clung to for years. And, somehow, we’ll find the money to keep paying to NZ Super pension to anyone and everyone.

I think it;s dreaming. Which is why I’m very interested in what Auckland University economist Susan St John is saying about a middle ground between lifting the retirement age and means-testing the pension.

And, even though I’ve been pushing the idea of means testing for a while now, I’m listening to what she’s saying about this middle ground.

It’s something we’ve done before in New Zealand but, politicians being politicians, they ditched it. Because it wasn’t popular.

The superannuation surcharge, which we had during the 80s and 90s, hit people working beyond the retirement age with a special tax if the money they earned from their jobs went beyond a certain limit.

It got up as high as 25 percent and the politicians got rid of it in 1998 because there was this view that it put people off working beyond the retirement age.

That’s because about a quarter of people over the retirement age had to pay back some or all of their pension.

But, given we have an ageing population and the cost of the NZ Super pension scheme is only going to become even more unaffordable in its current form, then I’m listening to what Susan St John is saying.

Because if means testing the pension is too much for our politicians to stomach and if raising the age of entitlement spooks some of them too, then let’s meet in the middle and bring back the surcharge.

It would be much more straightforward than means testing. Because how you define a person’s means?

Is it just the money they earn over-and-above the pension from their job? Or is it also the money they earn over-and-above the pension from term deposits and other investments?

Does it include any property they own?

With the surcharge or the surtax, it would be very clear.

And just like it was in the 80s and 90s, it would be unpopular. But so what?

As Susan St John says, it would free-up money for those in genuine need.

She’s done the numbers and reckons the surcharge would save us $3 billion, with little or no impact on the majority of low income retirees.

Sounds like the perfect middle ground to me.

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