Why an outgoing MP wants to gradually raise the pension age

Outgoing National MP Andrew Bayly wants every political party in Parliament to agree now to raise the age at which New Zealanders get the government pension, starting in 2029. He says waiting longer will only make the change harder.

In an interview with RNZ, Bayly proposed raising the pension age by one month every year from 2029, eventually reaching 68 by 2065. The pension, known as New Zealand superannuation, is the payment most people get from the government when they turn 65. Bayly set out his ideas in a research paper published in the International Review of Public Administration, co-written with economist Leonard Hong and data analyst Emmanuel Jo. He told RNZ he chose an Asian academic journal on purpose, to show he was giving his own view, not speaking for the National Party.

Bayly called the pension the biggest economic issue facing New Zealand. Right now, it costs about 19 cents of every dollar the government collects in tax. By 2065, that could rise to almost 30 cents. Together, spending on the pension, health, and education could take up nearly 80 percent of all tax revenue. Bayly called the rising cost a "freight train coming down the line" and said it is better to make small changes now than wait until there is a crisis.

He has sent the paper to all party leaders in Parliament.

Bayly's idea goes further than his own party's policy. In 2023, National campaigned on slowly raising the pension age to 67, starting in 2044. Bayly told RNZ that National's plan was "worthwhile but insufficient." His modelling shows that starting in 2029 instead would save more money.

Bayly also wants the dollar amount of pension payments to rise more slowly. Currently, the pension goes up in line with wages. He wants it to rise in line with general prices instead, which usually go up less. He said there should be regular reviews to make sure pensioners do not fall too far behind everyone else.

The paper also proposed letting some people get the pension earlier, at a lower rate. This would apply to people who can no longer work because of health problems, shorter life expectancy, or physically demanding jobs. The authors said this would answer one of the biggest objections to raising the age. The paper also backed making KiwiSaver contributions compulsory and continuing to put money into the NZ Super Fund.

On means-testing — checking whether someone has enough income or savings to get a smaller pension — Bayly's paper said this would be too hard to get Parliament to agree to.

The public is not easily convinced. An RNZ-Reid Research poll in July found 58 percent of voters wanted the pension age to stay at 65. Only 35.3 percent supported raising it to 67. The same poll found more support for means-testing: 46.6 percent in favour and 40.7 percent against.

Bayly resigned as a minister in February. The NZ Herald said his resignation was more significant than that of fellow minister Melissa Lee, because of its impact on Prime Minister Christopher Luxon.

The broader context here is familiar. A departing MP publishes a paper. The numbers are worrying. The public does not want change. No government moves quickly. What makes Bayly's proposal different is how specific and joined-up it is — the age, how payments grow, early access, and KiwiSaver are all treated as parts of one package. Whether that changes the political debate is a question for the next term of Parliament, not this one.