Her stance of favouring a higher eligibility age over means-testing, would disproportionately harm Māori and low-income labourers. This post explores how means-testing could cover NZ Super’s minimum costs, drawing on OECD examples and addressing structural inequalities, while questioning Richardson’s ignorant and evidence-free position.
I spoke to Ruth Richardson about NZ’s fiscal position, her role with the Taxpayers’ Union, and the impact of the ‘91 Budget. https://t.co/gEh6i9LgU9
— Jack Tame (@jacktame) June 15, 2025
The Case for Means-Testing
NZ Super’s universal model, paying ~900,000 pensioners (e.g., $1,076.84 fortnightly for singles in 2025), is a pay-as-you-go system with no dedicated fund, thanks to National, unlike Australia’s Future Fund or Denmark’s reserves. By 2037, costs will hit $45.3 billion for ~1.2 million pensioners, straining taxpayers’ ability to meet costs, particularly as consecutive government’s increase debt levels. Moderate levels of means-testing, used by 34 of 38 OECD countries, could save 11–15% ($5–$7 billion in 2037), maintaining costs at ~6% GDP.
Australia’s Age Pension, for instance, means-tests 2.7 million pensioners, and costs only 2.5% of GDP, while Canada’s Guaranteed Income Supplement targets low-income seniors, keeping costs at 2.7% GDP. These systems prove means-testing is scalable, and would work by leveraging tax data like New Zealand’s Inland Revenue (IRD) does for Working for Families (300,000 families).
Estimating Income and Asset Thresholds
To cover NZ Super’s minimum costs, means-testing could exclude the wealthiest 10–15% of pensioners (120,000–180,000 by 2037) from receiving super, who hold ~70% of household wealth. Based on New Zealand’s wealth distribution, where the top 10–15% of households earn above ~$70,000/year and hold assets (excluding homes) above ~$750,000, thresholds could be fairly set as follows:
Income Threshold: ~$50,000/year for singles ($962/fortnight) and ~$70,000/year for couples ($1,346/fortnight), above which NZ Super is reduced (e.g., 50 cents per dollar, as in Australia). This targets pensioners with significant investment or private pension income, phasing out payments for the top 10–15%.
Asset Threshold: $400,000 for single homeowners, ~$600,000 for couple homeowners; ~$600,000 for single non-homeowners, ~$900,000 for couple non-homeowners (excluding primary residences, as in Australia). This captures high-wealth pensioners with substantial savings or trusts.
These thresholds align with Australia’s ($180/fortnight income, $301,750 assets for singles) but are higher to reflect NZ’s higher cost-of-living. Inland Revenue could administer this, as with Childcare Subsidy, though trusts and asset-hiding require transparency reforms. Administrative costs ($100 million/year) are minimal compared to savings.
Equity and Māori Disparities
Means-testing addresses structural inequalities, a key concern raised in debates over Richardson’s policies. Her 1991 budget doubled extreme poverty (4% to 8%), hitting Māori hardest due to lower incomes (78.9% of median), lower homeownership (48% vs. 58% non-Māori), and lower incomes.
Today’s universal NZ Super favours wealthier non-Māori with longer lifespans, who receive payments for more years. Means-testing at these thresholds targets high-income/asset pensioners, ensuring low-income Māori (40% of over-65s rely heavily on NZ Super) retain full benefits. Raising the eligibility age, as Richardson supports, would harm Māori, particularly labourers in physically demanding jobs (18% of Māori vs. 11% non-Māori), who face health barriers to working past the age of 65.
OECD Lessons and Feasibility
Among 20 relevant OECD countries, 18 means-test pensions, with Denmark, Netherlands, Australia, and Sweden leading in fiscal sustainability due to funded systems and low costs (2.5–7% GDP). New Zealand and Greece, the only non-means-tested systems, rank weakest, with NZ Super’s $45.3 billion by 2037 threatening future budgets. Australia’s model of means-testing 2.7 million pensioners shows NZ’s IRD could easily handle ~900,000 pensioners, despite complexity concerns ($100 million admin costs). Canada’s hybrid (universal OAS with means-tested GIS) offers a balanced approach NZ could easily adopt.
Critiquing Richardson’s Stance
Richardson’s opposition to means-testing, favouring a higher eligibility age, ignores equity and fiscal realities. Her 1991 policies exacerbated Māori poverty, and her 2025 stance, advocating for even more neoliberal policies, perpetuates inequities by preserving a universal system that benefits only wealthier non-Māori New Zealanders.
Of course the deluded Ruth Richardson’s ideology prioritises simplicity over fairness. However there really is no good argument against means-testing superannuation, as proven by OECD peers and NZ’s parental means-testing programs, showing that such changes are feasible and could save billions while supporting vulnerable groups of people working in physically demanding jobs.
Conclusion
Means-testing NZ Super at ~$50,000–$70,000 income and $400,000–$900,000 assets could save $5–$7 billion by 2037, keeping costs at ~6% GDP. This aligns with OECD best practices, leverages IRD systems, and addresses Māori inequities, countering Richardson’s racist stance. As NZ’s population ages, means-testing offers a sustainable, equitable path forward and is the only real option to ensure super continues to be affordable for New Zealand.
