Source: Retirement Commission
A deep dive into New Zealand and Australia’s superannuation has revealed pros and cons to both nation’s retirement systems.
NZIER, with support from Te Ara Ahunga Ora Retirement Commission, has analysed the performance of both countries and evaluated their schemes against five criteria.
The report found:
According to the OECD, average pension expenditure across 31 developed economies will reach 10.2% of GDP in 2050. By contrast New Zealand is expected to spend 5.8% of GDP on retirement income policies (5.5% of GDP on NZ Super and 0.3% of GDP on KiwiSaver subsidies) in 2050.
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Adequacy: New Zealand’s system appears to provide higher incomes relative to the working age population on average.
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Equity: While New Zealand’s system reduces income inequality in retirement, Australia’s system perpetuates inequalities from working years.
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Sustainability: Government spending on the system is expected to increase over time in New Zealand but remain constant in Australia.
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Impact on savings and investment: Australia’s system has a larger effect on savings due to compulsory contributions and higher rates.
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Impact on labour and wages: Australia’s system discourages working at pension age, resulting in lower labour force participation.
Australia and New Zealand boast robust retirement systems, with Mercer recently ranking Australia’s as a B+ and New Zealand’s as a B – but with some areas for improvement.
Both countries have three pillars: a public pension, savings in pensions schemes, and other forms of private saving.
Australia’s system consists of a compulsory savings scheme (Australian Superannuation, introduced in 1992), and a means-tested government pension (the Age Pension). Savings in Australia attract particularly generous tax concessions, but not in New Zealand.
New Zealand’s system, by contrast, involves a universal public pension (NZ Super) and a voluntary savings scheme with auto-enrolment (KiwiSaver) introduced in 2007, a good 15 years after Australia’s savings scheme.
NZIER’s Adrian Katz says retirement income policies are a product of a country’s history and different countries have different objectives for these policies.
“These can reflect differences in values, population characteristics, and economic constraints.
“These can reflect differences in values, population characteristics, and economic constraints.
“You also need to consider each system as whole. For example, because New Zealanders have access to a universal pension through NZ Super, KiwiSaver plays a different role from Australian Superannuation.”
Retirement Commissioner Jane Wrightson says while New Zealand needs to set its own path for retirement income policy, it’s useful to look what is working or not in Australia.
“The systems have been shaped by different cultural attitudes and histories. There’s regular commentary that the Aussies are doing it better and that’s where New Zealand needs to aspire too, but when you boil it down the grass isn’t necessarily greener.
“Australia’s greater reliance on private savings perpetuates inequalities from working years. The universal coverage of NZ Super enables New Zealand’s system to deliver more equitable outcomes. What we can see by comparing the Australian system is that higher contributions to KiwiSaver could be achieved through an incremental approach: increasing contributions is something I’ve been advocating for.”
Both New Zealand and Australia spend significantly less on their retirement systems when compared to the OECD average, and this trend is expected to continue out to 2050.
According to the OECD, average pension expenditure across 31 developed economies will reach 10.2% of GDP in 2050. By contrast New Zealand is expected to spend 5.8% of GDP on retirement income policies (5.5% of GDP on NZ Super and 0.3% of GDP on KiwiSaver subsidies) in 2050.
Australia will expend 4.6% of GDP, with more money going to tax concessions for private saving (2.5%) than the means-tested pension itself (2.1%).
Australian Age Pension and NZ Super
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Australian Age Pension
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NZ Super
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Eligibility age
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Coverage
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Means-tested (income and assets)
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Universal
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Payment rates (2024-25, after tax)
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Single: Up to A$1,144.40
Couple: Up to A$1,725.20
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Single: NZ$1,043.24
Couple: NZ$1,606.96
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Indexation
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Twice yearly to greater of CPI, PBLCI, and MTAWE
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Yearly to greater of CPI and Net Average Wage
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Generally tax-free
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Taxed as income
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General taxation
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General taxation
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Residency requirement
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At least 10 years, with at least 5 years of continuous residency
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At least 10 years (increasing to 20 years by 2042) since age 20, with at least 5 years since age 50
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Australian Superannuation and KiwiSaver
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Australian Superannuation
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KiwiSaver
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Introduced
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Participation
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Compulsory
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Voluntary (opt-out)
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Minimum employee contributions
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Minimum employer contributions
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11.5%, increasing to 12% from July 2025
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Government contributions
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50c per $1 of member contributions, up to $521.43 per year
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Access age
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Early access
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Compassionate grounds, terminal illness, severe financial hardship, incapacity
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First home purchase, moving overseas, significant financial hardship, serious illness
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