Aotearoa New Zealand in 2050: preparing our retirement income policy for the future

Abstract

New Zealand is expected to undergo significant demographic changes over the next 25 years, raising concerns about the sustainability of its retirement income system. As the population ages, the share of people over 65 will increase, driving up the costs of New Zealand Superannuation (NZ Super). Spending on healthcare and other public services will also grow, while a smaller share of workers will be available to fund these costs. Under current policy settings, these trends will result in rising taxes, reduced public services or growing debt.

This article explores what Aotearoa New Zealand may look like in 2050 and considers how retirement income policy may need to adapt. It argues that the current pay-as-you-go system is vulnerable to demographic change and that shifting to a more savings-based system – such as by strengthening KiwiSaver or raising contributions to the New Zealand Superannuation Fund – would make it more sustainable. The article is based on a recent report by the New Zealand Institute of Economic Research (NZIER), commissioned by the Te Ara Ahunga Ora Retirement Commission for the 2025 review of retirement income policies (NZIER, 2025).