The Retirement Commissioner has called for the asset cap on the accommodation supplement to be increased to at least $42,700 for retirees as a growing number are facing financial difficulty amid the cost-of-living crisis and struggling to pay for housing costs.

Jane Wrighton made 35 recommendations for change as part of the three-yearly review of the retirement income policy but said the one that would make the biggest difference would be increasing the current asset limit of $8100 for those applying for the accommodation supplement.

The supplement can be paid on top of New Zealand Superannuation for those struggling financially to pay rent or housing costs but many over 65 year olds can’t qualify because of savings and investments which include KiwiSaver.

The current cap has remained unchanged since the supplement was introduced in 1993 and back then it was calculated at 10 per cent of the average house price.

“Unchanged for 30 years is clearly inadequate. It has never been adjusted for inflation.”

Wrightson said its research showed large numbers of retirees used New Zealand Superannuation to cover their housing cost but only around 5 to 6 per cent of superannuitants received the accommodation supplement.

“For those with a mortgage in retirement four out of five pensioners are spending more than 40 per cent of their super on housing.”

By 2048 40 per cent of the population 65 and over would be renting, she said.

“That will equate to 600,000 New Zealanders. That’s a 100 per cent increase.”

She said because it was means tested changing the cap would not result in an enormous flood of people being able to apply for the accommodation supplement.

“But clearly it hasn’t been looked at properly and it is one of the solutions for older people who have housing pressure.”

Natalie Vincent, chief executive of Nga Tangata Finance which provides low-cost loans to people with low incomes in financial difficulty, supported the need to increase the cash asset cap for the accommodation supplement.

In the last year it had seen applications from those over 65 for loans to purchase essential items increase from 21 per cent to 50 per cent of applicants.

“We believe this is reflecting the overall cost of living increase this year, particularly with housing and food. People just do not have sufficient budgets to set aside money to purchase household items or health items that they need and they don’t have any savings built up and they are now finding they have to borrow.”

Of its 65-plus clients, 61 per cent were female and 45 per cent were renting. Only 22 per cent lived in their own home.

She said senior applicants living in private rentals relying on NZ Super were in the most vulnerable financial circumstances.

“They are often paying 40 to 50 per cent of their Super on rent and occasionally we have seen that much higher - sometimes as high as 70- 75 per cent.”

Retirement Commissioner Jane Wrightson. Photo / Michael Craig

No change to NZ Super

Wrightson has recommended New Zealand Superannuation itself stay the same with no change to the current 65-year-old age of eligibility.

“The common theme that emerged throughout all the work reinforces the critical role New Zealand Super plays to large numbers of New Zealanders now and heading into the future.”

“Any change to increasing the age of people accessing it would only further disadvantage women, Māori and Pacific peoples.”

Commentators have argued in the past for the need to raise the age of eligibility due to the rising cost of NZ Super. Forecasts indicate that by 2061 net expenditure on NZ Super will be 6.4 per cent of GDP.

But Wrightson said while there was a lot of discussion about the cost of it there was little talk about its value.

“Retired New Zealanders make valuable contributions to their communities with NZ Super providing them with a means to give back through unpaid work, voluntary work and care-giving and of course they pay tax.”

She said the value of voluntary and unpaid work undertaken by older people was estimated to be worth around $15 billion a year as of last year and was projected to increase to over $70b by 2071.

“Taken all together I say these benefits more than offset current and future projected expenditure of NZ Super.”

Key recommendations:

• Retain NZ Super as it is, no change to the eligibility age
• Increase the asset cap for accessing the accommodation supplement from $8100 to $42,000
• New Sorted tool to help people work out how to spend their money in retirement
• Extend KiwiSaver eligibility to temporary visa holders for those who stay in New Zealand
• Form an advisory rōpū (committee) to allow Māori to make recommendations for Māori
• Improve outcomes for Pacific people through home ownership and financial capability programmes
• Financial institutions should consider a more connected approach to borrowing to allow multi-generational living situations
• Fix the gender and ethnic pay gap
• Employers maintain KiwiSaver contributions through periods of parental leave
• Extend the range of housing stock available for seniors to both smaller for down-sizing and larger for multi-generational living