Overseas expert gives super fund tick

The entitlement side of the equation is simple and straightforward, she says, but the funding is a different story.

"It’s very clean, everyone gets it at 65, its very inclusive and its not means tested," she says. "However its more complex on the financing side. It’s still under funded."

The latest estimates show the fund will pay for about 35% of the pension burden when peak demand hits at around the year 2040.

"The costs of providing for New Zealand superannuation are steep and the fund will smooth some of that but there is still a large unfunded liability."

The money will have to be found to pay for that, she says, but in discussions she has had since visiting New Zealand she says she is surprised at the lack of concern.

Effectively, she says, New Zealand Superannuation is an annuity indexed to the average wage.

"So while I think the benefit side of New Zealand superannuation is brilliant, the financing side needs more work."

The ways of dealing with the finance side tend to be unpalatable, she says. These include higher taxes, means testing, or changing the entitlements in different ways and indexing New Zealand superannuation to inflation rather than to the average wage. Highly controversial at the time – although the UK government did the same thing 20 years previously with little upset – it was reversed when Labour won the 1999 election.

The other way is to lift the entitlement age.

"I understand you did that before, from 60 to 65, and it went quite smoothly., I wonder though whether it would go as smoothly if you raised it to 70?"

The US has recently lifted the age to 67, but it still allows people to take the pension as early as 62, in return for a lower pay out, she says.

"So 62 is still common, and people are ending up poorer."