This is not about older folk being naughty and having fun under the duvet. It is about superannuitants staying in bed because they cannot afford to heat their homes. In a broader sense, it is about the adequacy of NZ Super, or rather its inadequacy to cover living expenses.

The issue was first raised under the catchy “stay in bed” headline in Grey Power’s Lifestyle magazine in 2008. The story was based on a study of John Logan, a superannuitant with a sharp mind and a penchant for figures did some extensive number crunching. Based on publicly available statistics, he arrived at alarming findings which prompted both Age Concern ("Dignity Champions") and Grey Power to take action. The following text from about 2010 is the summary of a study from the Age Concern website (link not available any longer):

"A new study shows that NZ Superannuation payments aren't enough to live on. Many people are short by $30-plus every week.

New Zealand Superannuation – A Measure of its Adequacy, a two-part study by Katikati volunteer John Logan, has been released jointly by Age Concern New Zealand and Grey Power.

Both our organisations are so concerned at the study's findings that we have jointly forwarded the study to the Prime Minister and other MPs.

Even the most minimal living costs, based on Statistics New Zealand figures, add up to more than the current Super payments of $245 - $318 per person in the hand each week.

"Most older people have only Super to live on, plus very small savings income," Age Concern New Zealand chief executive Ann Martin says.

"Few people would like to live on John Logan's minimal weekly budget, but his study shows that many older people can't even afford this basic standard of living without going into debt."

Couples on Super are the worst off, with the study reporting shortfalls of $30-plus each per week. The deficit increases the further South they live, due to higher heating costs.

The study shows that older people need extra weekly income just to make ends meet, but Statistics New Zealand figures show at least half of all older New Zealanders have $38 a week or less of additional income.

They must go into debt or cut even basic living requirements to survive.

The current level of Super payments has little relation to the cost of living. It is set through an arbitrary proportion of the net full-time average wage plus inflation adjustments. Government agencies have little information on its adequacy."

In late 2008, approximately 515,000 people received NZ Super. In June 2020 this number was at 809,001 people according to the Ministry of Social Development (MSD).

Insidious move by Ardern's "government of kindness"

In March 2020, the MSD statistic showed that it deducted 95,160 overseas pensions from NZ Super. The real numbers are much higher because the MSD statistic only counts cases where MSD must pay a few dollars of NZ Super after the deductions. If someone receives an overseas pension higher than the amount of NZ Super, the pension/er and the saved amount is not counted.

Comparing numbers of overseas pensions paid to pensioners living in New Zealand, provided by overseas government agencies, and the MSD numbers, the real number could be as high as 130,000 affected pensioners.

The Government surely saw the need to help pensioners and other "beneficiaries" over their income shortfalls and winter heating woes, and, in 2018, introduced the Winter Energy Payment.

However, this is only paid to pensioners who receive at least a fraction of NZ Super. Those who receive nothing after the deduction of their overseas pensions do not receive a single dollar of the heating support - even if their overseas pension is just as high as the amount of NZ Super. They have to live on the exact amount the Government and the organisations for the elderly consider too little to survive. What an insidious move by Jacinda Ardern's self-proclaimed government of kindness!

Sure, not all pensioners have to “stay in bed” to keep warm in winter and watch every cent to make ends meet. According to the Household Economic Survey (HES 2007), which was conducted every three years by Statistics New Zealand, about 14.9% of persons over 65 had additional income on top of NZ Super. However, conversely, this also means that the vast majority of all pensioners rely on NZ Super as their only source of income.

How adequate is New Zealand Superannuation?

This begs the question how much a person really needs to cover living expenses. It could be viewed as falling into the category of a “how long is a piece of string” question. But there are a couple of lofty, official goals and visions, and some more specific statistics to go by.

On its KiwiSaver web page, the Government stated: “NZ Super provides for a basic standard of living in retirement, but may not be enough for the kind of retirement you want. […] KiwiSaver savings will complement NZ Super to provide you with a better standard of living in retirement.” According to this statement, NZ Super should be enough for a “basic” lifestyle.

In 1972, the Royal Commission of Social Security recommended that "the community is responsible for giving dependent people a standard of living consistent with human dignity and approaching that enjoyed by the majority.”

A minimalistic budget and a Spartan lifestyle

Number cruncher John Logan took all these claims into consideration and created not a basic, but even a minimalistic pensioner budget. It was based on living costs gathered from various sources, such as Government agencies, universities and electricity suppliers.

In the absence of age-related expenditure data, Logan excluded such items from the Household Economic Survey data that would normally be consumed in many households, such as the expenses of owning a car, inter-city travel, alcohol and holidays. This left a very minimalistic budget and allowed pensioners only a very spartan, home-bound lifestyle.

The items that remained in his calculations to establish a typical superannuitant’s cost of living fell in the categories of

1 council rates

2 electrical energy

3 telephone

4 health services

5 food costs

6 other costs

Far from generous, far from adequate

Having analysed the HES data and done the sums of his minimalistic budget, the author came to the following conclusion: “It is a surprise to discover that an average household comprised of two persons in New Zealand spends twice as much per week as NZ Superannuation pays to a superannuitant couple.”

The shortfall from the amount of NZ Super to John Logan’s minimalistic budget requirements was - remember: in 2010 - NZ$ 38.36 per week, or NZ$ 1,995 per year. However, Statistics New Zealand figures showed that in 2008 over half of all superannuitants, i.e. more than 250,000 pensioners, had less than NZ$ 38.36 per week from other sources than NZ Super.

To make ends meet, there are a few types of cost over which pensioners have full control and which they can – and often do - reduce.

• They can choose cheaper food items, thus keeping an unbalanced and unhealthy diet.

• They can use less energy during winter, stay in bed, or put on another jumper and sleep in thermal underwear and a balaclava.

• They can exclude books and newspapers and only use the library.

• They can skimp on clothes, go threadbare or only buy second-hand.

This is surely not what the Royal Commission meant by a standard of living consistent with human dignity and closer to that enjoyed by the majority of people.

The Government: doing little and obscuring a lot

With all these figures available, the Government was doing very little to address the problem in a fundamental way - and when finally getting into the gear with the introduction of the Winter Energy Payment, they excluded a big group of pensioners with overseas pensions.

KiwiSaver is still promoted as a nice add-on income for the extras in retirement while the Government continues claiming that the basics would be covered by NZ Super. KiwiSaver is not compulsory and employer contributions were reduced, thus reducing savings in the long term.

The rate of NZ Super is still widely quoted as 66% of the average per-person full-time wage. However, this 66% is the couple rate. The rate for an individual living with a partner is half the couple rate, this means it is 33%. The rate for an individual living alone is around 40% of the individual average wage. If the comparison were made on a like-with-like basis, it would be obvious how little superannuitants really receive and are expected to live on.

While not the Government’s fault, another factor is also frightening. Given the fact how real estate prices have sky-rocketed since 2000, and even astronomically in the years after 2015, lower levels of home ownership are now a reality across all age groups, particularly among future retirees. Unlike today, significantly more elderly people will have to cover the cost of renting when they retire.

And in light of all these facts, the Government unashamedly continues to deduct overseas pensions, thus making sure the number of pensioners who “stay in bed” stays as it is. A bedrock principle, as it were.