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Pressure for John Key to raise retirement age

Monday 28 May 2012 6:15 p.m.

By political editor Duncan Garner

Prime Minister John Key is holding firm to his promise not to raise the retirement age, despite evidence from last week's Budget suggesting the current age of 65 is unsustainable.

An old political ally has joined the call for the Prime Minister to change his mind.

New Zealand Superannuation pays $350 a week, $520 if you're married, and you get it whether you're dirt poor or filthy rich.

“The age of eligibility simply has to go up,” says Don Brash

But John Key doesn't think the silver tsunami's a problem.

Despite cutting most things, including the paper boy's tax rebate, in the last Budget, National Super remains the elephant in the room.

Mr Key has promised not to touch it, or he'll resign.

He continues to dismiss the issue as not important.

“I can't rule out what other Government's will do, but even if I had not made that pledge it is not something we would have changed in Budget in 2012,” says John Key.

But the Budget paints an alarming picture of the cost of the ageing population.

In 2006 it cost $6.8 billion, this year $9.5b.

In 2016 we'll spend exactly the same amount on the entire education budget.

Mr Key says the issues came up for discussion during the Budget process, but not seriously.

“There are always recommendations from Treasury,” he says. “We kicked the tyres but no serious consideration.”

Labour has offered cross-party talks to help Mr Key out.

Mr Key's not interested in the offer, but increasing the age by a year would save $750 million annually.

Already Iceland, Norway, Ireland, Australia, the Netherlands, Denmark, the United States, Germany and Britain are moving to 67.

The man Mr Key replaced says he should break his promise.

“The mark of a true leader is someone who recognises he made a mistake,” says Don Brash.

There is a ready made solution.

The Retirement Commissioner says from 2020 New Zealand should increase the age by just two months every year until 2033, when the retirement age becomes 67.

We asked Mr Key, why not agree to that?

“I don't see any particular need to do that, no. It may be for another day, but not for today.”

So Mr Key is certainly boxed in by his promise to quit if he changes it. But by the next election his promise will look economically daft, and he may at least have to suggest a public referendum on the issue as a way out.

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