We often hear claims for higher levels of support for older people in New Zealand, for special concessions and special services. And there are quite a lot of these already, ranging through the SuperGold Card public transport concessions, residential care subsidies and rates rebates. Are older people in this country disadvantaged? Clearly not all of them are, but how many of them would fit into this category? How could we define “disadvantage” for this group?
Grey Power, in its submission to the 2013 Retirement Income Policy Review (p.30), asserted that:
New Zealand Superannuation in the absence of supplementary retirement income does not adequately fund retirement living of even a basic standard presently and, in future, certainly will not be sufficient to do so.
What does the research tell us?
Measuring disadvantage among older people
There have been several approaches to measuring economic disadvantage among the population in general.
• The 1972 Royal Commission on Social Security suggested that no one should have an income lower than a basic welfare benefit. Since the introduction of NZ Superannuation in 1976 its level has always been higher, say, compared to Unemployment or Sickness Benefits.
• In 2001 the Ministry of Social Development carried out Living Standards Surveys and developed a Material Well-being Scale to apply to sub-groups in the population. This found that only 4% of older people had severe financial problems (unable to meet bills, borrowing money, relying on charity) and 89% said their income was adequate. Older people reported fewer material restrictions than younger people.
• Statistics New Zealand’s Economic Living Standards Index (ELSI) was first run in 2006/07. ELSI uses a range of non-monetary indicators showing what items and services people can access and how they rate their own living standards. Each individual/household receives a score in the range of 0 to 60. Older people had the highest average ELSI score of all groups: 47 compared with 40 for the whole population and 36 for children under age eighteen. The 2008 Living Standards Survey showed similar relativities between age groups. Hardship rates were 4% for older people, 13% for the whole population and 19% for children.
• There were similar conclusions from the 2008 General Social Survey. Although 78% of people aged 65 plus reported annual incomes of $30,000 or less, they had the highest proportions who said that their incomes were enough or more than enough to meet their everyday needs – 61% as against 53% for the total population.
• Poverty measures calculated by the Ministry of Social Development in 2010 showed that older people have experienced considerably less poverty than the total population in the period 1982-2010 . Figures quoted in the 2013 Retirement Income Policy Review give an overall poverty rate of 15%, with 21% for children under eighteen and 7% for people 65 plus (couples 6%, non-partnered people 12%).
All this led to the conclusion in the same review that:
The great majority of older New Zealanders have sufficient income and assets to provide a reasonable standard of living. Many have a very good standard of living.
So, from all this research material, it appears that comparatively few older New Zealanders are disadvantaged, especially compared to children. But all the surveys give evidence of a small group (4-7%) whose living standards are very restricted. They would be considered by most to be living in undue material hardship (poverty). Who are they and what are the risk factors?
The research, using ELSI, shows that the risk of hardship is much higher for older New Zealanders who: are receiving little or no income over and above NZS; are paying rent or have a mortgage; and have low savings or other assets (other than their home). Any one of these factors alone increases the risk. Having more than one increases the risk greatly.
These all involve current financial circumstances, but, taking a longer-term perspective, the risk of hardship in later life is much higher the more adverse life events people have experienced in earlier years. Examples of these life events are: separation or divorce, redundancy, long-term hospitalisation or unemployment, especially in the decade or two before age 65. This is a timely reminder that material wellbeing in older age depends not only on income at the time but on events over the whole life-course.
In my next blog I will look more closely at the characteristics which might result in disadvantage for older people.