As part of its confidence and supply agreement with the United Future party, the National Government has issued a discussion document looking at the option of flexible superannuation.

The proposal would mean that people could choose when they wanted to take their super.  If they wanted the pension earlier than 65, they would get a reduced rate. Later, they would get a higher rate.

Finance Minister Bill English said the Government was testing the public appetite for more flexibility.

“The discussion document is deliberately set at a high level and more detailed policy work would be required should the proposal be progressed.”

Institute of Financial Advisers president Nigel Tate said the move would be risky.  “If you defer the pension with a view to receiving a higher amount later on, and you kick the bucket early, you miss out. Or if the Government changes, there are issues around that.”

But he said advisers should discuss with clients the possibility that they might not get the pension at 65. “It’s an opportunity for advisers to guide clients and acknowledge eligibility issues and encourage people who are planning for their retirements not to assume they are going to get a pension until they are 67.”

He said that would amount to clients needing an extra $25,000 over two years, which they could call on if they still wanted to stop work at 65. “There’s plenty of time to plan for it but if people do what people usually do, which is put things off, they could fall into a trap.”