Paffett, who has been a full-time test and reserve driver at McLaren since 2006, believes Magnusen's outright speed will have a positive effect on Button this year.
"What we want to see at McLaren is Jenson to be pushed hard this year," said Paffett on the main stage at AUTOSPORT International.
"Jenson needs someone quicker than him to push him harder. That's what we saw with Lewis Hamilton in the team.
"Lewis is one of the best qualifiers on the grid, and he always pushed Jenson past the limit, so Jenson had to work very hard to keep up.
"Last year with the drivers quite closely matched there didn't seem to be too much pushing going on in the team and I really think Kevin can bring that.
"What we've seen of him so far in testing, he is extremely fast."
Is Magnussen ready for F1?
Paffett also praised the way Magnussen adapted and matured during his two years in FR3.5, which culminated in him winning the 2013 title.
"Kevin lacks the experience of racing in F1 but what we saw over the last two years in World Series was how much he changed as a driver," he added.
"He was quick but a bit reckless and had a lot of incidents in 2012, but in 2013 he was a very complete driver - still quick but a lot wiser and a lot more technical than he was before.
"He still has a lot to learn in Formula 1 but he is very quick and he does learn well and he does change to make himself better."