Time to STOP New Zealand's pension rip-off
People entitled to a New Zealand pension, New Zealand Superannuation, who also receive an overseas pension, are likely to be in for an unpleasant surprise: their overseas pension will be deducted from their New Zealand Super. This is called Direct Deduction. If this person’s overseas pension exceeds the NZ Super rate for one individual, the “excess” amount is carried over to their partner’s entitlement and deducted from his or her NZ Super. This is called Spousal Provision. The practice is governed by Section 70 of the Social Security Act.
In a worst-case scenario, one partner’s high overseas pension can cancel out a couple’s combined New Zealand pension entitlement. The New Zealand government uses other states' contributory pension provisions for the payment of the NZ Super benefit.
A bad Super surprise for immigrants and Kiwis
This policy affects not only immigrants but also a growing number of New Zealanders, due to increasing global mobility and international work histories. It has been identified as highly unfair, but so far no changes to the law have been made.
This website highlights a number of points why this is so, how the Government is trying to keep the issue off the agenda and what this does to the people affected by Section 70.
While there are many aspects of the New Zealand pension law that need to be addressed, the primary aim of this website is for contribution-funded overseas pensions to be exempt from abatement against tax-funded NZ Super. Only overseas pensions similar to NZ Super must be deducted from NZ Super. Most urgently, however, the Spousal Provision rule needs to be discontinued as it is in breach of Human Rights and constitutes discrimination on grounds of family status.
Facts and figures
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o People with overseas pensions living in New Zealand: When we started this website in 2010, we had to use the statistic of the Ministry of Social Development from 2008. According to this statistic, 52,756 people received overseas pensions in New Zealand. Until July 2012 this number had risen to 63,989, and at the end of December 2015 it already stood at 83,754. Most are from the UK (56,745, compared to 47,898 in 2012 and 41,359 in 2008), Australia (15,309, compared to 8,953 in 2012 and 4,918 in 2008), and the Netherlands (4,120, compared to 3,588 in 2012 and 3,324 in 2008). Number four is Canada with 2,060. All other countries provide overseas pensions for less than 1,000 people. (More details from 2008 here.) The total number has been increasing steadily, from 42,336 (2004) to 46,996 (2005), to 51,464 (2006), and after a slight drop in 2007 to 50,019 up again to 52,756 in 2008 and 63,989 in 2012.
According to information given to the "Sunday Star Times" in mid July 2012, 24 per cent of those 64,000 retirees had deductions higher than NZ$ 5000 a year. At the end of 2015, 247 people had weekly (!) deductions of NZ$ 400 and more, this is more than NZ$ 20,000 per year!
o Misleading statistic: The MSD statistic is misleading, as only overseas pensions of people are counted who also receive a portion of NZ Super (and if it is only one dollar) because their overseas pensions are lower than NZ Super. Immigrants and returning Kiwis who miss out on NZ Super completely are not counted. Therefore the number can be dramatically higher. We happen to know the number of German pensions paid into New Zealand. As of June 2010 exactly 802 people in New Zealand received a German pension. The MSD statistic of June 2008 listed 200 German pensions. Even if this number is slightly higher now it means that 75% of people with German pensions do not receive NZ Super thanks to the Direct Deduction Policy - and that the total number of all nationalities missing out completely is several thousands higher than the nearly 84,000 published by MSD (December 2015).
o Spousal Provision policy: 124 people were affected by Spousal Provision in 2009. Numbers here also rising, in 2010 it was at about 200.
o The myth of a universal pension: The Crown Law Office defends Section 70, asserting that a couple can be perceived as a single economic unit. This is questionable as NZ Super is not a needs-based or means-tested system, and is received by some of the nation's wealthiest citizens as individuals in their own right, whether married or not, and regardless whether both of them have ever worked and paid taxes.
o NZ Super overseas: At the end of June 2008, 13,825 people living overseas were receiving New Zealand Superannuation (and 38 Veteran's Pensions) - at the time all at drastically reduced rates. Pensions overseas were paid at a rate of 50%; now they are proportional to time spent in New Zealand. So a total of 66,581 people did not get full NZ Super and many more none at all. And it is only paid to people who are ordinarily resident in New Zealand when applying for NZ Super.
o Pensions similar to NZ Super: Only eight other countries and one city pay a universal pension with no test other than citizenship, residence and age, comparable to NZ Super: Mauritius, Namibia, Botswana, Bolivia, Nepal, Samoa, Brunei, Kosovo and Mexico City.
o Ministerial mind twist: In its 2005 Review the Ministry of Social Development stated that only overseas pensions that are similar to NZ Super should be deducted, and that earnings-related second tier overseas pensions have little resemblance to NZS. In the 2007 Review the deduction of "fundamentally different" pensions was justified with the following mind twist: "Both pensions are nevertheless state social security pensions that are paid for the same purpose." This states that both kinds of pensions are - pensions. The Chief Executive of the Ministry of Social Development has the almighty power to decide which overseas pensions can be deducted from NZ Super. We urge the Government to take this overwhelming power off this one single civil servant and stop deducting overseas pensions that are not similar to NZ Super. Read more about the findings of the famous Reviews.
o The Government's justification of the injustice: Paying a person NZ Super and not deducting his/her overseas pension would place him/her in a better position than a New Zealander who has never left the country. The truth is that a lifelong New Zealander married to someone with an overseas pension might not get any NZ Super at all. He is worse off. People who have spent 50% of their working life in New Zealand might get 0% NZ Super. Parliamentarians, civil servants and others enjoy special treatment at taxpayers' cost. More about this on our Offenders and Letters from Wellington pages.
How much the NZ government cashes in from other countries
(Statistic by the Ministry of Social Development, June 2015)
In the meantime the number of affected pensioners has risen to 83,754 (December 2015) and the total amount taken off these people stands at NZ$ 322,778,017.75 - nearly
NZ$ 323 million!
See full table of the steady rise of the numbers of affected pensioners and the amounts taken off them by the New Zealand government from 2009 to 2015
at the bottom of this page.
1. Amounts are per year in NZ$
2. The number of pensioners includes only those who receive a portion of NZ Super, and be it only a few dollars. Those who miss out on NZ Super completely are not included.
3. The "Other" category combines countries with fewer than ten pensioners each.
Annual deduction bands Number of pensioners
NZ$ 5,000 and under 49,073 (Dec. 2015 approx. 24,744)
NZ$ 5,001 to 10,000 11,452 (Dec. 2015 approx. 20,701)
NZ$ 10,001 to 15,000 2,699 (Dec. 2015 approx. 36,582)
Over NZ$ 15,000 765 (Dec. 2015 approx. 1,727)
The figures in the category over NZ$ 15,000 and a proportion of those in the category 10,001 to 15,000 included pensioners who had a Kiwi partner who had never left the country. They did not receive any NZ Super and, on top of this, had to pay for their partners' NZ Super (Spousal Provision).
We have linked a new website with NZ Pension Protest. https://sites.google.com/site/dontemigratetonewzealand/ delivers a summary of the problems around the Direct Deduction Policy and portability, as well as NZ-specific financial pitfalls of relationship property when a relationship goes wrong.
We do not fight Section 70 only but also the unlawful taxation of a few overseas pension by New Zealand's tax authority (IRD). The Double Taxation Agreements with Germany, the USA, France, Finland and the Philippines rule that only the country where the pensions originate can tax them. If you have paid taxes on overseas pensions from those countries, apply for a re-assessment of your tax returns. This can result in refunds of thousands or even ten thousands of NZ dollars. More information on our DTA page.
We do not fight Section 70 only but also the unlawful taxation of a few overseas pension by New Zealand's tax authority (IRD). The Double Taxation Agreements with Germany, the USA
To fight the injustice of
Section 70, a new political party has been formed in June. It is called the New Zealand Seniors Party. The infrastructure has been set up and you can join and become a member of the party. You can download the membership form on the website. Email contact: email@example.com.
More information on our website:
The Social Security Legislation Rewrite Bill 2016 has been prepared by MSD. Submissions could be made until 22 June 2016. We made a submission, demanding that the Government stop deducting overseas pensions from NZ Super. Here is the link to a summary of the paperwork, offering you only the paragraphs dealing with overseas pensions.
New pages have been added about the Spousal Provision and the confiscation of private pensions from Ireland and Singapore.
A new page has been added about the Lucky Chinese who, thanks to the One Child Policy, can bring in two sets of parents and all receive NZ Super on top of their Chinese pensions. How is this possible?
When we started our fight against the Direct Deduction Policy in 2010, more than 57,000 pensioners were affected by this pension rip-off. Official statistics from December 2015 (see at the bottom of this page) show that this number has risen to 83,754. This does not include those who do not receive any NZ Super at all. It means the number of affected pensioners is even higher than that. Numbers are rising fast, and it is high time we use these numbers to make more noise and create political pressure, lobbying the party that serves us best.
Some pensioners are even ready to found their own protest party. Our plans are slightly different at the moment. More on this coming soon. Watch this space!
Yesterday the first reading of the the Pro Rata Entitlement Bill, tabled by NZ First, was voted down in Parliament 61:60, thanks to our "supporter" Peter Dunne. The ruling National Party abused the debate for a hate speech against NZ First instead of seriously discussing the issues, and treated NZ Super as if the Direct Deduction Policy (Section 70) didn't exist. We wrote to National MP David Bennett and Prime Minister John Key what we think about their attitude. Read more here in the "Fight" section.
Contacts in New Zealand
Since the General Election in October 2014 some faces have changed but not the stance of the (still National) government under Prime Minister John Key on Section 70. A re-write of the Social Security Act has been announced for quite a while now. But don't get fooled. The intention is to "translate" outdated language and overhaul the innumerable changes that have occurred over many decades. It does NOT mean that the legislation will change.
Minister for Social Development:
Minister for Senior Citizens:
No change in the position of Chief Executive of the Ministry of Social Development. The man in charge is still Brendan Boyle.
He is the successor of all overseas pensioners' arch-enemy, Peter Hughes. We were mildly amused when we read the latter saying that he is fighting against bullies..
Address your complaints about the Direct Deduction Policy to Brendan Boyle - although we do not think this will change anything. We just want him to see that we have not retired from protesting...
You find links to the email addresses of all MPs here:
For older news please check the News archive page.