Clear views on pension reforms and fairness
New Zealand First is a highly controversial party, due to the antics of its leader Winston Peters. He is considered xenophobic - but also brave to speak out against the grievance mentality of many Maori, being a Maori himself.
To be frank: we have enjoyed his presence and comments in Parliament despite thinking his xenophobic stance was not acceptable, as were his political affairs that finally cost him and his party re-election and presence in Parliament after the November 2008 election. (But he came back in November 2011.)
Being of a certain age himself and sporting grey hair, Winston Peters has become the man of old age New Zealanders. He pushed for the introduction of the SuperGold Card which, as the most significant achievement, guarantees free public transportation to senior citizens - which, of course, helps only those in the bigger cities where public transport works.
Voted out of Parliament because they missed the 5% threshold and Winston Peters did not win his electoral seat (Tauranga), NZ First was trying hard to make a comeback at the end of 2011. Winston Peters was busy visiting resthomes and old people's meetings, and we are sure that a lot of protest voters affected by the legalised theft of their overseas pensions helped the old war horse and his party back into Parliament in Noveber 2011.
The party's policy on superannuation is spot on. We would support all major points. And this is not just about the treatment of overseas pensions but pension reform in general, with a realistic view that New Zealand's state pension is not sustainable.
At the same time we found Winston Peters' quotes about immigration and immigrants mid 2016 so highly insulting and xenophobic that we stepped back from a possible collaboration with the party.
Peters labelled higher immigration numbers the importation of more criminals. In this context we want to point out that Zealand chooses who comes into this country, by means of its restrictive immigration laws and requirements. Criminals don't just cross the borders like in Europe. The huge majority of immigrants are hard-working taxpayers who boost the economy. If you look at the statistics you can see that we do not need to import criminals to raise our crime rates. We have our own criminals. More immigrants increase the number of potential crime victims.
An article by NZ First leader Winston Peters, received on 5 February 2015:
OVERSEAS PENSIONS SHOULD NOT BE CONFISCATED BY NZ GOVERNMENT
Increasingly, I am getting letters from Kiwis who spent a few years in their adult life working overseas. When they apply for their New Zealand Superannuation (NZ Super), they discover their entire overseas pension is confiscated under Section 70 of the Social Security Act 1964.
I am certain the person concerned would not mind if I use his example anonymously. This successful Kiwi spent 12 years of his younger years working in Germany. He then brought back his expat skills to contribute to New Zealand.
During his OE he paid 9% of his income into the German pension scheme. On getting his NZ Super at 65, his entire contributory German pension is confiscated – an amount equivalent to 90% of NZ Super. Remember he only spent 12 of his 70 years overseas.
New Zealand First considers Section 70 a travesty.
The unfairness stems from comparing apples with oranges; when overseas pensions are contributory whereas NZ Super is a universal, non-contributory, non-means tested entitlement.
We have highlighted the gross injustice of Section 70 compared to migrants (from non-pension countries) who get full NZ Super after just 10 years of residency. Those who enter under parent reunion have no requirement to contribute to the economy – and their savings and capital are not touched.
Considering 25% of all NZ Superannuitants were born overseas, there are huge anomalies to entitlement to NZ Super.
New Zealand First has proposed a Members Bill which rejects the premise on which overseas pensions are confiscated.
New Zealand First believes overseas pensions are no business of the New Zealand government and all reciprocal pension agreements should be abolished.
The New Zealand Superannuation and Retirement Income (Pro Rata Entitlement) Amendment Bill bases proportional NZ Super entitlement on years residency in New Zealand between ages 20 and 65 (45 years).
For example, residency of 35 years will get 35/45th NZ Super. Residency of 10 years will get 10/45th NZ Super.
The policy allows for a 5 year waiver for Kiwis’ OE.
Our Kiwi who worked in Germany for 12 years would get 38/45th NZ Super and keep his entire German pension.
New Zealand First believes this is a fair formula which should apply to all Kiwis and to all migrants from pension or non-pension countries.
Section 70 is a contentious issue for 70,000 migrants who bring their overseas pensions, as well as increasing numbers of Kiwis who have spent some of their working lives overseas.
New Zealand First policy is: Overseas Pensions are no business of the NZ government if entitlement to NZ Super is based on years of NZ residency. And this should apply to everyone.
NZ First's policy on superannuation includes:
- work towards a formula for those receiving overseas pensions, based on a pro rata, 1/45 year entitlement for years worked in overseas jurisdictions and New Zealand, while ensuring that anybody who qualifies for New Zealand Superannuation receives no less than the base New Zealand rate
(note: this is similar to Option 2 of RPRC's Working Paper)
- facilitate the transition from the pay-as-we-go scheme through the cost-smoothing mechanisms of the newly established fund to a new save-as-we-go scheme, with the ultimate aim of achieving individualised accounts;
- amend the legislation relating to the Superannuation Fund to tag individual entitlements, guaranteed by the State, and to make them untouchable by future generations of politicians;
- pass legislation which ensures that any modifications to the scheme can only be made with a 75% majority in the House of Representatives;
- investigate the costs and benefits of a trade-off between tax cuts and the implementation of compulsory superannuation.
50,000 [now: 70,000, as of 2015] superannuitants are being ignored
In the December 2010 issue of the Western Bay of Plenty Grey Power group's newsletter Winston Peters wrote the following on the serious situation the National Government is driving New Zealand Superannuation into. The first two paragraphs are on superannuation in general, the following paragraph on superannuitants with overseas pensions:
"History has an awful way of repeating itself and with contributions to the Cullen Super Fund now stopped, our ability to meet the superannuation costs of today's baby boomers will be seriously reduced. This is an incredibly short-sighted move and it has set the stage for increased demands to change the retirement age, reduce pensions and/or means-testing, all measures being floated by a key advisor to the Government's Welfare Working Group.
As a result of changes on 1 October superannuitants will not be financially better off because costs are rising everywhere as will inflation by about 6% after extra charges resulting from this year's budget. Power costs, all manner of licensing fees, and rates. This will amount to losing the equivalent of one day's food a week when all the extras kick in. The fact that elder care has been internationally privatised and sold off overseas where profits for shareholders is the number one objective is not going to help.
Alongside this disquieting news is the fact that about 50,000 superannuitants who have qualified for overseas pensions are simply being ignored. Grey Power has battled some huge issues for the elderly since its formation. It has had some success but even the most optimistic Kiwi must realise that unless a dramatic rethink in this area takes place then part of the Kiwi way of life - caring for our elderly - is bound to deteriorate.
An independent body, paid for by the taxpayer, and in which the taxpayer can be confident of its representation is desperately needed to cut through bureaucratic and political non-performance. But for that to happen hundreds of thousands of retired people need to understand their duty to better care for those of their generation. "I am in the boat, Jack", will no longer do for who knows when the wolf will call or when the sad plight of the 100 year old lady becomes a personal one in their family."
Manifesto before election
Just in time before the general election on 26 November 2011 NZ First published its manifesto. On page 108 it states that the deduction of contributory overseas pensions is unfair. It repeats the policies described in detail in the centre column of this webpage. NZ First's aim is to work out a fair formula. This means that you will not receive full NZ Super if you have not lived in New Zealand for 45 years.
21 November 2016
Denis O'Rourke's new ideaWe have received a draft for consultation of the “New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill”, authored by NZ First member Denis O'Rourke. He suggests to raise the residency requirement for the payment of NZ Super to 25 years and in return abolish Section 70 (Direct Deduction of overseas pensions).
We agree with him on that a 10-years residency requirement for a full state pension is too generous. We also applaud him for his continuing effort to abolish Section 70 and all associated inequities.
But already to claim that the 10-years requirement is an unusually short time “globally” shows his lack of understanding of the nature of overseas pensions, as only eight banana republics and one city (Mauritius, Namibia, Botswana, Bolivia, Nepal, Samoa, Brunei, Kosovo and Mexico City) have a universal, non-means-tested pension solely based on residence that is comparable to NZ Super.
O'Rourke seems to think it is ok to make people who have worked and contributed to overseas pension schemes pay for their own retirement, while Kiwis who have never contributed a cent and not even worked much in New Zealand should receive full NZ Super.
NZ Super would be paid to Kiwi millionaires and retired criminals who have spent most part of their lives in jail and cost the taxpayer a fortune, just for the fact that they have lived in New Zealand 25 years+, and immigrants and returning Kiwis who have worked here and paid taxes for 20 or 24 years, including the taxes used for the NZ Super of others, would miss out completely. If this is justice as he understands it, we must live on a different planet.
His earlier bill (about proportional NZ Super) hit all the right notes but was torpedoed by some small players (e.g. Peter Dunne). We would even support his new bill if he added proportional NZ Super for those who have lived in New Zealand for less than 25 years. The Portability scheme (when someone moves overseas in retirement) works exactly this way. Why should it not work for people staying in New Zealand and continuing to pay taxes here? Why should someone who has lived here for 25 years receive full NZ Super and someone who has worked here for 24 years nothing at all?
And what about people who have not lived here for 25 years but receive very small overseas pensions (because they have studied a long time, didn’t earn much during their earlier career, therefore didn’t make big contributions which would result in lower pensions; or if they have done a lot of unpaid volunteer work etc)? Where is the safety net for such people?
The message O'Rourke sends with his bill is this one:
Come with money and you will be very welcome, just like tourists who spend big.
Come with skills and work hard, pay taxes for years and years, and fund New Zealanders' tax-funded state pension, NZ Super.
Invest huge money in New Zealand, help to make the country's economy thrive, create jobs, be a good citizen. All this is expected of you.
But once you retire and have lived here for less than 25 years, you are treated like a greedy parasite.
O'Rourke's answer:[no salutation]
"Yes I do think that you live on another planet."
[and no comma after Yes...]
At least we now know which party we shall not vote for in the next election although the reply was rather funny.
(Page last updated on 21.11.2016)