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From the Labour Party


Update 14.09.2017
Vague promises and wrong terms

As the Labour Party changed its leader on 1 August 2017, from Andrew Little to Jacinda Ardern, and Jacinda-mania has overwhelmed the country, we tried to find out if Jacinda Ardern is standing to her passionate stance on the unfairness of Section 70 and if she would make changes to the policy if elected into Government on 23 September 2017. 

We had concerns because the new leader had announced to allocate huge amounts of money on other - surely worthy - policies she intended to implement if becoming the new Prime Minister, and we didn't see any money left for filling the NZ$ 350 million gap that would open in the budget if the Direct Deduction Policy stopped.

We referred to the articles collected on our website: Sunday Star Times in 2012.

The answer from Jacinda Ardern's office on 13 September was:

"Labour's policy says the following: An increasingly mobile society, including in retirement, raises complex issues as to how pensions are paid between countries. The current pension portability arrangements aim to ensure that all New Zealand residents receive an equitable level of pension and that costs of pensions are shared between countries. But the unique nature of New Zealand Superannuation presents a number of policy and administration issues, including real  or perceived inequity in the treatment of overseas pensions.

A Labour Government will review the legislation around superannuation portability."

This statement raises concerns that the Labour Party has lost the plot on Section 70. We are not talking about portability, as the portability rules apply when a pensioner leaves New Zealand and moves to another country. This gets further complicated when they move to a country New Zealand has a Social Security Agreement with. Only then real cost sharing occurs - or not, as we know from the particularly unfair agreement with Australia.

We are talking about the Direct Deduction Policy and the fact that non-taxpayer funded overseas pensions are confiscated by the New Zealand government. Is this perceived or real inequity in the treatment of overseas pensions?

Some of the pensioners who regularly contact us "smell a rat" in these vague writings from the Labour Party - while one couple let us know that Jacinda Ardern promised them on the campaign trail that she remembered her engagement in 2012, and that she would review the policy if elected into government. Well, this still is not a policy.

We are reminded of the passionate speeches of Ruth Dyson and Annette King in 2009 (see here on the right margin) - and rowing back into murky waters a year later with the words: "At this stage of the electoral cycle, I am unable to give you an indication of what our policy will be in relation to section 70, but I can say that it is a live issue within our policy discussions."



Older text about Labour and Section 70:

Money only for election promises
 
After Steve Maharey who signed the Review 2007, Ruth Dyson became the Minister for Social Development and for Senior Citizens.
 
She is a busy woman and takes on many jobs, as, for example, singing in a Labour Party chorus to ridicule National's policies. To us, it is remarkable that Ruth Dyson answers some letters and emails personally, and takes the time to even call people who complain to her.
 
Ruth Dyson was the Labour minister in charge who could forward the good news that Cabinet had agreed on 23 October 2007 to scrap Spousal Provision - and the bad news that the change of policy was subject to the availability of funding. This "was not found" in the Budget 2008. The dire consequence of this unsuccessful search for money was that the National Government distanced itself from this agreement when Labour got swept out of power at the end of 2008, and the fight for justice had to start at the very base all over again.
 
We should not forget that the Labour Government did not find less than NZ$ 2 million the abolition of the Spousal Provision would have cost, but it found the funding for major tax cuts before the 2008 election. Many people called those promises election bribes by a desperate Government that pulled all tricks to stay in power. 
 
Continue to look into this matter...
 
We do not know if Ruth Dyson is convinced that the Direct Deduction Policy is really "fair to most New Zealanders" or if she is only mimicking the phrases like all other high-profile politicians. But we and many pensioners would happily introduce her to our husbands and wives who have lived and worked all their lives in New Zealand, contributed to the tax base and society, and still do not get NZ Super.
 
We would also explain to her the difference between Tier 1 and Tier 2 pensions and give her a hint in which paragraph of the 2005 Review she can find the acknowledgement that contributory overseas pensions have little similarities to the tax-funded NZ Super and should therefore not be deducted.
 
As Ruth Dyson has promised "to continue to look into this matter as opportunity arises", the information would surely be helpful to her.
 
Excerpts from her letters from Wellington:
 
"... you will be aware that the rationale behind the policy on the treatment of overseas pensions is to ensure that all New Zealand residents receive an equitable level of either the full rate of NZ Super or an amount that is at least equivalent to that. The outcome of the Review was that, on the whole, the current policies operate and provide good protection for most New Zealanders. While the Review found that fundamental change is not required to the current policy, which is broadly appropriate to New Zealand's circumstances, I will continue to look into this matter as opportunity arises.
 
You asked whether, in the case of a couple where one partner has entitlement to an overseas pension at a higher rate than NZ Super, the Work and Income service continues to deduct the surplus value of the overseas pension from the spouse's entitlement to NZ Super. The answer is that the Government has agreed to change this provision but has not yet implemented the decision. Cabinet agreement to the change of policy was subject to the availability of funding in Budget 2008, and funding was not found. The proposal will therefore have to await funding in a future Budget round before the present law is changed."  (October 2008)
 
Did they think they would stay in government forever? Or that most protesting pensioners would die and not remind them of their decision?
 
Who pulls the strings in the ministry?
 
A letter from March 2008 shows who pulls the strings in the Ministry for Social Development:
 
"I asked the Chief Executive of the Ministry of Social Development who is responsible for Work and Income to look into the matter. [...] The New Zealand scheme is designed to facilitate entitlement to superannuation payments on the basis of age and minimal residential qualifications, regardless of a person's tax contributions. 
 
Many countries (Note: how many is many?), including New Zealand, apply a principle that a person should not be able to receive social security pensions from different countries for what is effectively one contribution period. While some people may be able to acquire one, two or even three pensions from the one country during the one contribution period, they cannot generally acquire pension rights from two different countries during the same contribution period. (Note: this is not correct if someone makes voluntary contributions to his contributory pension scheme in a country he has previously lived in.)  [...]
 
This policy also reflects a concern that those who spend their whole life here, working and paying taxes, should not be worse off than those who may have been resident for as little as ten years, or, in some cases, even less and who consequently have not contributed significantly by paying taxes. [...]  (Note: as criminals released from prison have done in a significant way...) [...] "
 
The pension is "adjusted"
 
In a letter (April 2008) to a pensioner who has lived, worked and paid taxes in New Zealand for more than 40 years but has a small overseas pension the minister wrote: 
 
"As your [contributory overseas pension] is paid for the same reason as NZ Super the rate of your NZ Super must be adjusted. [...]  NZ Super is adjusted by the rate of any social security based overseas pension similar to NZ Super that is received." (Note: so why again are overseas pensions that are not similar to NZ Super deducted from NZ Super???) 
 
 
 
 
Interesting words: a change of mind or not?
 
In a speech held on 21 October 2009 during the debate about the Superannuation and Retirement Income Amendment Act, Ruth Dyson signalled a surprising change of mind regarding overseas pensions. She said:
 
"... people who originally lived and worked in another country, but have since moved to New Zealand to retire and now receive New Zealand superannuation. They feel a huge frustration that they lose their entire overseas superannuation when they get the entire New Zealand Superannuation.
 
They are not expecting to get two lots of superannuation in full, but they would like to get the percentage of their overseas superannuation they earned while they were overseas, whether it was in Switzerland, Holland, or Canada, and they would like to get the percentage of New Zealand Superannuation they earned while they were here. I frankly do not think that that is too big an ask.
 
We would not want people to be financially disadvantaged by the fact that their overseas pension is worth considerably less than the value of the New Zealand pension and, actually, compared with many countries, we are quite generous. But compared with other countries, we are not.
 
So some people are financially disadvantaged and the Crown is advantaged by their giving over all their overseas superannuation to the Crown and receiving just the level of New Zealand superannuation."
 
 
During the same debate, the deputy leader of the Labour Party, Annette King, said:
 
"People want to be able to have their overseas pension that they earned in another country as part of their income here in New Zealand. As I said in the Committee stage, we believed that was unfinished business in terms of the changes that need to be made. I asked the Minister [John Carter] whether the Government was considering making such a change or doing work on such a change, but the Minister did not address that matter."
 
 
False hope - for now
 
Of course, we were most interested to know how serious we should take these words of wisdom, as they were spoken by politicians. So we contacted Ruth Dyson. This was her answer we received on 16 June 2010:
 
"At this stage of the electoral cycle, I am unable to give you an indication of what our policy will be in relation to section 70, but I can say that it is a live issue within our policy discussions."
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