Stealing Your Money
Elderly migrants mugged by WINZ
Front page of "Investigate", July 2010 (Volume 10, Issue 114, ISSN 1175-1290)
NZ citizens who migrated here from Europe are having their life-savings stolen by the NZ Government, as Peter Hensley reports
Contents page of the magazine
NZ Government steals migrants' life savings
Peter Hensley highlights the plight of foreign migrants
Jim looked quizzically over at his life-time partner and said: "That's funny. I never recall seeing that in the brochure before."
"Which brochure are you talking about, dear?", Moira replied.
"The Work and Income brochure about New Zealand Superannuation, it says here that if you receive a pension from an overseas government, it is likely to be deducted from your Super."
"The emphasis seems to be on the words 'Overseas Government' ", Moira stated matter-of-factly.
Jim went on to say: "And all this time I just thought it was a universal benefit with a residential qualification of living in New Zealand for a total of ten years since you turned 20 and five of those years must be since you turned 50."
As was Moira's nature, she had researched the Social Welfare Act (1964) and in particular Sections 69G and 70. Roughly interpreted, Section 69 places a legal obligation on an individual to identify and apply for all international pension entitlements and Section 70 allows for the confiscation of certain superannuation benefits from overseas.
In layman's terms, should an individual's international pension entitlement be linked to a foreign public purse then the New Zealand government arranges for its collection and pays the individual New Zealand Superannuation instead. On the surface this appears fair and reasonable, because why should an individual collect two public pensions?
The problem is that the legislation assumes that other countries have similar welfare entitlements to New Zealand. In New Zealand, individuals do not have to contribute separately towards NZ Super, it is payable to all who achieve retirement age (currently 65) and pass a residency test - 10 years since 20 and 5 since 50. As Moira found out recently, this is not always the case.
The Retirement Policy and Research Centre which is attached to the University of Auckland Business School has identified 11 different types of pensions - starting at totally private individually funded and moving in small increments to the other end of the scale of being totally publically funded. NZ Super falls into the category of being a tax-funded flat-rate universal pension.
In reality, pension types and entitlements vary from country to country and in-depth research by the Retirement Policy and Research Centre has highlighted some glaring inequalities in the application of Section 70.
Moira read recently of a New Zealand-born lady who grew up and worked in the provinces. She met, fell in love with and married a very kind and generous American. They travelled and lived in the US for 19 years. Whilst in the US she worked part time, but was not employed for the required number of quarters to become eligible for Social Security in the US. They then returned to New Zealand where she worked until 65. She had satisfied the residential criteria for NZ Super but was declined. She appealed to the WINZ Benefit Review Committee and lost.
It is interesting to note that Section 70 appears to be very subjective with different Work and Income officials applying their own level of discretion. When the lady in question applied for NZ Super she did so at the Work and Income office in Panmure, Auckland. About the same time a lady with virtually the same personal history applied to a Work and Income office in Southland to receive NZ Super and her application was approved.
The problem is not limited to individuals who have been told they married the wrong man. It affects most immigrants from the United Kingdom, Germany, Canada, Australia, China (Editor's note: this is wrong, Chinese pensions are not deducted from NZ Super), Fiji, the Netherlands, Switzerland and USA.
The collective argument from these immigrants is that they have put aside their own funds in order to provide for their own retirement. They are suggesting that this ownership is being usurped by the New Zealand government. In fact they believe that their money is being stolen by bureaucrats who have little or no understanding of the makeup of their international pensions.
It is possible that the officials, rubberstamping Section 70 applications, have no comprehension that their actions are effectively cancelling years of personal sacrifice and savings. It is also possible that they are just implementing Ministry Policy which has been developed through a lack of true understanding of fundamental facts.
It is possible that the officials who drafted Section 70 of the Social Security Act 1964 had a limited understanding or myopic view of international pension parameters. It could be that they believed that pension entitlements were either state-funded or they were not. Accordingly Section 70 was worded to capture all state-funded pensions.
In reality there are numerous examples where a pension may be administered by the state, yet funded entirely by private savings. By enacting Section 70, bureaucrats are effectively misappropriating funds and justifying it by saying, we have been doing it for the past 46 years, so it must be right. (Editor's note: despite being labelled 1964 Social Security Act, the Direct Deduction Policy dates back to 1938, so has been applied for more than 70 years.)
Anecdotal evidence of individuals appealing to their local Members of Parliament suggest that they each receive a sympathetic ear, and the MPs all supply the mirror response: "I will look into it." It has proved impossible for any one of them to change 46 years of bureaucratic stonewalling.
A handful of individuals have had the wherewithal to appeal against Work and Income's Direct Deduction Policy (DDP). Sadly their resources have been outgunned by bureaucracy and the deep powerful pockets belonging to the Government.
Recent research by the Retirement Policy and Research Centre has highlighted both individual and group cases which on the surface require review because of glaring inequity.
Jim went on to question Moira about their grandson David; his career has already seen him work in four countries and he had contributed to pension schemes in all of them. If the Ministry did not change its mind before he came back to retire in New Zealand, then it was possible that all his savings could be in vain.
Moira also surprised Jim with the comment that the Ministry may have backed itself into a corner by confiscating pension entitlements with just a hint of an international government fingerprint. If they changed their mind now, they would have to protect themselves against back-payment claims by stating a firm starting date of any new policy, non-retroactive.
As we all know, the overseas pensions are not stolen, the migrants are not robbed, and the pensions are not confiscated - because the New Zealand government has introduced a law (Direct Deduction Policy) that allows all this and makes the theft and confiscation legal, meaning those actions are legalised theft and factual confiscation.