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NZ Herald on 09 July 2018

"Pension fix looms after 80 years"
09 July 2018

Hard look taken at controversial legislation widely considered to unfairly penalise some superannuitants.

By Melissa Nightingale

Changes could be on the way to a controversial piece of legislation allowing the Government to make deductions from some pensions.

Minister for Social Development Carmel Sepuloni has requested advice on New Zealand Superannuation.

This includes a section that is currently before the Human Rights Review Tribunal amid concerns it unfairly penalises some superannuitants.

Section 70 of the Social Security Act contains a policy giving the Government the right to reduce someone's pension dollar for dollar if they also receive a pension or fund from overseas, and in some situations if their partner receives a foreign pension.

"I have commissioned a wide range of work looking into the wider welfare system settings, including NZ Super," the minister said in a statement.

"As a result, any proposed system changes will be made with the best possible advice, in a careful and considered manner."

The section 70 policy has long been the subject of controversy, with Prime Minister Jacinda Ardern even labelling it a "human rights violation" in 2015.

An Upper Hutt woman affected by the policy said she feels like a "bludger" because she has to claim food grants to get by, despite the fact she worked until she was 70.

Marie Brophy and her husband John Brophy are each eligible for New Zealand Superannuation, but also receive payments from overseas funds that they and their employers have contributed to.

Their pensions are deducted under section 70, forcing the couple to turn to Work and Income for food grants and other assistance so they can make ends meet.

"I don't like doing this, it's so embarrassing," Marie said.

"I worked hard all my life . . . now I'm a social welfare beneficiary.

"I don't want to be a welfare bludger".

Their overseas payments from Ireland and England do not come through on a regular basis, and how much they receive depends on the dollar. Marie said this meant they often lived on less each week than the average couple receiving only the NZ pension.

MSD senior international and policy general manager Justine Cornwall said the department worked hard to ensure fairness for clients.

She said the amount the financial stress and we know working through these issues is not easy. We appreciate the Brophys received was equivalent to what other superannuitants in New Zealand got.

"We appreciate the Brophys are trying to make the best of their situation and we are working hard within the law to continue to support them."

The Brophys have the option of using a Special Banking Option, which allows the overseas money to be held in a New Zealand bank account and managed by MSD. Those using the option will get the same amount of money and regular payments, regardless of dollar fluctuations. They have chosen not to do so.

Auckland man Graham Astley is in a similar boat, but doesn't receive an overseas pension.

His NZ pension is reduced under the spousal deduction policy in the Social Security Act - because his partner receives a pension from overseas that is higher than the New Zealand one, the excess is deducted from his pension.

"[It's] a huge injustice, not just to me but to a large amount of other New Zealanders. Some of them are old and doddery now, some are incoherent, some are infirm, but all have suffered from this wretched law," he said.

"I'm ashamed of my country. How do they do such a thing?"

Acting Prime Minister Winston Peters said in a statement spousal deductions were "a matter of ongoing concern but we are pleased that MSD officials are also examining section 70 as part of the superannuation reform work programme".

Ardern slammed the practice in 2015.

She also said the process of direct deduction, where the overseas pension-receiver has their own pension deducted dollar for dollar, had problems.

"The issue with this policy is about making a judgment over what overseas pension schemes are similar to ours and what are not. And that is where there seems to be real injustice in the way that the direct deduction policy works."

National's spokeswoman for seniors Maggie Barry said the policy had been in place for 80 years and successive governments had chosen to leave it in place on the basis that other Kiwis shouldn't be disadvantaged compared to those who received overseas pensions.