When MSD was still able to give exact numbers before computer software got more sophisticated, the numbers increased steadily. Now with cleverer software they have to search by hand and the numbers decrease… You can only guess what’s going on.

However, it doesn’t matter how many people exactly are affected. You just see that it is a very, very low number while nothing will change for more than 100,000 pensioners whose employer/employee-funded overseas pensions are deducted from NZ Super if/when the amendment passes Parliament.

Make a submission

After the first reading at Parliament on 17 October the “New Zealand Superannuation and Veteran’s Pension Legislation Amendment Bill“ has now gone to Select Committee, and you have the chance to make a submission until 1 December 2019.

You find the bill and the link to the submission page on this site:

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_92647/new-zealand-superannuation-and-veteran-s-pension-legislation

The intention of the bill is, according to the Minister, “to modernise and simplify New Zealand superannuation […] by shifting toward an assessment of entitlement on an individual basis”.

This means: A couple where one partner receives an overseas pension will not be assessed as an “economic unit” anymore and, in case the overseas pension is higher than NZ Super, the “excess” of the overseas pension will not be deducted from the partner’s NZ Super any longer. But, of course, the person with the overseas pension higher than NZ Super will still not receive any NZ Super.

Exceptions to the new rule

There are exceptions, however. The Spousal Provision will still apply to couples who...

1. receive an income-tested welfare benefit such as the Supported Living Payment or the Accommodation supplement, or
   
   
2. include a non-qualified spouse in their NZ Super application before 1 July 2020. (From 1 July 2020 the non-qualified partner (NQP) provision will be removed – which I think, with the exception of a few cases where e.g. a non-qualified partner cares for an ill or disabled pensioner, is only fair. The taxpayer should not fund a pensioner’s lifestyle choice of having a relationship with a much younger partner who is still able to work but can enjoy the benefits of retiring on a pension at e.g. age 40, both receiving a similar amount as a couple who have both worked until retirement age. For cases of hardship, like in the above mentioned case of caregiving, a different solution must be found by the Government.)

Some people got to the wrong conclusion that this amendment bill would remove the Direct Deduction Policy in its entirety. This happened because they missed to check out one essential sentence under point 37, Section 189 amended. This reads as follows:

“The rate of New Zealand superannuation […] must not be reduced […] by any amount of an overseas pension if […] NZ Super is payable to the person overseas under section 26 of the New Zealand Superannuation and Retirement Income Act 2001 […)”

This Section of the Act refers to the payment of NZ Super overseas, also known as Portability, which has become law in 2001. It does NOT apply to pensioners living in New Zealand. This means that if someone moves to a non-agreement country, e.g. France, Germany or the USA after age 65, they receive proportional NZ Super, the amount depending on the months spent in NZ between age 20 and 65 (1/540th of NZ Super for every month). This amount will not be deducted from an overseas pension this person receives. But as said, only if they live overseas permanently.

This is the link to this legislation:

http://www.legislation.govt.nz/act/public/2001/0084/126.0/DLM114259.html

Also see here: http://www.nzpensionprotest.com/Home/the-law/portability and http://www.nzpensionprotest.com/Home/the-law/portability/the-pitfalls-of-portability

In the proposed bill you find the removal of the Spousal Provision under (3):

“The rate of any of the following benefits that a person is qualified to receive must not be reduced under this section by any amount of an overseas pension that the person’s spouse or partner is entitled to receive or receives (as referred to in section 188(b)):

(a)
New Zealand superannuation or a veteran’s pension:

(b)
a winter energy payment that the person is qualified to receive because New Zealand superannuation or a veteran’s pension is payable to the person.“

Points for a submission would therefore be:

While it is good that the Spousal Provision will be removed from the legislation in Part 3 (Amendments to Social Security Act 2018) under #37 (Section 189 amended), (3), the changes don’t go far enough. The removal of the Spousal Provision affects only a few hundred people but it does not address the unfairness and injustice of the Direct Deduction Policy in its entirety. 

More than 100,000 pensioners in New Zealand are affected by this legalised theft of employer/employee-funded overseas pensions which are only paid to people who have worked and paid into compulsory retirement schemes overseas, while NZ Super is paid to everyone over the age of 65 who might never have contributed to the tax base and society but has fulfilled the minimum residency requirement of 10 years, 5 of which after age 50.

The amendments do not address the Winter Energy Payment which is not paid to individuals who do not receive any NZ Super after the deduction of their overseas pension. This adds insult to injury, first not paying a person any NZ Super at all and then punishing them further by not paying them the Winter Energy Payment. In a worst-case scenario such a person receives just the amount of NZ Super, paid by this person with their overseas pension and New Zealand not contributing a cent, and still doesn’t receive the heating supplement almost all New Zealand pensioners receive on top of their NZ Super. Where is the justice and fairness in this?

In this context it might be an option to mention the Government’s massive NZ$ 7.5 billion surplus Finance Minister Grant Robertson has announced in early October. While there are many worthy causes to spend this money on, about half a billion could end the shameful Direct Deduction Policy which makes New Zealand a pariah in the developed world. There is no longer any affordability excuse for stopping the theft of more than NZ$500 million a year from retirees receiving overseas pensions.

Use your own words, add your story and thoughts. Just write something, so the Select Committee sees that there is far more to do than just end the meanest and most indecent part of the Direct Deduction Policy. I have heard that the bureaucrats and advisors at MSD even fought the end of the Spousal Provision until the last minute.

The next important bill is about the residency requirement

The next policy change is on the cards when the “New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill”, which was drawn from the ballot on 18 October 2018, will be tabled in Parliament, highly likely in the new year.

This bill, sponsored by NZ First member Mark Patterson, suggests raising the residency requirement from 10 to 20 years. But there is no word which would say that it would mean the end of the Direct Deduction Policy (Sections 187 – 191, formerly Section 70). But there needs to be clarity on exactly this issue. 

What will happen to hard-working migrants who might have been here for 19 years only and who are not the (not working) parents of a couple of Chinese migrants? (This is the real background of the bill.) 

We suggest to pay proportional NZ Super to people who have been here between 10 and 20 years, whatever the formula might be. If proportional NZ Super can be paid to pensioners moving overseas after turning 65 (never earlier, or you receive nothing!), why not when they stay in New Zealand and spend their money here?

Other issues that have been raised with me in the past few months:

1. There is still no automatic provision at MSD that a non-qualified partner’s overseas pension must not be deducted from their partner’s single NZ Super, leaving such a couple with ZERO dollars NZ Super while a Kiwi millionaire couple can cash in two full NZ Supers – and all this still happening despite the assurance at the HRRT hearing that the CEO of MSD has the discretion to defer such deductions. The Social Security Appeal Authority (SSAA) has ordered the CEO of MSD several times to stop such deductions, and still there are MSD employees out there who cause pensioners stress and harm. This will stop with the amendments on 1 July 2020 (if they pass Parliament) but it should never have happened in first place and it should not happen now!
   
   
2. Another problem that occurs regularly is that New Zealanders return too late from extended stays overseas. Just an example: a Kiwi moves to the USA at age 40 and returns at age 63. They apply for NZ Super at age 65 because they think they are born-and-bred New Zealanders and have spent 22 years in their home country, therefore fulfilled the residency requirement. But no, you have to spend 5 of the required 10 years in New Zealand after age 50. Therefore they have to wait until age 68 (and even up to their birthday) until they can receive NZ Super.
   
   
3. And let’s not forget: if you are a New Zealander, live and work in the USA and make contributions to the US Social Security system, take on US citizenship or the USA won’t pay you the US Social Security pension because of New Zealand’s ridiculous retirement laws, namely Portability, which is only paid to people who are ordinarily resident in New Zealand when applying for NZ Super. If you leave a day before your 65th birthday, even after working and paying taxes in New Zealand for 35+ years, you won’t receive a cent. See here: http://www.nzpensionprotest.com/Home/the-law/the-big-bang-for-kiwis
   
   
4. Many people also ask if a pensioner has contacted “Fair Go” regarding the unfairness of the pension deductions. Yes, quite a few have done this but have been told that this issue is not suitable for a consumer affairs programme. 
   
   
5. Some people think they can refuse the receipt of an overseas pension as it will be indirectly stolen by the NZ government anyway. If you do this, MSD will bully you and force you to apply for the overseas pension, as only this will enable them to save money, as their aim is not to share the pension cost but capture the overseas pensions in order to reduce the cost of NZ Super. As they cannot receive information about your overseas pension from the overseas pension provider legally due to privacy laws, they force you to get the information and then forward it to them. This blackmail is allowed under New Zealand law which says that you have to “take all reasonable steps” to apply for an overseas pension (Sections 162 – 165 of the Social Security Act 2018, formerly Section 69G). This includes applying for it when MSD wants it – which is the legal entitlement age overseas, even if you would receive more if you delayed the start of the payments. You have no choice. 

I can tell you that several embassies are working on the overseas pension robbery, some are actively collecting data from affected pensioners. There are also activities going on to encourage the EU to take a hard stance on New Zealand regarding the free trade agreement our Government so desperately wants.

Let me also remind you to forward the link to the NZ Pension Protest videos on YouTube or to single videos whenever you can to spread the word, post in on social platforms etc:

https://www.youtube.com/channel/UCTaa5yWB4XxK8q6QJ0TCmcA

Again the offer to record more such videos in Christchurch. Alternatively you can send me videos (not longer than 2 to 2:30 minutes with your pension story).

If you can, send a submission to the Select Committee, and try to smile despite the unfairness in this self-declared fair country,

Sissi