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19.02.2020

Private pensions: MSD failing in its obligations
It has been brought to my attention that the Ministry of Social Development (MSD) is failing in its obligation to NOT deduct the voluntary part of compulsory overseas pensions from NZ Super. 

I had thought it was common knowledge and practice that the percentage of an overseas pension that was funded by voluntary contributions would not be deducted from NZ Super. I also know of various pensioners where this is the case, and for many years I have advised others to make sure that the voluntary part of their overseas pensions must not be deducted.

While this is not written law (yet), MSD has been directed by the Social Security Appeal Authority (SSAA) in a case in 2005 to excise its discretion to defer the deduction of the voluntary portion of an overseas pension from NZ Super. 

In a report from August 2018 the Ombudsman reported that “the Ministry subsequently began exercising this discretion routinely when specifically requested by an applicant, but did not take active steps to make all applicants for superannuation aware of the existence of this discretion”.

As I have been informed by a pensioner that he has never been informed about this discretion and that his entire overseas pension has been deducted from NZ Super until today, there is reason to believe that many others who have made voluntary contributions to their overseas pension scheme have been treated in the same way. To hide the truth is outright theft, and it does not matter if it has happened because WINZ/MSD staff are just not well trained, as I have encountered on many occasions.

Apply for a re-assessment of your deductions and back-payment

Therefore, if you have funded a portion of your overseas pension by making voluntary contributions but MSD have deducted the entire amount, contact your overseas pension provider and get a confirmation about which part of your pension is based on employer/employee-funded contributions and which part you have funded voluntarily. 

Then contact MSD and apply for a reassessment of your deductions (which are already a rip-off anyway), demand a back-payment, interest and compensation for the stress caused by the unjustified appropriation of your money.

Many people have made voluntary contributions to increase or keep up their pension payments at a certain level, usually when working in self-employment for a certain time or moving overseas for a limited time or permanently.

To not deduct the portion of an overseas pension which is derived from voluntary contributions is one of the policy changes that are planned to become law on 1 July 2020. [Update 04.06.2020: Date changed from 1 July 2020 to 9 November 2020!]

But as the Ministry has had the discretion to apply this rule for many, many years, it is unacceptable that it has obviously not been applied by default, but only when someone knew about it, requested it specifically or complained about the injustice.

If you are affected by the non-disclosure of common practice, get active. As you will see in the attached file, the complainant received over NZ$ 45,000 from MSD.

I hope not many of you have been suffering this daylight robbery.



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