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The famous Reviews

The findings of the 2005 and 2007 Reviews
To give you an idea about it all, we list some of the major findings of the famous 2005 and 2007 Reviews that have become a bible of excuses for any New Zealand government.

We have added our comments, disguised as invented quotes of the minister(s) and chief executive(s) in charge at the time. Behind closed doors they might have really said the words we put in their mouths; you never know how such twisted minds work in order to justify things that cannot be justified if only a tiny portion of fairness is applied. The facts and the thoughts highlight the absurdity to deduct compulsory and contributory pensions from NZ Super.
 
Note: The current National Government is not a jot better; it has adopted nearly every word of the Reviews that were prepared under Labour.
 
The 2005 Review was top secret and only released upon request under the Official Information Act. It was signed by Finance Minister Dr. Michael Cullen (Treasury), David Benson-Pope (Minister of Social Development/MSD), MSD Chief Executive Peter Hughes, and Mark Sowdon, Secretary to Treasury. The 2007 Review was signed by Steve Maharey, then Minister of Social Development, and published as Cabinet Papers on 12 June 2008. Ruth Dyson had by then replaced Maharey as the minister in charge.
 
The official name of the Review is:
 
Cabinet Papers: Review Of Treatment Of Overseas Pensions And Payment Of New Zealand Superannuation And Veteran's Pension Overseas

Review 2004: click here
Review 2005: click here
Review 2007: Links at the bottom of this page
 
It defies belief that the conclusion of such a review was that the policies of Direct Deduction and Spousal Provision were considered as sound and appropriate for the circumstances in New Zealand, that the system was fair to most New Zealanders in the face of rising migration both ways, and that the ideals of fairness and equity were defined by the number of people who were affected by unfair and unequal treatment.
 
But read yourselves. (And please note again that the comments in italics are freely invented despite the similarities to the real thinking of New Zealand's government ministers and their chief executives.)

There may be differences between the findings of the Reviews and our findings, which we have directly deduc(t)ed from these documents and which are distinctly different in nature. But they are nevertheless findings, and as long as the purpose is the same - to make someone angry (pensioners on the one hand, the Government on the other) - it should not matter at all. It just proves that this technique works reasonably well for most New Zealanders confronted with it.

 

Major findings of the Reviews 2005 and 2007 about the Treatment of Overseas Pensions

The minister's/Government's/ Chief Executive's thoughts behind it (our interpretations)


The first part of the Review which was finished in 2005 identified options that would have required fundamental change to core NZ Super policy in general.

The rip-off policy works well, saves the Government a lot of money, so why should it be changed?

The second part of the Review (2007) focussed on options that were narrower in scope and did not require fundamental change.

Why should we stop this stream of income provided by foreign states?

The Review identified a number of aspects of the policies which could be improved.

... but let's only improve the ones that do not cost a lot of money.

(Note: NZ was proud to invest NZ$ 6 million over four years into the payment of NZ Super and Veteran's pension overseas. It would cost about NZ$ 185 to 200 million per year to end DDP and SP.) 

I (= the minister) have decided not to pursue the proposal which would have given superannuitants with overseas pensions the choice of receiving a proportional payment of NZ Super based on their years of residence in NZ or having their pensions treated under the existing policy.

Had I given them a choice, some of these immigrants would have chosen the proportional payment of NZ Super. This would leave the Government worse off because if you deduct a high overseas pension from NZ Super the pensioner often gets no NZ Super at all. If we pay them a portion of NZ Super we end up paying them some money…

This proposal would have made the NZ Super entitlement criteria more complex and less equitable.

I mean: less equitable for the New Zealand government. Deducting overseas pensions is straight forward.

This dual system would bring the NZ system more into line with other countries' systems, and would make the interface with other systems easier.

Why should we be like all the others? New Zealand is unique and wants to remain unique.

One of the overarching objectives of the Review is to modernise the current policy for treatment of overseas pensions. The OECD estimates that the average life of a pension system is 15 years.

It is true that pension systems continually have to be reassessed. But I think a system from 1938 that has just been updated in 1968 is rather modern. We have even added Spousal Provision in 1985. This should be enough modernisation in nearly a century.

One of the secondary objectives is to ensure that the treatment of overseas pensions paid to New Zealanders is equitable for New Zealanders who have lived and worked in New Zealand all their lives.

Sorry, I did not take into consideration that New Zealanders returning with overseas pensions would marry New Zealanders who have lived and worked here all their lives. My intention was to rip off only immigrants, and immigrants should not be married to New Zealanders.

Maintaining the current system will benefit lifelong New Zealanders who have no intention of leaving the country.

I have only lately heard of unpatriotic New Zealanders who marry immigrants with overseas pensions.  

The current system can be seen as inequitable for many migrants and New Zealanders who have lived overseas.

They will see it as inequitable. But who cares?

NZ Super is recognised by the OECD as a good first-tier pension system which is simple, relatively inexpensive, and excellent at preventing poverty.

I should somehow change the wording... Our scheme is generous. A generous scheme cannot be inexpensive. But it would be more expensive if we paid NZ Super to everybody who has worked in New Zealand.

Most other countries have pension systems in which a retiree's level of entitlement is based on social security contributions made by that person over the period of their working life. New Zealand's residence-based system contrasts with the contributory systems in most other Western countries.

That is why we do not bother if an overseas pension is Tier 1 or Tier 2. If we tried to deduct similar pensions only we would have to pay pensions to every New Zealand resident – even to those who have paid taxes here and never left the country.

Residence-based systems are not easily able to accommodate immigrants or residents who wish to spend time out of the country.

I do not know why we have such an unsuitable system as we have always depended on immigrants to compensate skills shortages. But I have come to really like it because it works well and helps to compensate tax shortages.

(Note: the proportion of New Zealand's working-age population born overseas has grown from 18% in 1981 to 25% in 2006 - and keeps on rising.)


This option [Option 5 in the proposals of the 2005 Review: Deduction of Tier 1 Pensions only] would ensure that only overseas pensions that are similar to NZS are deducted. [...] Currently Section 70 authorises the direct deduction of second-tier earnings related pensions, despite the fact that, other than being administered by the state, they have little resemblance to NZS.

These sentences are the admission of the NZ government ministers (then Cullen and Benson-Pope and the Chief Executives) that they know very well the difference between NZ's state pension and contributory pensions, and admit that those overseas pensions are not state pensions at all and therefore should not be deducted from NZ Super.


While there may be differences in the way NZ Super and state pensions in other countries are funded, both pensions are nevertheless state social security pensions that are paid for the same purposes.

Sure - I know that in New Zealand the state funds pensions from taxes and the retirees have not contributed anything, and overseas people have made big contributions towards their pensions. But the words are the same - social security... And the pensions are paid because the people who receive them are pensioners...

The [2005] Review suggested that the current process applied for achieving the adjustment of NZ Super on overseas pensions is not the only option.

But still I stick to the old system. It is the cheapest way to finance our pensions. Why should we only accept immigrants into our country? We should also accept their money.

The policy can be seen as a way of sharing the burden of social security costs between NZ and an individual's home country.

I admit: foreign governments have asked me why they should share the burden of social security costs for New Zealanders who are married to immigrants.

The policy has been tested in the courts.

I know that the courts can only rule if an existing law has been applied correctly.

Most other countries do not pay any pension for periods where contributions have not been made or a person has not been present.

I have heard rumours that other countries pay social welfare benefits to people who have not made pension contributions. New Zealand pays such benefits to everyone. This only shows how generous our system is.

The treatment of overseas pensions can be a contentious issue for the overseas governments that pay the pensions.

That is why only eight other countries have signed Social Security Agreements with New Zealand, and to make the numbers look better I tend to list Jersey and Guernsey as independent countries.

New Zealand does not have a Social Security Agreement with the USA. This appears to be a significant gap in the SSA network, given the well-developed relationship the two countries have in other areas.

As the USA has forgiven us that we have taken an anti-nuclear stand and did not go to war in Iraq, we should really use the improving political climate and try to conclude a Social Security Agreement. We must make sure that the USA pays social security pensions to New Zealanders who retire in New Zealand. This would save us a lot of money, as we could deduct those pensions from NZ Super payments.

It comes as a surprise to migrants and returning expatriates that they will not receive a full NZ Super entitlement on top of their overseas state pension. Some other governments consider that New Zealand is using their pensions simply to reduce its own pension liabilities. The policy makes the conclusion of Social Security Agreements difficult or impossible.

Have we not hidden this policy very well from expats and immigrants?! And is it not those other governments' mistake if they do not tell their people what happens to their contributory pensions here in New Zealand? But with or without Social Security Agreement: we would deduct overseas pensions anyway.Where there's a will there's a way.

Work and Income and Immigration New Zealand have recently (in 2007) amended websites and printed material to better inform prospective migrants of the policy.

I am confident the info is still well enough hidden so as not to create suspicion about our agenda. 99% of immigrants will only learn about it when they retire.

If the overseas pension is lower than NZ Super it is effectively topped up to the appropriate NZS rate. A person will receive the higher rate of the two pensions.

If someone knows a way to confiscate the excess amount of an overseas pension, please contact me.

The Review also found that there are aspects of the policy that are arbitrary, particularly the treatment of spouses or partners of overseas pensioners. New Zealand should discontinue the policy of Spousal Provision.

Ok, as a sign of goodwill we could change that.

(Note: but Labour did not find money in the Budget 2008, and National does not care.)

In my view there is insufficient evidence to suggest that we should take the step of establishing a less equitable and more complex system to improve the international interface of NZ Super, when this interface affects only 10% of superannuitants.

I have listed a lot of reasons to change the system. But as long as tourists and ignorant immigrants come to New Zealand, we should not really care. 10% of superannuitants are a minority; nobody will hear them when they complain. As long as they suffer silently and do not organise country-wide hikoi to Parliament as Maori would do, we have nothing to fear. The good thing about pensioners is that they are old and have run out of steam.

NZ Super is paid to people in Pacific countries at a minimum rate of 50% after 10 years residence in New Zealand and 100% after 20 years. This Special Portability Arrangement is designed to recognise the Pacific people's contributions to New Zealand and those countries' inability to fulfill the reciprocal obligations of a Social Security Agreement.

I cannot remember why this Special Portability Agreement covers 22 Pacific nations and not only the three with constitutional relationships to NZ (Niue, Cook Islands, and Tokelau). I must have had my day off when this was decided. But it only shows that we are a friendly country, and I have always said that NZ Super provisions are generous.

Treasury, the Ministry of Foreign Affairs and Trade, the Ministry of Pacific Island Affairs, the Department of Labour, Veterans Affairs New Zealand, and the Ministry of Women's Affairs have been consulted and agree with the recommendations in this paper.

I am not the only one who thinks that immigrants and returning Kiwis are very welcome in this country to donate their overseas pensions for the honour of paying taxes, living in New Zealand, and even marrying a Kiwi man or woman. We are a very remote country, everything comes at a price.


Silvereye/waxeye

 
 
A string of five reviews
 
The famous 2005 and 2007 reviews were not the first reviews that were made on New Zealand Superannuation. In total, five reviews were submitted, following the 1999 election of the fifth Labour Government.
 
Then, the Ministers of Finance (Michael Cullen) and Social Development (Steve Maharey) were warned that New Zealand's pension system was in urgent need of a major overhaul. So they asked officials of the Ministry of Social Development (MSD) for a review of New Zealand Superannuation.
 
This ended in a string of five reviews - delivered in November 2001, February 2003, May 2004, November 2005 and October 2007 - because the ministers were never satisfied with the results, demanding more modest options that did not stretch the budget.
 
Some of these reports were treated as highly classified material. Access was denied to the public and even to the other parties in Parliament. If you have a look at the findings of the last two reviews you know why: because they were so damning.
 
Crazy enough, the second report was accidentally sent to a private citizen in Christchurch! As this report was not classified, copies could be made and the content made available. The permanently changing ministers applied every trick and delaying tactics, so it took this citizen four years and the help of the Ombudsman to get access to the subsequent reports. The last one was received just before the 2008 election.
 
The reviews showed that the Labour Government had had nine years to address the issues (and these were nine years of prosperity). Cabinet agreed half-heartedly that Spousal Provision was so unfair that it should be discontinued - but did not "find" NZ$ 2.7 million in the Budget to end this shameful policy. They thought they better spend the money on election promises. 
 

 
The ministers of Helen Clark's Governments who let New Zealand's seniors down
 
Finance:
Michael Cullen
5 Dec 1999 - 19 Nov 2008
 
Social Development:
Steve Maharey
10 Dec 1999 - 19 Oct 2005
(until 19 May 2003 as Minister of Social Services and Employment; after the restructuring of the ministry as Minister of Social Development and Employment)
 
David Benson-Pope
19 Oct 2005 - 27 July 2007
 
Ruth Dyson
27 July 2007 - 19 Nov 2008
(before that, Ruth Dyson was Associate Minister and also Minister for Senior Citizens)
 
 

 
A brilliant brain's drain
 
When Steve Maharey left Parliament in 2008 to become vice-chancellor of Massey University, he said he was satisfied by much of what he had achieved in 18 years as an MP.
 
The Press quoted him as saying: "Fairness and equal opportunity have long been part of the New Zealand political tradition and it led to Governments putting in place institutions that made a practical difference to people like me." He thought of his upbringing as a state house boy and becoming a key strategist of the fifth Labour Government - surely not of his role in abusing immigrant and returning Kiwi pensioners as cash cows financing such careers.
 
The following sentence of the same newspaper article is maliciously taken out of context but we happily misuse it for the purpose of defining Mahareys role in keeping New Zealand's superannuation scheme unfair. As you know, according to the minister, a pension is a pension; so we think a sentence is a sentence. This is the sentence which can be deducted from the super(b) article: "Maharey admitted his thinking was not always clear." Nothing to add to this as it sums up the waste of a brilliant brain, once arrested in party politics.
 
 
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History of the Ministry of Social Development
(Source: Wikipedia)

It was originally established as the Old Age Pensions Department. This was replaced by the Social Security Department in 1939. It absorbed the major portion of the Employment Division of the Department of Labour.

In 1972 the Department of Social Welfare was formed from the amalgamation of the Social Security Department and the Child Welfare Division of the Department of Education.

In 1998 the Department of Work and Income (WINZ) was established.

In 1999 the social policy agency and the corporate office formally became the Ministry of Social Policy.

In 2001 WINZ was merged with the Ministry of Social Policy to form the Ministry of Social Development.

 
 
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