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Portability

Rules for retirement outside the country
The so-called portability rules define the circumstances under which pensioners can receive their superannuation if they wish to retire outside the country that pays their superannuation, in this case NZ Super (and Veteran's pension).

To qualify for NZ Super being paid outside New Zealand, normally (not always) two major portability rules apply:
  1. The person must be ordinarily resident in New Zealand when he/she applies for NZ Super.
  2. Social Security Agreements with other countries (NZ has nine of them with ten countries, including the bailiwicks of Jersey and Guernsey...) can affect the person's ability to receive NZ Super. This does not mean that they are better off. On the contrary.
The portability rules are in two parts:
  1. General portability.
  2. Special portability (for Pacific Island nationals).
General portability
 
The 2009 New Zealand Superannuation and Retirement Income Amendment Act which came into force on 5 January 2010 brought one positive change: it established a new formula for general portability. For every month spent in New Zealand between ages 20 and 65 a pensioner receives 1/540th of NZ Super.

This means: if someone has lived in New Zealand for 20 years and moves overseas in retirement, he/she receives 240/540th of NZ Super (240 being 20 years = 240 months). The minimum payment therefore is 120/540th of NZ Super, as you need to have lived in New Zealand for a minimum of 10 years (five of which after age 50) in order to receive a pension.

For persons who have spent the entire 45 years of their working lives in New Zealand between age 20 and 65 and wish to retire overseas, this means that they will now be paid 100% NZ Super rather than just 50% as before. 
 
This sounds good. But if you have a closer look you realise that it is pathetic, as it affected less than 1,000 people in total. According to MSD figures, the general portability provision impinged as little as 226 persons in 53 countries at the end of June 2008 (and 252 in March 2009); the principal destinations were China, India and the USA.
 
The huge majority of people are hugely disadvantaged because they retire in countries which have Social Security Agreements with New Zealand, especially if the country of retirement is the United Kingdom, and in many cases also Australia. Pensioners moving to the UK do not receive any NZ Super payments at all. 
 
At first glance the new portability rule seems fairer towards the majority of New Zealanders as it means that people who have not spent their whole adult lives in New Zealand and want to retire overseas do not get full NZ Super.
(Note: the expression "working life" only describes the 45-year residential requirement, not years in which someone has really worked and paid taxes in New Zealand.) NZ Super is paid at a rate of 1/540 for every month of residence in New Zealand between age 20 and 65.
 
But the seemingly fairer treatment becomes relative when you examine the details.
  • Persons who have not worked and paid taxes all their lives in New Zealand are entitled to full NZ Super (provided no overseas pension is deducted) after fulfilling a minimum of 10 years' (5 years after the age of 50) residency in New Zealand.

    However, persons who might have lived, worked and paid taxes in New Zealand for e.g. 35 years and wish to retire in non-agreement countries will be paid a portion of NZ Super only, in this exemplary case 420/540 (35 years = 420 months, divided by 540). This means that this person receives 78% of the full rate of NZ Super or 22% less than someone who has been living in New Zealand for e.g. 15 or 20 years only but stays. You see that someone who has dedicated a much bigger part of his life to New Zealand gets less NZ Super if he/she retires overseas than someone who remains in the country, despite not being a burden on New Zealand's public health system, not using the roads, etc.

  • The other question raised is why the Government is paying proportionate pensions to Kiwis retiring overseas but not to immigrants and returning Kiwis who retire in New Zealand and have worked and paid taxes in New Zealand over many years, only because they receive proportionate overseas pensions (they have paid for) which are deducted from NZ Super.
  • In late 2015, after being alerted to a few cases where life-long New Zealanders living overseas did not receive a cent of NZ Super due to their partners' overseas pensions, we made further investigations, and, sadly enough, if you move to the "wrong" country, your overseas pension will still be deducted from NZ Super. This applies to three countries which have Social Security Agreements with New Zealand. In their response to our request under the Official Information Act (OIA) the Ministry wrote on 18 March 2016: "There are three older Social Security Agreements ([...] with Greece, Ireland and Jersey and Guernsey) that do not provide an exemption for the deduction of a third country pension". These exceptions, we were told, will be amended in the future. This means: if you move to Canada or the Netherlands, your overseas pension will not be deducted.

    In their letter from 18 March 2016 the Ministry let us know that - with the exception of countries with which New Zealand has a Social Security Agreement and 22 Pacific countries covered by the Special Portability Agreement - "under the General Portability rules, the proportional rate of payment is not reduced by the amount of overseas pension that a person receives but is reduced to take into account periods where a person has not resided in New Zealand".
  • The ridiculous requirement that someone has to be ordinarily resident and present in New Zealand to be able to apply for NZ Super has not been addressed. Kiwis and immigrants returning to their home countries before age 65 receive no NZ Super at all even if they have paid taxes in New Zealand for 20, 30 or even 40 years. This is another hint that NZ Super is no proper pension but a (welfare) benefit. 

  • In the last sentence on their website about Portability payments another fact is hidden that doesn't make any sense: "Note: You can’t get the Living Alone rate of New Zealand Superannuation or Veteran’s Pension overseas. Instead you’ll be paid the single sharing rate." Why? Why should a genuine single who has been on the Living Alone rate during his/her retirement in New Zealand suddenly only receive the same amount as someone who is sharing? It looks just like another rip-off.

One last note on General Portability:
Before you decide to move back to your (first) home country in retirement in order to avoid the direct deduction in New Zealand, do your research on the pitfalls that could be waiting there. The main factor that could impoverish you there is health insurance. In Germany, for example, you cannot join the state's health insurance which offers affordable rates for pensioners, if you have not been a member of a state health insurance scheme (Gesetzliche Krankenversicherung, e.g. AOK) before moving overseas. If your last health insurance in Germany was private, you can only get back into private health insurance. As of December 2018, basic private health insurance for a pensioner an cost any amount between 650 and 750 Euros - per month!
 
 
Special Portability
 
Residents of 22 Pacific states receive special treatment. 
(Please note: these Special Portability rules also apply to individuals of any nationality who move to one of these countries permanently, not only to nationals of the listed Pacific islands.)

They fall in three categories:

1. Niue, Tokelau and the Cook Islands (since 1993), as New Zealand has a constitutional relationship with these three Realm countries, and due to their inability to provide reciprocal social security. They also suffer from depopulation, so NZ wants to encourage these nationals to return home. It can be seen as a special form of foreign aid. Critics, however, say New Zealand encourages Pacific Islanders to return home because many of them suffer health problems due to obesity-related illnesses and are a burden on New Zealand's public health system.

2. Samoa and Tonga (since 1999), as New Zealand has special relationships with these countries.

3. American Samoa, Federated States of Micronesia, Fiji, French Polynesia, Guam, Kiribati, Marshall Islands, Nauru, New Caledonia, Northern Mariana Islands, Palau, Papua New Guinea, Pitcairn Islands, Solomon Islands, Tuvalu, Vanuatu, Wallis and Fortuna (since 1999).

There were no obvious reasons for including overseas territories of the USA and France, without special historic or present relationships. Strangely enough, no reciprocal Social Security Agreements exist with France and the USA.
 
  • Their privileges:
Nationals of the three Realm countries Niue, Tokelau and the Cook Islands receive full NZ Super (but not the single living alone rate!) if they retire in their home countries after living in New Zealand for as little as 15 years: 10 years after age 20 and another 5 years after age 50. 

Since 2015, people in these three countries can apply for NZ Super from the islands and need not be ordinarily resident in New Zealand at the time of the application, usually when turning 65.  The requirement to be present in New Zealand for five years after age 50 can be met with residence in one or the combination of these three countries.

To residents of the other Pacific islands the following applies:
They receive the full basic rate if they have lived in New Zealand for 20 years after age 20, and half the basic rate for 10 years after age 20. For residence between 10 and 20 years, they receive 1/20th of the basic rate for each year spent in New Zealand after age 20.

Exception: under this arrangement, any overseas pension a person receives is deducted from any rate of NZ Super. (MSD/WINZ's wording is as follows: "If you are receiving an overseas benefit or pension the basic rate payable will be adjusted first, then payment will be calculated according to the table above", referring to the table on the WINZ website - which does not distinguish between the three Realm countries and the other 19 island nations, as of 09.04.2018.)

For comparison: under the General Portability rules New Zealanders and - most - other nationalities get only a portion of NZ Super. They receive full NZ Super - except in non-agreement countries - after living 45 years in New Zealand. Kiwis and others would get 44% after 20 years. For 10 complete years since age 20, Pacific Islanders get half the basic rate (New Zealanders and others only 22%).


Update 08.03.2018
Easier access to NZ Super in Niue, Tokelau and the Cook Islands

During her visit to the Cook Islands, Prime Minister Jacinda Ardern announced full pension portability to residents of the Cook Islands, Niue and Tokelau would be introduced "no later than January 2019".

This means that NZ Super will be available for more Pacific retirees.

Currently, those from the Cook Islands, Niue and Tokelau are entitled to the New Zealand pension if they've lived and worked in New Zealand for 10 years after the age of 20, and spent another five years doing so once they have turned 50. This last requirement will now be scrapped.

Deputy Prime Minister Winston Peters - who travelled with Ardern - said the existing restrictions were unfair because they didn't apply to immigrants from elsewhere in the world.

"In our country over 87,000 people who've come in the last 15 years to get a full pension after just 10 years," he said on Newshub. "Now see the inequity of that."

It means an additional 200 people from the islands will be eligible or the pension. According to Ardern this will cost NZ$ 3.5 million in the first year.

There's still the problem of superannuation fund deductions. The New Zealand government reduces the pension payment amounts for those who have a super fund in the Pacific, which is comparable to New Zealanders having their pensions cut just because they're in KiwiSaver. Or who have paid into employer/employee-funded pension schemes overseas and who get robbed of these overseas pensions. Of course, they didn't mention that...
 
  • Numbers:
In 2005, of the 7,000 people paid NZ Super overseas at a cost of NZ$ 48 million per year (average less than NZ$ 7,000), only 190 were affected by the special portability agreements (according to the MSD Review).

In 2008, 482 residents of Pacific Islands received NZ Super. Annual cost: NZ$ 6.844 million per year (average NZ$ 14,200).
 
In an undated later report (probably 2013) on their own website MSD mentions the number of 579 people receiving NZ Super in the 22 countries, at a cost of NZ$ 9.494 million. (Further it says: "Should this be extended to allow people to apply for NZS from the three Realm countries, immigration data provided by Statistics New Zealand shows that 245 people who migrated from New Zealand to Realm countries after the age of 55 would become newly eligible for NZS in 2015/16, rising by around 16 additional people in each subsequent year.")

So you see, it is a tiny number of people of mostly poor nations - while nothing is done for the more than 89,000 people (as of 2017) affected by Section 70 and living in New Zealand. 
 
At the end of June 2008, 16,716 New Zealanders living overseas were receiving pension payments or other benefits from New Zealand. Of these people, 13,825 were receiving NZ Super. This increase has been mostly caused by pensioners who have moved from New Zealand to Australia. Remember: some might only receive a fraction of the full amount of NZ Super.


 

 
Parliamentary debate on Portability (New Zealand Superannuation and Retirement Income Amendment Bill, War Pensions Amendment Bill/Third Readings) here and here
 
First reading here.

 

 

Bora Bora

Volunteering and doing missionary work overseas

Different rules apply for pensioners who want to volunteer and do missionary work overseas. Find the details here:
 
 
Reassessment of NZ Super payments after 5 Jan 2010
 
According to information from International Services (WINZ) during a phone call on 11 June 2010, pensioners receiving NZ Super overseas do not have to be present in New Zealand to have their payments reassessed. We were told that all pensioners affected by the 2009 Amendment Act were contacted by WINZ and informed about the changes - but only those who answered the letter were reassessed. If there are people out there who think they are entitled to more than 50% under the new formula and those who have not received the letter should contact WINZ and ask for reassessment. The NZ Super payments would be backdated to 5 January 2010 when the new formula became law.
 
If someone has spent less than, let's say, 20 years in New Zealand and five over the age of 50 and would therefore receive less than 50% of NZ Super under the new formula, this person will keep on receiving 50% if he/she retired overseas before 2010, so he/she is not worse off. Someone who has spent his whole life here and has retired to a non-SSA country before 2010, will now receive 100%, or 66% if he/she has lived in New Zealand for 30 years. Please note: this applies to retirement in countries only which have no reciprocal Social Security Agreements (SSAs) with New Zealand.


 
Hidden facts

As already mentioned, when looking at the general situation and the blatant disregard for people receiving overseas pensions, it is hard to believe that the New Zealand government would have introduced the Special Portability rules for pure benevolence. Other facts show why it is cheaper to pay Pacific Islanders full NZ Super after 20 years of residence in New Zealand.

These nations have the highest obesity rates in the world, as a consequence of traditional values and poor diet, even supported by cheap fatty imports from New Zealand.
 
The people suffer from all obesity-related illnesses like type 2 diabetes, heart disease, stroke, osteoarthritis, asthma and some cancers. All this can lead to substantial disability, including amputations as a consequence of diabetes. If all these people stayed in New Zealand after retirement they would be an extreme burden on the public health system.

On the other hand obesity-related illnesses cause premature death, meaning NZ Super does not have to be paid for a very long time, if at all. Life expectancy is low. Some examples (based on the numbers published by the World Health Organisation WHO, 2008):

Samoa: men 66, women 70 years; 235/203 in 1,000 Samoans die before age 60.
Tonga: men 73, women 69 years; 114/208 in 1,000 Tongans die before age 60.
Cook Islands: men 71, women 75 years; 147/96 in 1,000 Cook Islanders die before age 60.
Niue: men 64, women 78 years; 236/81 in 1,000 Niuens die before age 60.
Fiji: men 66, women 72 years; 259/162 in 1,000 Fijians die before age 60.
 
According to a MSD report and Statistics New Zealand, in the period from 2006 to 2008 life  expectancy at birth for New Zealanders was 78.2 years for males and 82.2 years for females. The report also says that there are marked ethnic differences. In the period from 2005 to 2007, male life expectancy at birth was 79.0 years for non-Māori and 70.4 years for Māori, a difference of 8.6 years. Female life expectancy at birth was 83.0 years for non-Māori and 75.1 years for Māori, a difference of 7.9 years. The numbers for Pacific Islanders in New Zealand are similar to Maori.
 

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