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:

The portability rules are in two parts:

 

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. 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, 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.

• It also means that many immigrants to New Zealand who receive overseas pensions would now be better off financially if they retire to a non-agreement country where they can receive proportional NZ Super as well as their overseas pensions, no longer subject to the Direct Deduction Policy.
  
  
• The ridiculous requirement that someone has to be ordinary 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. 
  

 

 

Nationals from 22 Pacific states receive special treatment.

They fall in three categories:

1. Niue, Tokelau and the Cook Islands (since 1993), as New Zealand has a constitutional relationship with them, 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:

Pacific Islanders get full NZ Super if they retire in their home countries after living in New Zealand for as little as 20 years. (New Zealanders and - most - other nationalities get only a portion of NZ Super. They get 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%).

 

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).

 

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.

In 2008, 482 residents of Pacific Islands received NZ Super. Annual cost: NZ$ 6.844 million per year (average NZ$ 14,200).

 

So you see, it is a tiny number of people of mostly poor nations - while nothing is done for the more than 52,000 people affected by Section 70 and living in New Zealand. 

 

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