What is all this fuss about?

Isn’t this just a small number of pensioners kicking up a lot of fuss?

No. It is about more than 100,000 pensioners in New Zealand who receive an overseas pension in addition to their NZ Super and are affected by Section 187-191 of the Social Security Act (Direct Deduction Policy), to varying degrees.

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Isn’t it just immigrants who come to New Zealand and then complain about having their overseas pensions deducted from NZ Super?

No. There are no statistics by the pensioners’ country of origin, or showing whether the pensioner is “just” a permanent resident, a naturalised New Zealand citizen or a “real” born and bred Kiwi, if you wish to make that distinction at all. But Sections 187-191 affect increasing numbers of New Zealanders who have spent part of their working lives overseas and now receive, or will in future receive, an overseas pension.

Due to growing global mobility and New Zealanders’ love of the big OE and the fact that it often lasts longer than intended, the number of “real” New Zealanders whose overseas pensions are going to be reduced is expected to rise.

Until 9 November 2020 Sections 187-191 also affected New Zealanders who were married or lived together with the “wrong” person, that was one with an overseas pension. We took up this fight against the so-called Spousal Provision because it could not be realistically expected, and would be a confession of moral failure, that people choose their partners based on financial criteria such as their future pension entitlements.

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Why don’t you think it is double-dipping if people get two pensions?

It isn’t double-dipping because it is comparing apples with oranges and making illogical deductions on an apple-and-oranges basis. NZ Super is paid from taxes. It is designed as a universal age pension for everybody who qualifies by fulfilling the age and residency requirements. If a similarly funded overseas pension is abated against NZ Super, there is a comprehensible logic behind it and we don’t object at all. But NZ Super doesn’t make any difference between tax-funded and contribution-funded pension systems. WINZ also deducts contribution-funded pensions as if they were analogous and comparable to NZ Super, but they are not. Far from it.

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Not all contribution-funded overseas pensions are deducted from NZ Super, only those that are publicly managed. How come?

That’s one of the many inconsistencies and anomalies of the Direct Deduction Policy. If a pension scheme is publicly managed, it counts. If it is privately managed, even if publicly mandated, such as in Chile, the Direct Deduction Policy does not apply. No-one loses any money if an employer/employee-funded pension is paid out as a lump sum (as in Australia) or if a contributor can opt out (like in the UK). There is no logic behind this classification.

Also, the definition of a pension scheme as privately or publicly managed is just as flawed. For example, the German compulsory, contribution-funded pension scheme is defined as publicly managed although the administering body is not a government agency, but an independent entity.

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Why do recipients of contribution-funded overseas pensions claim they are being denied their own money?

These people, and their employers in most cases, have made contributions that can be rightly considered part of their remuneration during their working lives – with the proviso that the benefits are due after retirement only. Surrendering this deferred remuneration benefit to a foreign government that abates a tax-funded pension against one that is fundamentally different in character is therefore perceived as highly unfair and, as many put it, legal theft of individually earned entitlements.

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Why should the New Zealand government listen to you? It would only cost more money to scrap the Direct Deduction Policy altogether.

Yes, it would cost more money, but money isn’t everything. Of course it is hard to put a dollar value to reputation and international standing, but it may well be worth it. New Zealand has Social Security Agreements with only a very small number of countries: Australia, Canada, Denmark, the Republic of Ireland, Greece, the Netherlands, the United Kingdom and – to make the list look more wholesome – the independent Channel Islands Jersey and Guernsey, as well as Malta! Just as an aside: Australia and the USA have 23, and Canada has 51 Social Security Agreements. What does this tell us? Not exactly that many other countries would like to enter into such agreements with New Zealand.

New Zealand has, so far unsuccessfully, attempted to conclude Social Security Agreements with the USA, Germany, Switzerland and Austria; these are some of the world’s heavyweight economies. Some countries, such as the USA or Germany, balk at the Direct Deduction Policy and refuse to negotiate such agreements. What light does this cast on New Zealand?

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Sections 187-191 and the Direct Deduction Policy are enshrined in law. It has been tested in the courts and has been found to be legally sound. So what’s the problem?

If something is legally correct it doesn’t mean that the law itself is still adequate. Swiss women were granted the right to vote in 1971 only. Apartheid in South Africa lasted until 1994. Does this make the legislation that allowed the previous situation sound right just because it was legal?

The Direct Deduction Policy - and especially the Spousal Provision that was finally abolished in November 2020 - have been identified as out of touch with today’s world characterised by increasing inward and outward migration, high labour mobility and ageing populations. Remember: the Social Security Act and Sections 187-191 date back to 1938.

In the most recent Ministry of Social Development pension review, back in 2008, a number of recommendations were made, including discontinuing the policy of deducting a person’s overseas pension from their partner’s entitlement to NZ Super. Sadly enough it was not enacted in law because, apparently, there was not enough money for it. The onset of the global financial crisis in 2008 came in handy, too, for the new Government to say that the budget doesn’t allow it. It took another twelve years until it was finally abolished.

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Why did you come to New Zealand if you don’t like the pension system?

Most people leave their country of origin for more than one reason, just as they choose the country they make their new home for various reasons. There are many positive aspects to life in New Zealand, but it is not perfect. Just like in every other country you have to take the good with the bad. Only because people voice their dissatisfaction with the pension system doesn’t mean they don’t appreciate what’s good about New Zealand. And don't forget that not only immigrants are affected by the Direct Deduction Policy but more and more born-and-bred New Zealanders as well.

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Why do you stay in New Zealand if you find the pension system so unfair?

For some people the good things about life in New Zealand balance out their dissatisfaction with the pension system. Some are lucky to have enough funds or other income to manage even without NZ Super or with reduced NZ Super. They are frustrated at the unfairness of the system, but not on the brink of poverty. They can choose to stay. Others simply cannot leave, for a variety of reasons. Lack of funds is one of them. They have no choice but to either suffer silently or vent their anger and try to change the law.

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It seems you didn’t do your homework before deciding to emigrate. Why didn’t you research things properly before coming here?

There is no excuse for not doing one’s homework. However, up until recently the information was not as available as it is now, with the web making researching things much easier than in the pre-digital age. Those who came to New Zealand before the internet era had to depend on the information given to them on request by Government agencies, and this was usually no full information.

The Direct Deduction Policy was not something official Government agencies would volunteer, and until today (2021) new-ish migrants tell us that no-one ever mentioned the pension rip-off even at New Zealand migration seminars. As a rule, the message was that NZ Super was universal and not means-tested. And who in their right mind would have conceived of a rule such as the Spousal Provision (which existed until November 2020) and attempted to verify it before moving to New Zealand? It is so bizarre that it would have never occurred to them.

The New Zealand government and particularly the Ministry of Social Development (MSD) and Work and Income (WINZ) did their best to hide the truth. Just look at their websites where they still (2021) make vague comments about the possibility that an overseas pension might have an impact on the amount of NZ Super than can be paid to applicants. We pride ourselves that we have contributed enormously to the topic being far more out in the open since the launch of our website in 2010.

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Don’t you think it is inappropriate to move to another country and complain about things you don’t like there?

Why should immigrants keep mum about something they find unfair? New Zealand is a democratic country, and equal rights and free speech are some of its valued principles. This applies to everybody who lives there legally, no matter whether they are born and bred Kiwis, naturalised New Zealanders or permanent residents. Immigrants make a useful contribution to the country by bringing their skills to fill labour shortages, spending their money and thus keeping the economy going, and paying taxes to the Government. Beyond their formal right to free speech, this also gives them a moral right to express their views, including critical ones.