The nearly secret end of the
Spousal Provision is near
Spousal Provision is near
This is a particularly sad time. We have, as a pension fighter and friend put it, to acknowledge the first official Spousal Provision refugee who has fled New Zealand. This born-and-bred New Zealander in his eighties found life in his home country so unbearable, due to the deduction of part of his wife’s overseas pension from his NZ Super, that he left our self-proclaimed paradise for good. Digest this until I explain it in more detail a bit further down in this newsletter.
I have been waiting with writing the first NZ Pension Protest newsletter this year because I have been waiting for the New Zealand government to act on Section 70, as Prime Minister Jacinda Ardern – then in Opposition - had already said in 2015 that it was an unfair policy and the Spousal Provision even in breach of Human Rights.
First I was waiting for the promised review of “certain aspects” of the “settings of NZ Super” which Social Development Minister Carmel Sepuloni had promised to dozens of pensioners for late last year, then for February this year – only to learn that she had mutated into a Minister of Postponing Information (MPI…) and postponed the postponed review once more.
No wellbeing for pensioners in the Wellbeing Budget
Then I thought I could wait a little longer, until early June, as the so-called Wellbeing Budget might contain some wellbeing for pensioners as well. After all it’s the people who have contributed to the wellbeing of this country with their work, taxes and volunteering. I was hopeful that the end of the Spousal Provision would be announced. The end of punishing New Zealanders for being in a relationship with a person who receives an overseas pension by not only denying NZ Super to the person who receives the overseas pension but deducting the “excess” of the overseas pension from the New Zealand partner’s NZ Super.
I held this hope because I thought the Government finally wanted to act before the Human Rights Review Tribunal (HRRT) would tell them that the discriminatory treatment of those people was in breach of Human Rights on the grounds of family status – a decision we have been waiting for since the Spousal Provision hearing at the HRRT in March 2018. (And due to the backlog of the Tribunal it can take another year or even longer.)
But nothing. No announcement. No fanfare. Not a word.
Only the day after the official publication of the Budget I wondered what was going on when Mike McRoberts presented winners and losers of the Wellbeing Budget on the Newshub TV news, saying that 6,300 pensioners would be worse off. I quickly googled and ended up on the WINZ website which said: “From 1 July 2020, your NZ Super or Veteran’s Pension won’t be affected if your partner’s getting an overseas pension.” The losing 6,300 people were pensioners who include non-qualified partners in their payments. See here: https://www.workandincome.govt.nz/about-work-and-income/news/2019/wellbeing-budget-2019.html#null (Changes for superannuitants)
What?! The Spousal Provision gone with the stroke of a pen and without mentioning it with a word? After all, our site has been fighting for it to be scrapped for ten years, and many others had been fighting the same fight. Hundreds of affected pensioners had complained with MSD since the official introduction of the Spousal Provision in 1985. Would it not have been a proud day for the NZ government to praise themselves and get celebrated for finally giving justice and fairness to the victims of this 19th century-like policy? More than strange. Why this secrecy?
Susan St. John from the Retirement Policy and Research Centre (RPRC) of the Business School at the University of Auckland was even at the social sector lockup (that’s people having access to the Budget documents before its publication later on the same day) and it was not mentioned at all, and it could barely be found in the documents.
The revelation in an ambiguous fact sheet
Anyway, after finding the information on the WINZ website I informed other Section 70 advocates and some pensioners affected by the Spousal Provision. We started discussing online, and after some more googling someone found an ambiguous fact sheet on the MSD website: https://www.msd.govt.nz/documents/about-msd-and-our-work/newsroom/factsheets/budget/factsheet-super-and-vp-modernisation-2019.pdf.
Suddenly things were not as clear anymore. I wrote to MSD and their media team – after all I am a journalist in first place and see it as my duty to give people a voice who are not heard, and hold governments to account – and asked for clarification, particularly about the never-heard numbers they mentioned in the MSD fact sheet.
But I am afraid I slipped down on the priority list when the senior media advisor called me and I told her that I edit the www.nzpensionprotest.com website. And just to clarify here: Once I retire I will not be affected by the Spousal Provision. I have not received an answer after more than a week despite delivering the requested second email with my two or three main questions for a quick reply.
Only NZ$ 2 million were needed for ending the Spousal Provision
The NZ Herald was luckier and received a statement from the Minister after a few days already, and I have seen information from other sources. Therefore I can let you now know that just under NZ$ 2 million have been put aside in the Wellbeing Budget for ending the Spousal Provision by 1 July 2020 – under the condition that the amendment to the Social Security Act passes Parliament. This should be a formality, as obviously Labour wants the change and it is NZ First and Green Party policy to end Section 70, not just the Spousal Provision part of it.
It is still unexplained how, in the fact sheet, MSD comes to the number of “around 450 superannuitants (in 2022/23)” who “will no longer have their entitlement to NZ Super or the Veteran’s Pension reduced because of their partner’s overseas pension”.
According to one of the MSD policy advisors who talked at length at the HRRT hearing last year, the number of affected pensioners already stood at 588 in October 2017, and despite the one or other pensioner dying, the numbers have been rising steadily every year. (When we first published our website in 2010, the number stood at 254.) Either the number of 588 was pure fantasy, or something sinister is going on.
In her statement to the NZ Herald, Minister Sepuloni said: "Spousal deduction will still apply for people who are still receiving other forms of assistance." Logic would tell me that Spousal Provision is part of Section 70 which rules on how overseas pensions are treated, and the payment of NZ Super is – at least in principle – not means-tested.
If someone receives “other benefits”, these other benefits are means-tested, e.g. accommodation supplement, and they have nothing to do with Section 70. Of course, when a benefit is means-tested, all other income of a couple (not just the individual) comes into consideration, and a spouse’s overseas pension is treated as income. But I think you cannot call it “Spousal Provision” or spousal deduction if it is counted as income against a means-tested benefit, it is just family income.
The changes came too late for the Larsens
All this comes too late for Malcolm Larsen. That’s the man who has left New Zealand due to the distress caused by the Spousal Provision. He has had his NZ Super reduced due to his wife Sigrid Stensrud’s Norwegian pension. Mal is a man from Nelson who has never left the country, worked and paid taxes in New Zealand all his life. But he fell in love with a Norwegian woman who received an overseas pension. Such love stories are life-changing in the worst way if you live in New Zealand.
At the HRRT hearing Malcolm said he felt “like a much-diminished man”, and that not being able to financially contribute to the marriage as others can, had “a huge effect on his dignity”. His wife Sigrid broke down in tears when she gave her witness statement, saying she felt guilty because she had caused the situation – by loving and marrying him. She said: “I feel like it is all my fault. If I hadn’t come into his life, we would never have had all this hassle.”
I have been in touch with the Larsens since then, that’s why I knew they were planning to leave New Zealand. When Malcolm sent an email to his contacts in early May, reminding us of his email address and not adding anything else, I knew that he and Sigrid had arranged their departure date.
Since the Tribunal hearing the distress had increased. In March Malcolm had written that life in New Zealand had become unbearable due to the NZ Super situation. He said everyday conversations with well-meaning friends hurt, saying what he could or should do, even just the greeting: “How are you?” He said: “Ordinary everyday conversation no longer matches our reality and traditional responses take on a different meaning.”
42 days to arrange Portability with WINZ
At the time there were difficulties with the Norwegian resident visa, and WINZ told them they needed 42 days spare to meet them regarding the portability of their NZ Super. And they needed to make their final travel arrangements prior. Imagine all this stress for a couple of 83 respectively 81 years of age, and no family members in New Zealand to help. It makes you cry if you have seen this lovely couple so devoted to each other but both deeply depressed due to an unjustifiable, shameful policy imposed by successive uncaring and heartless governments.
(For those who don’t know: you receive proportional NZ Super if you move to another country which has no social security agreement with New Zealand, it is 1/540th for every month spent in New Zealand between age 20 and 65. For Malcolm this means he receives full NZ Super in Norway and Sigrid some NZ Super, while in New Zealand she received nothing and he only about 50% of NZ Super. Those wanting to follow their example, best while younger, please read the Portability pages on our website (links below) because there are pitfalls all over the place. And never tell anyone before you do not receive NZ Super!)
Bob Newcombe, another very active Section 70 activist who lives in Nelson like the Larsens, checked out if the Larsens were still in New Zealand, and he found out that they had left for Norway at the end of May, with Malcolm in a really bad state in his last week in New Zealand, just days before we found out about the Governments hidden information in the Wellbeing Budget about ending Spousal Provision.
"Ardern and Co are responsible for this tragedy"
Bob is a man of strong words, and while I might express things differently, I understand him all too well when he said: “Ardern and Co are responsible for this tragedy. Had Mal known that the disgusting Spousal Provision was to end in July next year, they would probably have not gone and a decent government would have made it this July. So there it is, New Zealand's crime against us elderly, promised by Ardern and Peters to end but still goes on. If Ardern had half a conscience she would sort this lot out and fly them home.” His conclusion: “When Parliament is supreme over the Bill of Rights, uncaring, unconscionable politicians will always abuse our Human Rights.” He calls the Larsens’ fate “New Zealand’s ever-lasting shame”.
In that I agree: it is a crying shame. On the other hand I think the Larsen’s will have a better life in Norway. I am told their social security and welfare system is excellent, and Sigrid’s children are there, there is family support. And they don’t have to wait another year for NZ Super. When you are in your eighties you don’t know how many years you have left. Every year without the stress about Section 70 is a good year.
In and out of hospital due to the stress
Just like the Larsens, Donna LaFauci, another one of the complainants at the HRRT hearing, has suffered more health issues over the past 15 months. It is not a breach of privacy if I write here that her health has deteriorated further and that she has been in and out of hospital with strokes and stress-related illnesses, as she said it in the article published by the NZ Herald (link below) after the Spousal Provision secret had been unveiled. She also said: "It's affected my health, it's affected my marriage, it's affected my emotional health." And she wondered if she'd live to see the change be made official: "Am I going to last another year?"
I have written to Ministers, PMs, Chief Executives etc over the years, telling them which horrible stress, health problems, mental breakdowns, social disconnect and poverty Section 70 in general and the Spousal Provision in particular are causing. It has fallen on deaf ears, and politicians have only spoken out against it while in Opposition.
At the HRRT hearing we have learnt first-hand how the MSD bureaucrats tick, how they ill-advise incoming Ministers and that they probably really believe what they say, as outlandish as it may sound. We had always wished MPs used common sense, listened more intently to affected people instead of these so-called experts who glue on their seats for ages and defend the indefensible while governments and ministers change every three years or even more frequently.
While it is commendable that the current Government has the intention to discontinue the Spousal Provision, given that the legislation is passed, it comes far too late.
Anne Tolley's terrible legacy of lies and misrepresentations
Things we should not forget is that the responsible Minister of the previous government (Anne Tolley) even signed a Crown Law response full of misrepresentations and lies to the UN after a group of 15 – including Malcolm Larsen – had sent a complaint about Section 70 to the UN, and in this shameful response the Spousal Provision wasn’t mentioned with a word. The UN dismissed the case.
But the failure of successive governments has started much earlier. There were the famous Reviews, particularly in 2004 and 2005, which all stated that overseas governments were not willing to negotiate Social Security Agreements with New Zealand because of New Zealand’s all-encompassing overseas pension grab. We finally have to blame Helen Clark and her last government before being catapulted out of power in late 2008.
Ruth Dyson was the Labour minister in charge who could forward the good news that Cabinet had agreed on 23 October 2007 to scrap Spousal Provision - and the bad news that the change of policy was subject to the availability of funding. This "was not found" in the Budget 2008, and we speak of less than NZ$ 2 million – but they found enough money to fund major tax cuts – we call them election bribes – before the Election 2008.
The dire consequence of this unsuccessful search for money was that the incoming National government distanced itself from Clark’s Cabinet decision, and the fight for justice had to start all over again. With a tiny bit of decency the Spousal Provision would have ended then and we would not find Malcolm and Sigrid and so many others at the end of their tether eleven years later.
And after all this suffering, today’s Government has hidden the intended law change on their websites, and had I not googled, just like National did on other issues of the so-called Wellbeing Budget, we might still not know it. No hacking needed. I wonder if the NZ$ 137 million to stabilise MSD (computers) and the NZ$ 76 million for hiring 170 new staff over the next four years is enough to make MSD officials (and some politicians think like decent human beings.
The fight goes on
The end of the Spousal Provision can only be the start of the end of Section 70. While the NZ government claims people with overseas pensions are advantaged over New Zealanders who have never left the country, the opposite is the case. Deducting overseas pensions from NZ Super dollar-for-dollar disadvantages these people over lifelong New Zealanders who can invest their and their employer’s contributions in the government-sponsored KiwiSaver scheme and cash in this money as a lump sum, while the same overseas investments are indirectly confiscated by the NZ government by not paying NZ Super or only a fraction of it, with the lame excuse that KiwiSaver is not administered by or on behalf of the government.
Winter Energy Payment
The end of the Spousal Provision does not automatically end the unfair treatment of pensioners who do not receive the Winter Energy Payment (WEP). While it will help some couples when one of them suddenly receives some dollars NZ Super, those couples (e.g. made up of two singles who both receive an overseas pension each higher than NZ Super) and singles who do not receive NZ Super after the direct deduction of their overseas pension) will still not receive the WEP. Millionaires – and MPs over 65 with two or more pensions – can keep it. They can refuse it. But how many do it? According to MSD only about 2,000 of 770,000 pensioners have opted out so far. Story on it here: https://thedailyblog.co.nz/2019/04/15/paying-too-much-to-keep-us-warm/
NZ First bill to raise the residency requirement
The so-called New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill has been introduced to Parliament by NZ First member Mark Mitchell last October but hasn’t had its first reading yet. I have been informed that this bill is rather down in the list (15th item on the Order Paper for Member’s orders of the day, and sittings are only every second Wednesday morning). The intention of the bill is to raise the residency requirement for NZ Super from 10 to 20 years after age 20. (In this case it has always been NZ First’s policy to end Section 70 – although ending Section 70 is NZ First policy anyway…)
The bill does not suggest if and how people who have lived, worked and paid taxes in New Zealand for e.g. 15 or 18 years will be treated. We have nothing against the 20 years but we are strictly opposed to not paying any NZ Super to people who have been here between 10 and 20 years. It would just be the injustice raised to a higher level. It would be fair to introduce proportional payment for these groups or come up with another fair solution. There is nothing mentioned about phasing in this policy and with plenty of warning (called grandfathering) and not introducing it from one day to the next, destroying many people’s lives at the verge of retiring. Bill and progress here: https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_80767/new-zealand-superannuation-and-retirement-income-fair
More changes for pensioners
There are two other changes for pensioners in the Wellbeing Budget: 1. They can now receive NZ Super and ACC for up to two years and need not decide between the two payments. – 2. Pensioners cannot include a non-qualified partner (too young or not long enough in New Zealand) in their pension payments from 1 July 2020. If the non-qualified partner is currently included, the pensioners will keep getting the full rate unless their circumstances change (new partner after separation or death of current partner). The sheer number of pensioners receiving payments for non-qualified partners (as in MSD fact sheet) is astounding.
Problems for people with US and Canadian pensions
For several months I have been receiving emails from pensioners who have been threatened by MSD that their NZ Super payments would be stopped if they don’t apply for their US Social Security pension or their Canadian pension before age 70. Americans can choose the starting date of their pensions, and the later they start receiving payments, the higher these payments are. This is particularly important if someone decides at a later date to move to the USA, as in this case they would only receive proportional NZ Super. I have asked MSD and the Minister on which law the threat is based already quite a while ago, as there is not a word in the Social Security Act about an obligation to request an overseas pension earlier than on the date the pensioner has agreed upon with the pension provider. I have not received an answer until today.
Links to further reading:
Susan St John’s blog about the secrecy surrounding the end of the Spousal Provision: https://www.newsroom.co.nz/@ideasroom/2019/06/07/623481/wellbeing-budget-quietly-rights-a-wrong
Malcolm Larsen’s story:
NZ Herald article on the end of Spousal Provision:
Pages about Portability:
Jacinda Ardern’s speech in 2015:
The Offenders: PM Jacinda Ardern
Keep well despite the cold weather and the continuous anger about Section 70.
#nzsuper #newzealandsuperannuation #superannuation #newzealand #overseaspension #directdeductionpolicy #deduction #spousalprovision #spousaldeduction #sections187-191 #section70 #socialsecurityact #msd #winz #WorkandIncome #ministryofsocialdevelopment #newzealandgovernment #statepension #contributorypension #legalisedtheft #ripoff #lawchange #superannuationbill #carmelsepuloni #minister #socialdevelopment #newsletter #nzpensionprotest.com