Offenders & Actors in Wellington

The New Zealand government denies many Kiwis NZ Super.

Fair contributions

The NZ government argues that it is "fair to most New Zealanders" that overseas pensions are deducted from NZ Super. And it says that NZ Super should only be paid to people who have contributed to the NZ tax base and NZ society.

On 28 March 2010 the Sunday Stars Times reported on figures from the Ministry of Social Development:

"The ministry says the longest serving recipient of the unemployment benefit is a man in his 60s who has been on the dole for 23 years. He lives in a remote area and will qualify for superannuation later this year."

In the same article it was reported that "a single mother has been receiving welfare payments for 36 years". The woman in her 50s has had dependent children in her care throughout the period. Her total weekly benefit is NZ$ 500 to 580. The value over 36 years would approach NZ$ 1 million.

The woman will be eligible for NZ Super.

Fairness is only a word

Take the current government, take former governments of whichever political side, it does not matter. They treat immigrants and returning Kiwis like parasites for demanding their share of NZ Super for their contributions to the New Zealand tax base and society.

The only difference has been the acknowledgement of the Labour Government under Prime Minister Helen Clark in 2007 that the Spousal Provision should be abolished because this would have stopped Kiwis who have stayed and worked in New Zealand all their lives from being denied NZ Super. But they did not go as far as to change the law because - surprise, surprise - this would have cost money. This took another 13 years!

(And remember: if we speak of the Government's money it is not their money or even a gift they would offer you. It is money gained from taxes from you and those retirees who in the end do not get a cent out of it.)

They did not, as Social Development Minister Ruth Dyson let us know, find any money for it in the Budget 2008 - and when they finally abolished the Spousal Provision policy in 2020, it cost only a mere NZ$ 2m. (At the time it was estimated as costing $2.7m.) When National took over in 2008, things got even worse for superannuitants affected by the Direct Deduction and Spousal Provision policies because they would not even discuss the hot potato topic.

Conclusion number one:

Justice is only done when the coffers are full - if at all.

The way politicians justify why justice is not done is cynical. The Prime Ministers, the Ministers for Social Development and Employment and the Minister for Senior Citizens exposed themselves as bludgers by overusing the words "fair", "fairness", "egalitarian" and "equity".

New Zealanders are conditioned to these words and have an allergic reaction to anyone who asks for more, and the Government feeds this feeling by claiming that the Direct Deduction is "fair to most New Zealanders". In their view, this means: the demand to abolish Sections 187-191 of the Social Security Act is not fair because this would advantage a greedy few and, on top of it all, it would bankrupt the country. So it is in everybody's interest to keep the status quo and discredit this unreasonable minority as before.

Because, and this is conclusion number two:

Who cares about a minority?

Our answer is: because this would be the appropriate reaction of a fair and mature society that does not fall for cheap political slogans.

Yet the Government does not even make an attempt to acknowledge that it would be fair to leave immigrants' and returning Kiwis' overseas pensions untouched. It would be fair because:

  1. overseas pensions are not full pensions (except for Tier 1 pensions which are the only ones comparable to NZ Super but are a rarity) and

  2. those people have paid for their overseas entitlements on top of their income taxes in those overseas countries - something nobody in New Zealand has ever had to do.

A cheap political slogan: No-one should be better off...

Yes, some immigrants and returning Kiwis would be what the Government calls "better off". This makes the average Kiwi furious. Why should someone get more money?

Think again. It is more because these people had to make compulsory contributions in order to receive the money at old age, and the money comes from other countries. No New Zealander who has stayed here all his life has to pay a cent for overseas pensions being paid to people living in New Zealand. Most overseas pensions are like saving schemes, administered by independent entities or agencies and not even a foreign government, and they become due when those people who have contributed retire. New Zealanders can - if they want - save all this money and put it into a bank account and invest it into shares, funds or property, to be better off at old age, too.

People who have not contributed to a foreign pension scheme do not get a cent out of it. Unlike in New Zealand where everybody over the age of 65 is entitled to NZ Super, provided he or she has resided here at least 10 years (going up to 20 years) since age 20, and five of those after age 50 - and everyone receives it, with the exception of those affected by Sections 187-191, of course.

Foreign states pay benefits to top up insufficient pensions

And, here is another fact the New Zealand government does not represent truthfully: nobody in those foreign countries who receives no or only a small pension descends into extreme poverty. Most nations like Germany (and therefore the taxpayer) top up tiny pensions by a social welfare benefit, so everybody can live above the poverty line.

Those benefits are paid to people who have no realisable assets. Applicants are means-tested and their entire financial situation examined. This includes the house and other property, not just cash and money in a bank account. The benefit is topped up by supplements for accommodation, heating and health insurance. This, by the way, is similar to NZ Super, rather than a Tier 2 contributory pension.

Subsequent New Zealand governments have identified inequities (like in the 2005 Review of Superannuation and Retirement Policies, and the 2007 report based on this first Review) but have chosen not to follow up on them, with the exception of Labour suggesting to scrap and then really abolishing the Spousal Provision 13 years later, as mentioned above.

The explanation is that the existing policy has "worked reasonably well" and is "fair to most New Zealanders". They repeat it over and over again; everybody has been using these precedents since they were first published in the 2005 Review. There is no difference between Labour and National - because the Ministry of Social Development's "Mandarins" have been writing the reviews and subsequent letters.

The policy that "works reasonably well"

Of course, Sections 187-191 work reasonably well. The people in the WINZ offices who deal with applications for NZ Super only have to ask the applicants if they receive a foreign pension. Then they deduct this overseas pension from NZ Super.

By deducting overseas pensions from NZ Super WINZ achieve miraculous calculations:

If a single person receives a 40% portion of a theoretical full overseas pension because he or she has only worked 40% of his or her working life in that country, it is nevertheless considered a full pension by WINZ and deducted as a 100% pension payment from 100% NZ Super.

Before the end of the Spousal Provision this lead to perverse outcomes. An example: if a person was married to a New Zealander who would receive 100% NZ Super in his or her own right, his or her partner’s 40% pension from overseas was abated against the full couple rate of NZ Super.

This means: one person’s 40% pension from overseas was deducted from two single-person NZ Super rates, each one equivalent to 100% NZ Super, so 200% worth of NZ Super. The result of the calculation could be: 200% NZ Super - 40% overseas pension = $0 (zero). Or: 200% NZ Super - 40% overseas pension = 20% NZ Super. By wrongly weighting the percentage values of two pension entitlements, the dollar values arrived at through subtraction were truly wondrous. This is a prime example of wrong-headed logic and twisted arithmetic.

Twisted ideas of generosity

If the deduction left the couple with a nominal minus, WINZ topped up the negative balance by the dollar amount needed to leave the couple no worse off than a pure Kiwi couple. This gesture was considered generous - and this lead the NZ government to believe that its superannuation provisions were (and still are) generous. However, in fact the New Zealand taxpayer paid only a fraction of one full NZ Super to two people, if anything at all.

If the 40% overseas part-pension was higher than two full NZ Supers, the couple were allowed to keep the excess amount. This again was considered generous - as there was and is no existing law that would allow the Government to confiscate this foreign money directly, perhaps labelled as an entry fee into this pensioners' paradise.

The fact that overseas pensions, even proportional pensions, from a range of countries are higher than NZ Super is easy to understand: if you earn a high income and make high contributions to your superannuation scheme you get more out of it than the relatively modest rate of NZ Super - because no-one has ever paid directly into it.

(Last update: 26.11.2021)

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