AKL University research
The Retirement Policy and Research Centre (RPRC) is - according to its own definition - an academically focused centre specialising in the economic issues of demographic change.
The centre's sphere of interest includes:
1. public provision of retirement income (New Zealand Superannuation);
2. private provision (including KiwiSaver);
3. the accumulation and decumulation phases of retirement saving;
4. tax and transfer policy.
The RPRC contributes to public debate in regular breakfast briefings, submissions, working papers, articles, and regular newsletters.
The centre hosts PensionReforms, a website that fostered international debate on public and private pensions, tax, compulsory saving regimes, employment patterns and decumulation issues. This website, supported by many international contributing editors, is a great resource for researchers.
To "normal" people like you and us, however, the research is hard to understand in places. Meaning: there is some more "legalese" and theoretic approach to digest where some more practice-orientated views would be appreciated.
Overall it demonstrates how nearly impossible it is to compare international pension schemes because it just is what it is: comparing apples with oranges.
Clear views and clear words
Let's start with the good news: the findings of the Retirement Policy and Research Centre (RPRC) of the Business School at the University of Auckland. They had put an incredible lot of research into the topic of the treatment of overseas pensions and therefore the treatment of human beings who receive overseas pensions. The conclusion is:
People with overseas pensions are penalised
by Section 70 of the 1964 Social Security Act (SSA)
[in the meantime renamed into Sections 187-191 of the Social Security Act 2018]
and the 2009 amendments to the New Zealand Superannuation
and Retirement Income Act 2001.
Of course, this news is not really good. The good thing - and therefore good news - is that finally experts the NZ government cannot dismiss as idiots or parasites, have loudly addressed the problem. Those fellow researchers at the university are neutral researchers and not a lobby group, as we are. Nor are they immigrants.
This is important to mention because a significant proportion of the more than 100,000 people affected by Direct Deduction Policy are born and bred Kiwis, and their number will grow in the future. Then it will be even less of a discussion about some foreigners' greed. It will be a national problem that has to be solved in the face of the economic challenges New Zealand's ageing population poses.
The major findings, presented in the RPRC "Working Paper 2009-2. New Zealand Superannuation and Overseas Pensions: Issues and Principles for Reform" and released to the Human Rights Commission (HRC), are:
New Zealand pays New Zealanders with overseas pensions to leave, while making them poorer when they stay. RPRC researcher Dr M Claire Dale says that the above-mentioned 2009 amendments "have addressed the situation for pensioners who leave New Zealand, but they have ignored the very real inconsistencies and inequities for those who stay". (The international tax expert Andrew Smith estimates that only about 1,000 people are affected by the 2009 amendments and wonders why the New Zealand government has made such big noise about it whereas the problems of the 52,000 people affected at the time [now more than 100,000] have not even been considered for discussion.)
Claire Dale also states that "pension policy has developed in an ad hoc manner, often without public consultation, behind closed doors, and often with unintended consequences".
Morality and democratic rights are compromised.
The consequences of Sections 187-191 are severe: financial hardship, the physical health of the affected people is compromised, their ability to work impaired, and there is seething resentment at the injustice.
The RPRC has analysed complaints, policy, legislation and recommendations regarding the treatment of overseas pensions and of New Zealand Superannuation overseas (portability). Therefore the Working Papers do not only describe the status quo. They also provide a foundation for discussion of suitable principles to guide future decision making and policy formation.
At the Overseas Pension Forum in Auckland 2010 Claire Dale warned that in the face of increasing migrant flows "New Zealand must sort this enormously complex issue out urgently", as more and more people are coming into New Zealand to satisfy the need of skilled workers. RPRC co-director Susan St. John called Section 70 "a time bomb".
(In the meantime eleven years have passed - we write 2021 - and nothing has changed, with the exception of the end of the Spousal Provision in November 2020 and the ever increasing number of affected people. It has nearly doubled.)
At the Overseas Pension Forum Susan St. John and her fellow co-director Michael Littlewood presented two options for reform. This led to vivid discussions - with one clear favourite amongst the retirees and future pensioners who will miss out on NZ Super if the Direct Deduction Policy will not be dramatically changed or completely abolished in the future.
No endorsement of our website
We want to clarify at this point that the Retirement Policy and Research Centre (RPRC) of the University of Auckland is absolutely independent and does not endorse our website in any way. We do not even share the same views on several key issues.
(Last update: 14.11.2021)
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