Debt and over-payment


Conditions and steps to take in order to have debt waived by MSD

1. You have not lied to MSD by not declaring an overseas pension.

2. You have kept all the records of your dealings with MSD.

3. Request your entire MSD file.

4. Compare your records and the MSD file.

5. Find out if there are inconsistencies and check if MSD has made a significant mistake.

6. Look up details in the main article on this page.

7. If you are convinced MSD has made a mistake, request a re-assessment of your NZ Super as soon as possible, as usually a three-month timeframe is given for appeals.

Knowing Section 208: The way to have "debt" waived by MSD

It is hard to read all these words of despair and frustration, and not being able to really help, as we are running against a brick wall of nastiness, ignorance, contempt and heartlessness of successive uncaring governments and advisors who feather their nests with high incomes and, later in life, with several taxpayer-funded pensions.

Therefore it was a very pleasant surprise when we got news from a couple who have fought the Ministry of Social Development (MSD) successfully. They had incurred a huge “debt” due to MSD not deducting an overseas pension despite knowing about it, and then demanding the “over-payment” to be paid back in monthly instalments over decades. Thanks to their legal knowledge they were able to have the debt waived.

This was possible because they knew about Section 208 in the regulations for the New Social Security Act 2018. This clause says that MSD has to cancel debt if MSD has made significant mistakes that have led to the debt.

You find an indication of it in Section 444 of the Regulations in the New Social Security Act 2018 under (2) (b).


But for the full wording you need to go to a separate document named

Social Security Regulations 2018 where you find it in Section 208:

Section 208: “Debts caused wholly or partly by errors to which debtors did not intentionally contribute” says:

(1) MSD cannot recover under the Act a sum comprising that part of a debt that was caused wholly or partly by an error to which the debtor did not intentionally contribute if—

(a) the debtor—

(i) received that sum in good faith; and

(ii) changed the debtor’s position in the belief that the debtor was entitled to that sum and would not have to pay or repay that sum to MSD; and

(b) it would be inequitable in all the circumstances, including the debtor’s financial circumstances, to permit recovery.

(2) In this regulation, error—

(a) means—

(i) the provision of incorrect information by MSD:

(ii) any erroneous act or omission of MSD that occurs during an inquiry under section 298 of the Act:

(iii) any other erroneous act or omission of MSD; but

(b) does not include the simple act of making a payment to which the recipient is not entitled if that act is not caused, wholly or partly, by any erroneous act or omission of MSD.

(3) In subclause (2), MSD includes a contracted service provider whose action or inaction is under section 377(c) of the Act treated as if it were action or inaction by MSD.

This means:

You have NO CHANCE to have a debt waived if you have lied to WINZ/MSD, e.g. by not declaring an overseas pension. If you have done this, you’ll repay the money until age 120 or 134, depending on how much you owe them, and even your estate is responsible for re-paying this debt. (Only Methuselah would have been able to pay such typical debt back to MSD during his lifetime. He died at the age of 969...)

But there are many ways MSD might have made mistakes and caused the situation.

Therefore it is critical that you request your entire MSD file. It has to have everything in it including records of phone calls, and it is important that the request makes this clear.

The state of the file and its contents will give an indication right away if the MSD processes have been sloppy or not.

It is equally essential that you have kept and keep all the records of your dealings with MSD, so you have evidence to prove their mistakes.

Possible mistakes MSD might have made:

1. You have declared the overseas pension but WINZ didn’t deduct it from your NZ Super, then notices it with a huge delay and asks the money back.

2. MSD has not deducted your overseas pension or the correct amount because they have lost your paperwork. This happens more often than you might think.

3. Has there been any info slippage between MSD and WINZ? Example: MSD tells you you will receive one amount and WINZ comes up with a different figure. Miscommunication between WINZ (where you apply for NZ Super) and MSD happens frequently. We hear it all the time from pensioners who have been given a hard time by MSD staff.

4. Have they refunded you off-the-top deductions made over a certain period and then demanded the money back?

5. Has MSD undertaken a secret review of your situation about which you have never been advised, either before or after a decision?

6. Does the review contain errors of fact?

7. Does the review not include correspondence that you have sent to them, and they have lost it? It happens more often than you might think that paperwork you have sent them, sometimes even twice, is missing.

8. Has MSD made the assumption that you were, in some way, not upfront with them because they had not taken your submissions into account?

9. Has MSD assumed you were being obstructive when they lost some of the paperwork you had provided?

The legal framework and timeframes for an appeal

This list which gives you the framework for an appeal will be updated continuously.

It is impossible for us and for the legal whizzes who have alerted us to the possibility of such an appeal, to directly assist people in this process. But, as said, we’ll keep this page updated.

If you are not able to work on an appeal yourself, ask a family member or friend, or, if you can afford it, hire a lawyer, give him the legal framework and the list of errors, this should shorten the process.

Another successful case

In another case a pensioner has been successful as well. They had received full NZ Super for several months before MSD deducted their overseas pension from NZ Super and demanded backpayment of the “debt”.

MSD admitted that there was Ministry error which contributed to the overpayment and determined that it was not recoverable, and that the repayments would not need to be made.

The timeframe

In this context it is important to know that usually you have to appeal an MSD decision within a 3-month timeframe. Therefore you have to explain why you make an appeal for an out-of-time review after many more months or even years.

The reason is simple: because you have not known about the regulation of Section 208 in the regulations of the New Social Security Act 2018. New information has come to your attention.

We know of six cases that went to the High Court and all applicants failed because they represented themselves and didn't have the legal knowledge to fight MSD and their lawyers.

If MSD insists that they did not make a mistake, there might or might not be a hearing in front of the Benefit Review Committee when the 3-month timeframe has passed.

Therefore you should be sure that MSD has made a mistake, and to establish this you should request a copy of all the paperwork they are holding in your file. This must always be the start of the process.

The legal framework

As said above, the faster you apply for a review, the better. But we know of a case where even an appeal lodged after several years had to be heard due to the complexitites of the Direct Deduction Policy. It cannot be expected that people who are highly disadvantaged in the dealings with MSD due to their lack of legal expertise are able to lodge a review within three months.

First ask MSD for an internal review of their decision. If this fails, you need to apply for a review with the Benefit Review Committee (BRC). This is the first tier of the statutory review and appeal process.

And as you might know, BRCs are rather hopeless because two of the three members of a BRC are from the Ministry, therefore only in case of a tsunami the BRC would change an MSD decision. But if MSD has really made a mistake it would be a travesty of justice if the BRC didn't correct the decision. It is easier to prove that MSD has made a mistake than to question the legality of the Direct Deduction Policy because the indirect theft of contributory overseas pensions is written into law in New Zealand.

If a BRC refuses to hear an out-of-time review application, there is no right of appeal to the Social Security Appeal Authority (SSAA), as in "normal" cases where a pensioner refuses to accept the deductions made.

The only option to challenge such a denied hearing is - aside from lodging a judicial review - is to make a complaint to the Ombudsman. (And, other than MSD's bureaucrats, he seems to apply common sense and shows some empathy towards the victims of this controversial law.)

If you have communicated with MSD and told them that you don't agree with their findings about imposing a debt on you, this can already be considered as an application for a review. While the legislation requires an application for review to be in writing, there is no requirement that it has to be filed on a particular form or that any specific wording has to be used. Therefore it should be sufficient if you have written to MSD that you disagree with their decision. And if this has happened within three months of the decision, you have asked for a review even within the required timeframe.

If MSD doesn't act on this and you demand a review again later, you can always point to your letter/email in which you expressed your disagreement earlier.

If you have not complained about the initial decision and you have clearly filed your review application outside the three-month timeframe, the authorities have to decide whether there was a good and sufficient reason for the delay.

Such reasons are:

  • New information has been received since the original decision that could impact on the outcome. This could be new factual information, a relevant court decision or any other information that has the potential to change the outcome of the original decision. In the case of debt: you have just learnt that there is a chance of having the debt waived if MSD has made a mistake.

  • Overall interests of justice, public interest.

  • The impact the the original decision has on the person (probably for the rest of their lives, as we know of debt that would need to be repaid until the pensioner would be 134 years old). To give such a shocked person only three months to think about the future ramifications (cancellation of NZ Super, a lifetime of deductions, large overpayment/debt) seems extremely hard.

  • Has MSD explained clearly which ramifications an out-of-time review appeal might have? (That not appealing within three months could lead to MSD not reviewing the case or not passing it on to the BRC.)

  • The review and appeal process has not been clearly explained to the applicant.

  • The complexity of the issue has not been sufficiently explained by MSD. Only a very basic explanation was given.

  • Has the Ministry told the complainant that there was no way a review would change the outcome? (Such "advice" nullifies the information given about review rights. Not many people would consider lodging a review when they have been told it would be pointless.)

Late review applications can be accepted by the BRC only if there was a good and sufficient reason for the delay. This discretion is possible due to the wording of Section 392 of the Social Security Act.

(Last update: 15.11.2021)

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