Private pension blunder


Voluntary contributions
must not be deducted

There is quite some confusion about the term "private pensions" and "voluntary contributions".

It is clear that a private pension, funded outside a country's compulsory scheme, cannot be deducted from NZ Super.

However, if you have made voluntary contributions to your account in a country's compulsory scheme, this part of your overseas pension must not be deducted from NZ Super either. The only thing you have to do is get a statement from your overseas pension provider which says which percentage of your overseas pension has been funded by voluntary contributions, and this part of the pension must not be deducted from NZ Super.

The problem is that some WINZ workers, MSD employees and many pensioners do not know about this law, therefore the entire overseas pension is deducted and no-one complains. It became written law on 9 November 2020. But MSD had been instructed e.g. by the Ombudsman many years earlier to not deduct the privately funded part of an overseas pension. Huge backpayments, interest and compensation had to be paid to affected pensioners.

How many such pensions are wrongfully deducted, we don't know. There is reason to believe it still happens. If you are affected by this blunder, complain as soon as possible and demand backpayment, interest and compensation for damages and stress.

E-Book: "Discrimination made legal"

A book based on Colin Tan's experience has been published, it is available for Kindle. Tan says he had it vetted by his lawyer and by Amazon. The title is: "The Conscience of a 'Fair Go' Nation - Discrimination made legal". Here is the link:

(Please note: we are not responsible for the content of external links and must not agree with the content of external pages or books.)

You find Colin Tan's blog here:

Confiscations driven by pure malice or stupidity?

One thing is clear: private pensions are usually not "administered by or on behalf of a government" and can therefore not be deducted from NZ Super. The Ministry of Social Development is using this definition of the type of administration as one of its tools to grab nearly all contributory pensions of the world to make immigrants and returning Kiwis pay for their own (and until 9 November 2020 also for their partners') NZ Super.

On many occasions the Ministry has also made sufficiently clear that even the KiwiSaver scheme is, despite government subsidies, a private pension that cannot be deducted from NZ Super. In several High Court cases it has been stressed as well that private pensions are untouchable for the Ministry. Even the part of an overseas pension that has been funded by voluntary contributions must not be deducted.

Therefore we were led to believe that private pensions, funded by an individual or the individual and his/her employer, and in most cases paid for on top of compulsory superannuation schemes overseas, would not be deducted from NZ Super.

Deducting retirement savings from Singapore and Ireland

But we have come across some cases where this rule is obviously blatantly breached and pensioners are robbed of their private savings. This applies to an Irish savings scheme named Personal Retirement Savings Insurance Fund (PRSA) and to the Central Provident Fund (CPF) of Singapore.

Already the term "private pension" says that a government is not involved in the scheme whatsoever. Usually individuals invest funds into savings schemes, life insurances or mutual funds, run by insurance companies, sometimes by the employer. The insured person carries the risk alone and can even lose all the invested money if the insurance company invests it into bad funds or goes broke.

Often the investor can choose between a lump-sum payout at retirement age or monthly payments. The monthly payment option obviously leads New Zealand's Ministry of Social Development to believe that they can even confiscate such private savings.

John Key has received his money, Colin Tan's is taken by MSD

A man named Colin Tan has been fighting the confiscation of his CPF from Singapore for quite a while now. The core message he is trying to get across is that the CPF is not a pension fund but a compulsory savings account started by the British government in 1955 when Singapore was a British colony.

The citizens were allowed to withdraw their savings when reaching the pension age of 55, and later they were entitled to buy apartments using their CPF. (Exactly what you do with KiwiSaver.) Unfortunately the government watered down this rule, and now Singaporeans can only withdraw small monthly amounts from the age of 65.

However, all foreigners who leave Singapore after working there for some time can collect their CPF savings tax-free. New Zealand's former Prime Minister John Key who worked for Merrill Lynch in Singapore is one of them, so he should have known better than anyone.

Despite this knowledge, he allowed the Ministry to treat this savings scheme as a pension which can be deducted from NZ Super.

The CPF is not a "periodic allowance"

Superficially examined, Singapore's government is involved and the severe restrictions placed upon its own citizens have led to monthly withdrawals. This obviously is enough for MSD to regard it as a state or occupational pension - a view shared by the chairwoman of the Social Security Appeal Authority - and not take a closer look at the nature of the scheme.

Or are they too stupid at MSD to understand what the CPF really is when they claim it is "a periodic allowance"? We think it is plain malice because once the savings account is depleted, the payments from Singapore stop - unlike a pension which is paid until the end of someone's life.

The Chief Executive of MSD stated: "The Singapore CPF monthly refunds are considered to fall within the definition of a periodic allowance as they are paid monthly as part of the Singapore CPF's administration of the CPF Savings Scheme. The fact that they are defined by the Singapore CPF as 'refunds' does not, in the Ministry's view, mean that they cannot be seen to be a periodic allowance, generally accepted to be sums issued to a person regularly or for a specific purpose."

First the people of Singapore have been cheated on by their own government to do with their savings whatever they want to, then - according to Colin Tan - MSD insists that the CPF Board is the correct authority to contact and not the Pensions Branch in Singapore. Colin feels discriminated against because of his nationality and citizenship and therefore lodged a complaint with the Human Rights Commission and the Ombudsman. He wasn't successful - but the rulings around it stink so much that you lose trust in New Zealand's claim to be a fair country with low evidence of corruption.

Find more details about this fight on

MSD cannot distinguish between PRSA and PRSI

Another pensioner, originally from Ireland, and her lawyer have run against a brickwall in explaining to the Ministry of Social Development that her monthly payments from the Irish Personal Retirement Savings Insurance Fund (PRSA) are a strictly private pension. And she is right. In the definition it even says that PRSAs are recommended for people who have no pension provision!

The PRSA is a kind of life insurance and there is no connection with the government at any level. One of the providers is Irish Life. Does this name sound like a government agency? On their "About us" page they state who they are:

"Irish Life is one of Ireland’s leading financial services companies with over 1 million customers. For over 75 years, we’ve been helping people in Ireland look after their life insurance, pension and investment needs.

Since July 2013 Irish Life has been part of the Great-West Lifeco group of companies, one of the world’s leading life assurance organisations."

Irish Life even tell their customers that their INVESTMENT can lose money. Just look at all the warnings in bold letters at the bottom of their page (! They are:

  • Warning: The value of your investment may go down as well as up.

  • Warning: If you invest in this product you may lose some or all of the money you invested.

  • Warning: If you invest in this product you will not have access to your money until age 60 and/or you chose to retire.

  • Warning: This product may be affected by changes in currency exchange rates.

The funds are clearly not administered by or on behalf of the Irish government.

Don't accept monthly payments if you move to New Zealand!

If MSD only bothered to look at Irish Life's and the Citizens Information websites, they should easily understand the difference between this private scheme and a compulsory superannuation scheme forced upon an individual by a government. This pensioner and her employer paid into the insurance scheme every month, and while she paid into the scheme she could decide if she wanted a lump-sum payment when she retired or monthly payments.

She decided to receive monthly payments, and this was a huge mistake, given that she would move to New Zealand where people are robbed of their retirement savings. She could have taken the money and invested it into property or shares, she could have put it into a simple savings account, and no-one - but IRD - would have bothered about it. But in comes MSD and the money is gone.

Perhaps the MSD officials do not understand the difference between PRSA and PRSI? While PRSA stands for Personal Retirement Savings Insurance Fund, PRSI is the abbreviation for Pay-Related Social Insurance. This is Ireland's compulsory pension scheme and, of course, has government involvement, as it is run by the Department of Social Protection and the account is managed by the Ministry of Finance.

PRSI is Ireland's compulsory social insurance - not the PRSA

On their website the PRSI - Pay-Related Social Insurance - is described as follows:

"Most employers and employees (over 16 years of age and under 66) pay social insurance (PRSI) contributions into the national Social Insurance Fund. In general, the payment of social insurance is compulsory. The term ‘insurable employment' is used to describe employment that is liable for social insurance contributions. [...]

The Social Insurance Fund is made up of a current account and an investment account managed by the Minister for Social Protection and the Minister for Finance, respectively. The current account consists of monies collected from people in employment. This money is then used to fund social insurance payments. The investment account is a savings account that is managed by the Minister for Finance."

While the PRSI surely is a state-administered pension, PRSA payments are not. As long as MSD deducts PRSA payments from NZ Super, they could also confiscate the life insurance payouts of honest New Zealanders. Only because the payments occur monthly, they are neither funded or guaranteed by a government nor are they an allowance or benefit. High time for MSD to stop this blunder.

(Last update: 25.11.2021)

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