By Maria Kaufmann

We first came to New Zealand in the early 1990s. My husband and I were in our forties, a professional couple at their peak earning years. Contrary to our original plan to make New Zealand our permanent new home, we left late in that decade when the effects of what became known as the Asian Crisis were also felt in New Zealand. Income was patchy; prospects for stable employment were poor. However, we are planning on returning in the near future to take early or semi-retirement in New Zealand, the country we still prefer for its laidback lifestyle. But there is a problem: the New Zealand pension system.

When we decided to leave New Zealand, we did have some savings that might have allowed us to stay and sit out the crisis. We could have done nothing, living off the money set aside for a rainy day. We could have depleted our reserve funds and eventually gone on the state benefit, costing the Government money rather than paying it taxes from income earned from employment. We have seen many for whom this seemed a more convenient option than actively pursuing a career, be it in New Zealand or elsewhere, and standing on their own feet financially.

Long-term planning built on sand

We didn’t want to take the risk. Instead of watching our savings melt away, wasting our best years and earning capacity, we decided to take our skills back to Europe where job prospects were better. However, I wish to point out that during our years in New Zealand we did work; we did make a useful contribution to the local economy; we did pay taxes.

My husband had taken on New Zealand citizenship and we had come to value the many benefits New Zealand lifestyle offers. The decision to leave wasn’t taken lightly, and was solely based on the necessity to earn a living. Our plan was to work hard, make some decent money in Europe and return with savings that would tide us over until our pensions kicked in.

Ever since taking up my first salaried job after graduation, up until the early 1990s, I had worked and paid into the German compulsory employer/employee-funded pension scheme. At the time I moved to New Zealand my pension entitlement was fairly modest, but it was a reassuring base for retirement planning.

The everlasting myth of universal Super

My husband, who had no German pension entitlement, wasn’t overly worried about retirement because he would be getting a New Zealand pension – so he was told. After all, NZ Super was universal, neither needs-based nor means-tested, and paid to every New Zealand citizen or resident who had fulfilled their ten-year residency requirement. This was, and still is, a widely held belief and there was no reason for us to doubt or double check it at that stage.

As an avid internet user, and as the information on the web became more comprehensive and accessible, I eventually found a Government website where all the information on eligibility for NZ Super was neatly listed. There was nothing new, just the reassuring information that what I had been told back in New Zealand was actually true. This must have been in the early 2000s.

The end of privileged information, filtered to suit the Government

It was only two years ago [2008] that I stumbled upon an alarming piece of information on the internet, which had become my way of keeping up to date on New Zealand’s current affairs. The item’s innocent name was Section 70, a sobering piece of legislation and part of the New Zealand Social Security Act. It was this small print that ended my illusion of the universal New Zealand pension.

Checking back with the WINZ website in disbelief, I subsequently found out that in the meantime this crucial information had been added. Why that late? And how should I explain this to my husband? It took me two years to pluck up the courage to do so and to get it off my chest. However, I had used the time to research the issue more thoroughly, found an ally, and decided to do something about it rather than just quietly accept my fate. The idea of Pension Protest was born, albeit it was still vague at the time.

Until today, I see this myth perpetuated in the New Zealand media. And while today the internet makes it much easier than some 20 years ago to research information and even dig as deep as the Direct Deduction Policy, there are still many New Zealand would-be pensioners and immigrants blissfully unaware. Unaware of its consequences, especially of the Spousal Provision, and ignorant of the fact that New Zealand Superannuation is means-tested for some, under certain circumstances.

Blatant discrimination on the grounds of marital status

Back in the 1990s I knew that immigration would put a significant dent in my future German pension entitlement. It was the price I was prepared to pay for starting all over again at the other end of the world to enjoy the lifestyle in New Zealand. But it would have never occurred to me that my future German pension, by now supplemented with further obligatory contributions from my salary, would affect my husband’s own New Zealand pension entitlement.

If I’m lucky, by the time we move back to New Zealand I might have accrued a German pension entitlement that equals the married rate of New Zealand Superannuation. To make it perfectly clear: I have never expected to get a second pension from New Zealand. However, my husband, who is not eligible for a German pension, will not receive New Zealand Superannuation either when we return. He would, though, if he were single. Yet simply because we are married, he will be lumped in with me as an “economic unit”, becoming financially dependent on me as the New Zealand government conveniently calculates my “excess” German pension against his New Zealand Superannuation.

Double standards left, right and centre

Interestingly, the Government applies double standards when putting forward the argument that a couple constitutes an economic unit, and therefore applies the Spousal Provision rule. Isn’t a wealthy couple, where the wife has been the homemaker and hence has earned no income of her own, an economic unit, too? Yet they are both eligible for New Zealand Superannuation because in these cases payment is neither needs-based nor means-tested.

Interestingly, when it comes to taxation, there is no income splitting for couples as economic units to reduce the income tax they have to pay. Instead, part of the income of the partner who is lucky to earn a lot, is automatically taxed at the top tax rate. So the concept of couples as economic units is applied at random or at will, as it suits the Government.

Making a contribution to New Zealand doesn’t necessarily pay off

As far as we are concerned, I can only state: What a great prospect for a returning New Zealander who has paid taxes in the country whose citizenship he has adopted and whose flag he is flying abroad! What a blow to the ego of a bloke who has always made a point of looking after himself financially rather than taking benefit handouts! Instead of receiving a pension in recognition of his contribution to the New Zealand pension fund and never being a burden on the public purse, part of his taxes will pay New Zealand Superannuation to those who have never paid in a cent.

Quite obviously the New Zealand pension system is riddled with a number of inconsistencies. Many of them have been identified and recommendations to rectify the most glaring anomalies, such as the Spousal Provision, have been made: by the former Labour Government, by the Retirement Policy and Research Centre, and by various interest and lobby groups. Yet nothing has happened. It’s about time we added some urgency to the matter. Because the New Zealand pension system is far from fair.

(Written in 2010 when Sections 187-191 were still Section 70. The Spousal Provision Maria Kaufmann and her husband were affected by was abolished in November 2020.)