Fighting on two fronts

Two different Canadian pensions are deducted from NZ Super: Jeanne Villeneuve has been getting increasingly angry over the years.

A painful slap in the face
back and forward

By Jeanne Villeneuve *

I am a Canadian, married to a Kiwi, who has been living in New Zealand since 1979. I have worked and paid taxes in New Zealand for 30 years and he for 45 years. Prior to moving here from Toronto, Ontario, we were both earning an income and paying taxes in Canada as well as making pension contributions to the Canadian Pension Plan (CPP) for eleven years.

The Canadian retirement income system is based on two pillars. The Old Age Security pension, financed from Government of Canada general tax revenues, is meant to be a basic state pension. It is supplemented by the CPP, which is funded from contributions made by employees and employers. We have earned our right to both pensions by paying taxes and making our own contributions. We are now, rightly, getting both Canadian pensions.

However, both our Canadian pensions are directly deducted from our NZ Superannuation, and that’s what has been making us increasingly angry over the years. All of our attempts, just like other Canadians’ efforts to have the problem sorted out, have been hobbled and we have been fobbed off with thinly disguised excuses for maintaining the status quo.

Whose debt is it anyway?

Individuals who apply to Service Canada, the equivalent of WINZ for pension purposes, often find that Service Canada takes between six and 14 months to process and finally send monthly entitlement notices. Invariably there is a retroactive payment which WINZ then calls “your debt”. The return of our Canadian contributions is now a debt to WINZ! This would make a good joke if it weren’t so sad and reality.

The interpretation of Section 70***, that is the Direct Deduction Policy, of course, calls for the direct deducting of basic pensions such as the Old Age Security. But why should it also apply to our CPP pension? Only Old Age Security (Tier 1) matches NZ Superannuation in character, and hence should be our only deduction. The CPP (Tier 2) is fundamentally different and payments are made from our own money we have contributed.

Peter Hughes**, Chief Executive of the Ministry of Social Development, advised the Government in 2005 that "Section 70 authorises the direct deduction of second-tier earnings related pensions despite the fact that, other than being administered by the state, they have little resemblance to NZ Super".

A double whammy

Ministry officials and clerks refer to the policy as equalising the benefits and not giving advantages to “internationals” over New Zealanders. We feel this is just pretending or not wanting to see what is quite obvious if you look at the situation objectively.

The New Zealand government is not comparing like with like when it abates the CPP against NZ Superannuation. And to doubly disadvantage overseas beneficiaries, it denies people like us the benefit of paying taxes in New Zealand, because pay we do, and often for decades. But when it comes to NZ Superannuation, it turns out we have paid through our nose.

Individuals who ask for benefit reviews have so far been unsuccessful. Their attempts are usually dismissed through three successive channels of appeal. Finally, at High Court level, they are dismissed on the basis of previous cases which have been lost in previous years. This outcome is no surprise because the High Court can only test whether or not the practice is in breach of existing law, and it isn’t. However, this doesn’t mean the law doesn’t need to be changed.

John Carter denies what has been written in 2005

My letter to the respective ministry in Canada and the Canadian High Commissioner here concerning our CPP pension entitlement was sent in early 2009. I did not receive a reply. My letter to John Carter, Minister for Senior Citizens, resulted in a stock answer in May 2009, which only emphasises the importance of amending Section 70 of the New Zealand Social Security Act.

He denied the Peter Hughes option of 2005**, which said: "This option is designed to ensure that only overseas pensions that are similar to NZS are deducted." The minister at that time was David Benson-Pope and he signed the Executive Summary. Michael Cullen also was privy to it.

It takes two to tango

As my concerns are obviously falling on deaf ears with New Zealand authorities I have now approached the Canadian High Commission in Wellington. Having read the pension agreement between Canada and New Zealand, it is clear to me that the CPP is identified as part of that agreement, although the benefits refer to those other than the basic entitlement, such as widows, disabilities and other benefits.

Unless the CPP portion is withdrawn, Canadians in New Zealand will continue in the forty-year practice of being disadvantaged because the law courts can only judge on the rightful application of that agreement.

It seems the international agreement is regarded as more important to the governments than the rights of their citizens. Canada can rectify this. My wish, and that of many fellow Canadian citizens, is for Canada to renegotiate the agreement and remove the CPP part from it.

For individuals, it is like a David-and-Goliath situation in which they feel powerless. But after all, wasn’t David successful with just a staff and sling? Today’s Davidian weapons are public opinion and political pressure and we are determined to use them with just as much skill and effect.

* name changed

** Peter Hughes was the Chief Executive of the Ministry of Social Development until September 2011. Read more about him on these pages: The mind behind it all; The famous Reviews. His direct successor was Brendan Boyle.

*** Section 70 was renumbered into Sections 187-191 in 2018

(Article written in 2010)

(Last update: 22.11.2021)

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