The joys of marriage

Jan McKeogh on the way to the Human Rights Review Tribunal in Wellington where she and two other pensioners fought for the end of the Spousal Provision.

Jan McKeogh on YouTube:

Jan and Marcus McKeogh.

After the end of the Spousal Provision in November 2020, Jan received a few dollars of NZ Super. Marcus still received nothing, as his earned overseas pensions were higher than NZ Super.

Being a "single economic unit is a slap in the face

Jan McKeogh was one of the three plaintiffs at the hearing in front of the Human Rights Review Tribunal (HRRT) in Wellington which took place from 5 to 14 March 2018. The case was named “McKeogh & Others v Attorney General” (the latter in respect of the Ministry of Social Development). It was a claim under Part 1A or the Human Rights Act 1993. Jan and her co-plaintiffs claim that the Spousal Provision/Deduction – part of the Direct Deduction Policy (Section 70) is in breach of Human Rights because it discriminates against people who are in a relationship with a partner who receives an overseas pension on grounds of family status. [In 2018 Section 70 was renumbered into Sections 187-191.]

Here is her edited story, based on the statement she made at the HRRT on 5 March 2018.

By Jan McKeogh

I am a born-and-bred New Zealander. After my studies at the Teacher’s College in Canterbury, I travelled extensively before settling in Heidelberg in the early 1970s. I lived and worked in Germany for 23 years. During that time I met my husband Marcus, an Irish citizen. We married in 1982 and I gave birth to two children, a daughter and a son.

I made contributions to the compulsory German pension scheme during all those years. While in employment, 9% of my salary went into the scheme, and another 9% was contributed by my employer. When I ran my own business, I made those contributions myself.

The overseas pension comes from earnings

The German pension scheme is like KiwiSaver, except that it is mandatory to contribute. Only people who work and make those contributions receive a pension (“Rente”) in retirement. People who require social assistance have their financial needs met by a benefit paid by local authorities and funded by taxation. That’s different to my pension which comes from my earnings.

We returned to New Zealand in 1994 when Marcus and I were both 47. One of the reasons for coming home was to care for my mother, who had suffered a stroke in about 1990, and for my brother, who was born with cerebral palsy. Both of them lived until 2004.

When I returned to New Zealand, I started teaching, and Marcus became a teacher, too. We lived in New Zealand for about 13 years, until we got the opportunity to travel to Libya in 2007. I set up English as a second language unit in a foundation school and Marcus became a business studies teacher. We lived there for four years but left due to the civil war. We then spent some time in Malta, Germany and Ireland before finding employment in Shanghai for two years until August 2013. Then we finally returned to New Zealand (again) and have been here ever since.

Living in New Zealand for 40 years

All up, I would have lived in New Zealand for at least 40 years, not including frequent trips here to see family and friends. Despite having reached retirement age, I have kept on working in several roles at Papanui High School in Christchurch since 2014. Outside of work, we have an earthquake-damaged home to get back on its feet. We spent a year out of the house while we were rebuilding and renovating it.

Marcus and I are both 70. Marcus is a great househusband and I’m at the school for five days a week during term time. We keep fit and love to enjoy life. We both still feel as though we have a lot to offer. My daughter once told me that we’re not allowed to be sick, late or lazy in this family – and she’s right. We like to give everything our best.

Applying for New Zealand Superannuation

While we were overseas, we started making inquiries about our eligibility for New Zealand Superannuation. We wanted to know when we could receive it. We had both very carefully calculated the length of time we lived in New Zealand and we were sure we would be entitled to it. However, I felt I could never really get a straight answer from International Services. (International Services are the part of Work and Income that gives advice about overseas pensions.)

When we returned to New Zealand in August 2013, we both applied for NZ Super. I was 66 and Marcus was 65. We were both completely upfront about where we had lived overseas and for how long. We applied in person and we were told by the staff that we would both be eligible for Super, as we expected.

In September 2013 Work and Income asked me to check whether I was eligible for a German pension, which I did. I knew I would be entitled to a German pension because of my work history and personal contributions. I discovered I was entitled to a German pension of about €736 per month, which I understand would have been about $1,214 per month in New Zealand dollars. According to the Ministry’s records, I told Work and Income about that pension on 14 September 2013.

On 12 September 2013 I was granted the married rate of Super, which was $620.68 before tax per fortnight, backdated to August. This was great – it was such a relief to receive it, especially as we had only just returned to New Zealand. (They asked my husband for more information about his time working overseas, so his application wasn’t processed until later.)

Only NZ$ 34.86 a week after all deductions

But in October 2013 – after I had started receiving Super – Work and Income applied the ‘direct deduction’ of my German pension. I couldn’t believe it. It felt like the bottom of the world fell out. It was such a shock that I didn’t get my full NZ Super. Instead, I was going to receive only $34.86 per week after all deductions.

They also calculated that I had been overpaid by $2,499.11 because I had been receiving my full Super for two months – and I would have to pay that back at $10.50 per week. That’s deducted from my Super payments, and I’m still paying that off.

In November 2013 I asked the Ministry to review the decision to deduct my German pension from my NZ Super. I still disagree with the Ministry’s decision, because I consider my German pension to be similar to a private pension scheme that shouldn’t be caught by section 70. However, I know this case is not about direct deduction, so I will leave it to one side.

Appeal wouldn't make any difference

After a lot of to and fro, the Ministry’s decision was upheld after an internal review and a decision by the Benefits Review Committee, but the Ministry accepted that they would not deduct 4.418% of my German pension which was made up of voluntary contributions. I didn’t bother appealing their decision to the Social Security Appeal Authority, because it was a given that it wouldn’t make any difference. Constantly fighting wears you down after a while.

After the deduction of my German pension, the exact amount I received each week would change depending on the level of my German pension, my tax code and the exchange rate. At the start it was $34.86 per week. In March 2014 it was only about $20 per week (due to a tax code change) but in April 2014 it would have been about $58 a week. However, from 3 April 2014 onwards, the Ministry began to apply spousal deduction.

NZ Super of NZ$ 0 after Spousal deduction

Marcus also earns a German pension from his time working there, and a small UK pension, too. In April 2014 the Ministry told us that Marcus would normally receive $319.23 in NZ Super before tax, but because he received the equivalent of $390.69 in overseas pensions, his New Zealand Super was reduced to zero. That was the effect of direct deduction.

Because Marcus’s overseas pensions were $71.46 more than his NZ Super, that excess was taken from my Super from 3 April 2014 onwards. As I noted earlier, I would normally get about $58 a week after direct deduction of my own German pension. But the spousal deduction of Marcus’s excess meant that I got nothing.

That amount kept changing: in May 2014 I received $3.35 a week; in January 2015 it was $5.27 a week. In January 2015, I understand they also established another overpayment and they applied another deduction. (They told me I’ll finally pay that off by June 2030!) The exchange rate keeps changing and in April 2017 I was told I would get $37 a fortnight.

Loss of NZ$ 14,000 for being married

I understand that the total value of the spousal deduction suffered up to now is approximately $14,000. That’s a significant amount of money – we could have done so much with that sort of financial security. We still have work to do on the house, and of course we have family and friends in Ireland, Germany and elsewhere. We’re not in a position to travel to see them anymore.

It is devastating to be affected by spousal deduction. I already felt like I was emotionally drowning with the effect of direct deduction and the overpayments. Being hit with spousal deduction was a double whammy.

I think I contribute so much to New Zealand. I pay primary and secondary taxes, I’ve always worked (and am still working), and I’ve always kept up private health insurance so I don’t draw on the state. I chip in with charitable work, too, like street collections for the Cancer Society and regular donations. I feel I should be entitled to NZ Super. But the government takes almost all of it away from me, and some months I get nothing at all.

Insulting treatment

The Ministry treats Marcus and me as a single economic unit, but I find that insulting. It’s a slap in the face. I’m taxed individually and I can’t split my income with Marcus, so why are we treated as a couple when Marcus’s overseas pension is involved? I feel it’s dishonest and cruel of the government to take Superannuation away from us.

I feel anxious and appalled [SS1] to be treated this way. It’s depressing that our financial security has been taken away after all our years spent living and working here. I keep on working to plug the gap. If I had the security of NZ Super, I probably wouldn’t work so many hours at the age of 70. It’s hard because we know the years ahead of us will be difficult. I love working but at some point I’ll have to give it up.

If I couldn’t work, we’d have serious financial difficulties. We’d have to think about selling the house and scaling down. We’ve still got massive expenses to deal with after the earthquakes. Our children will have to step up, too, and take care of us. Sometimes I imagine what it would be like if we didn’t have our health, and it scares me. Our health insurance is expensive and we work hard at being fit, but that can’t continue forever.

The harm continues month to month, too. I’m never quite sure how much NZ Super I’m going to receive, which makes it difficult to plan. At this date (March 2018), I have not received any NZS at all. And the Ministry always writes to us to let us know the new calculations, or to ask if our pension amounts have changed. I have to contact them whenever I receive something new from Germany. That upsets me 24/7 – the issues around spousal deduction are always in the background. I’m constantly reminded that I’m treated differently to other New Zealanders.

Deductions of nearly NZ$ 100,000 within four and half years

Since August 2013 when we returned to NZ, our deductions have added up to $95,455. We’re fortunate that we’ve already travelled together and lived overseas. Travel isn’t on the agenda anymore. Work has to come first – sometimes I teach six hours a day.

In May 2016 the stress got so much that I even asked the Ministry what my NZ Super would be if Marcus and I separated, or if we relocated to Germany. The Ministry told me that I’d likely receive $185 per fortnight if Marcus and I separated.

But it would be even stranger if we moved overseas. I understand that direct deduction and spousal deduction wouldn’t apply if we moved to Germany, and I’d also receive a proportional amount of New Zealand Super based on the time that I have lived here. The Ministry told me I’d get $321 gross per fortnight, and Marcus would receive $236 gross per fortnight – that’s in addition to receiving all of our German pensions. That would be a massive difference.

The government is taking advantage of us

It seems so odd that spousal deduction is applied here in New Zealand but not if we moved overseas. It seems like the government is taking advantage of us for wanting to live here with our family.

I know people might think that we’re “double dipping”, but we’re not. NZ Super is known as a ‘Tier 1’ pension – it’s meant to be universal once you have lived in New Zealand for long enough. Our German pensions are known as ‘Tier 2’ because they’re contributory. As I said earlier, I contributed a portion of my salary every month I worked in Germany and so did my employer. My pension, and Marcus’s pensions, are based on our contributions.

I feel that after all the financial contributions I made in Germany, and everything I’ve given to New Zealand over the years, I should be entitled to both, and Marcus’s overseas pension shouldn’t affect my NZ Super.

(Edited and published on 19.03.2018)

(Last update: 22.11.2021)

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