[Tui2too]

Hi...

Tui2Too's husband here, looking for clarification on two aspects of what I've read are current NZ policies:

Do I understand correctly that NZ currently reduces the NZ Superannuation amounts paid to qualifying permanent residents who 'paid their dues' overseas and who receive a state pension from...say, the UK, Canada or the U.S.? Have I got it right that the eligible NZ Superannuation amount (ie. $383NZ/month for a retired qualifying married couple) is reduced by the amount received from that foreign state pension?

Do I also understand correctly that (at present) NZ Superannuation payments to qualifying permanent residents are also further reduced by any amounts they may receive in retirement as a result of contributions made over their working years to KiwiSaver?

I can understand a policy of graduated clawbacks above a certain retirement income level, but these policies appear to unfairly target foreigners-now-permanent-residents who: (a) legitimately qualify for NZ Superannuation after having met the minimum 10-year buy-in requirement but who also worked for years to pay into another state pension scheme abroad; and (b) doubly penalize the same group if they also support & contribute to the NZ KiwiSaver plan. This seems to be a very strong disincentive to buy into KiwiSaver in lieu of private retirement investments or other savings vehicles.

Can anyone clarify these policies?

Many thanks in advance.

[Mickstim]

As far as we have ascertained the first part is correct as NZ and the UK (don't know about Canada and US) have a reciprocal pension agreement. Whatever UK State pension you receive is deducted from the amount of super paid to you by the NZ government. There is a certain amount of protest about this at the moment but it is not looking too likely to change in the near future.

Bx

[IanW99]

...
I can understand a policy of graduated clawbacks above a certain retirement income level, but these policies appear to unfairly target foreigners-now-permanent-residents who: (a) legitimately qualify for NZ Superannuation after having met the minimum 10-year buy-in requirement but who also worked for years to pay into another state pension scheme abroad;
...


My understanding of this is the same as yours, if you qualify for a foreign state pension then you must claim that pension and then NZ will top this figure up (if needed) so that you get the same as anyone else in NZ.

I'm not sure that I understand why you believe that this is unfair? Do you think that they should be entitled to two pensions?

This is surely even less fair and would make every Kiwi go abroad to earn pension 1 and then comeback and claim pension 1 and pension 2. I guess that NZ really would be the place to live if this was the case, as everyone from the UK who has worked enough to claim the UK pension would then move over to NZ to be eligibly for the NZ one as well.

Sorry, I can't help on the second question but will be interested in the answer.

Ian

[kanatakiwi]

I'm not sure that I understand why you believe that this is unfair? Do you think that they should be entitled to two pensions?

This is surely even less fair and would make every Kiwi go abroad to earn pension 1 and then comeback and claim pension 1 and pension 2. I guess that NZ really would be the place to live if this was the case, as everyone from the UK who has worked enough to claim the UK pension would then move over to NZ to be eligibly for the NZ one as well.


Ian

I have no problem with collecting one pension (and that would be Canada as its a good one. What I didn't like was finding out that would mean my OH a kiwi,will not be entitled to his superannuation from NZ because of my pension. that doesn t seem fair.

A third question is this: i have Canadian pension coming, and am getting payments now from my employer and employee funded pension as well. I suppose they are going to calculate that into the mix?

[JandM]

A third question is this: i have Canadian pension coming, and am getting payments now from my employer and employee funded pension as well. I suppose they are going to calculate that into the mix? I think I'm right in saying, it's only a government (state) pension from a country with a reciprocal agreement with NZ which is counted towards the NZ superannuation payment. Any extra pensions like your work one are outside the picture.

[Nienke]

I think I'm right in saying, it's only a government (state) pension from a country with a reciprocal agreement with NZ which is counted towards the NZ superannuation payment. Any extra pensions like your work one are outside the picture.

Be careful if you're Dutch, I've heard that if you have an ABP pension, and you request your NZ superannuation, NZ regards ABP as state pension and will take it all in (ABP is usually more than NZ superannuation as it's NOT the state pension AOW, depending obviously how many years you've worked) and will pay out the NZ amount only.
If your ABP is more than the NZ state pension, don't request to get the NZ one!
I've still got a few years before my pension:yes:p so hopefully this will have been sorted by then.

[Tui2too]

I'm not sure that I understand why you believe that this is unfair? Do you think that they should be entitled to two pensions? This is surely even less fair and would make every Kiwi go abroad to earn pension 1 and then comeback and claim pension 1 and pension 2. Ian

Thanks for this, everyone. Yes, at present the policy applies only to foreign state pensions. Through a government colleague, I now have a contact in the appropriate Canadian federal department who can verify that this only applies to Canada's Old Age Security program and *not* to employer pension plans.

It was another thread on this board where someone suggested the NZ policy also applied to returns from KiwiSaver. I haven't any further info on this but if true, it's rather alarming to have that deducted as well.

Ian, my issue is not one of fairness to native New Zealanders; rather (as a senior policy analyst myself) I take issue with what I see as bad policy. Both groups meet the required state criteria, but even though they are now New Zealand residents and their additional income would be spent/invested in New Zealand, the migrants are discriminated against for having worked & paid their dues elsewhere on the rationale that the other group is at a disadvantage.

Good public policy doesn't discriminate against one group of citizens over another - at least not in a situation where both have satisfied the requirements.

A better approach would be to change the eligibility criteria (ie. do what Canada and several other western-style nations have done) and lengthen the eligibility period to, say....40 years, where the amount you get is determined by the number of years out of 40 in which you have resided in New Zealand. Been there 40 years? You get 40/40ths; come in at age 55? You get 10/40ths, etc. This would provide a natural advantage to native citizens who have never lived outside the country - they'd receive the full amount, whereas I would not.

Thus far I understand that New Zealand refuses to do this. Too much paperwork? Dunno. I have absolutely no wish to see anyone (least of native New Zealanders!) at a financial disadvantage, but to maintain discriminatory public policies is not the way to go IMHO.

On the other matter: if anyone can provide information on whether KiwiSaver payouts are/will be deducted from NZ Super, please let us know!

Thanks.

[JandM]

I still can't see why you feel that migrants are discriminated against. I'm a UK citizen with entitlement to £x state pension. I migrate to NZ, and NZ says now I am a resident, like ALL NZ residents, wherever they started out, I'm entitled to $y superannuation. (If I were a lifelong NZ resident, there from birth, I'd still get $y.) But for me, the migrant, that sum of $y will be made up of my £x pension, topped up from NZ funds as necessary. And they WILL be topping up, because the rule in the UK is that, though the state pension is index-linked here at home, as soon as we move to NZ (and certain other countries) our pension is frozen at the rate it was at the time we left, so year by year, we'll get proportionally more of the $y from NZ.

[Mickstim]

I still can't see why you feel that migrants are discriminated against. I'm a UK citizen with entitlement to £x state pension. I migrate to NZ, and NZ says now I am a resident, like ALL NZ residents, wherever they started out, I'm entitled to $y superannuation. (If I were a lifelong NZ resident, there from birth, I'd still get $y.) But for me, the migrant, that sum of $y will be made up of my £x pension, topped up from NZ funds as necessary. And they WILL be topping up, because the rule in the UK is that, though the state pension is index-linked here at home, as soon as we move to NZ (and certain other countries) our pension is frozen at the rate it was at the time we left, so year by year, we'll get proportionally more of the $y from NZ.

That is exactly the position we are in now as we retired this year. The good news is that at the moment our UK pensions are higher than the NZ super - and we are not needing to claim anything from NZ, but in a few years time NZ super will have overtaken our frozen UK pensions and we will be entitled to claim that.

Bx

[Flutterby]

I really don't see how it is unfair, if you are only claiming a state pension, you get the same as everyone else, it is only made up of both countries moneys because you have supported both economies, so in turn they both support you in your old age. To me that seems fair on both parties.
What i'm more concerned about:

Originally Posted by kanatakiwi
I have no problem with collecting one pension (and that would be Canada as its a good one. What I didn't like was finding out that would mean my OH a kiwi,will not be entitled to his superannuation from NZ because of my pension. that doesn t seem fair.
does this mean that my(kiwi) partners superanuation is affected by my UK state pension?

With regards to the KiwiSaver, i was under the impression that this was the governments way of pushing people towards private pensions, if NZ is anything like the UK the pension available when we reach retirement age will probably have been abolished, my OH (a kiwi) was certainly surprised to realise that superanuation still exists.

[Nick88]

I agree, Flutterby. The present system is unsustainable (a Ponzi scheme, really) and will have to be radically altered at some stage, when the politicians either grow some nuts or are forced into it by the cost. Somehow I doubt I will still be eligible after the crunch comes, so I intend to have enough stashed away to not need govt super.