Mean and petty and wrong

By   /   June 13, 2017  /   18 Comments

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It is bad for the democratic process when government to fails to address such a clear injustice especially in this case when it poses little fiscal cost. But we don’t seem to know how to do sensible retirement policy any more.

The government has just flicked off the 2016 Retirement Commissioner’s 3-yearly review of retirement policy with a raft of inadequate responses.

The pathetic justifications for the status quo from the Minister of Consumer affairs make the whole exercise farcical.

Let’s take the outrageously unfair rule that means a person’s pension can be docked if their spouse gets an overseas pension.

Review after review   has complained about this.  Some spouses find to their disgust and surprise they get less or even no NZ Super, even though they have lived all their lives in New Zealand

Here is one of many cases:

“I was absolutely horrified to discover recently that I might not be eligible to receive my National Super when I turn 65. I am married to a 70 year old American who worked for just under 20 years in the US before he settled in NZ. He then worked full-time for a further 27 years in NZ. When he applied for NZ Super in 2011 he ended up being given US Social Security instead. I have lived all my adult life in NZ, and worked full-time for about 35 years (34 years for one employer), before retiring early in 2012, and have since worked part-time, and continued to pay tax. Now I find that I am to be severely penalised/simply because I am married to an American.”

Even the Ministry for Social Development Briefing to the Incoming Government (2014)  stated:

There are policy and technical issues related to [section 70] that could be addressed. For example, one of the most unpopular aspects of the policy is that, where one partner of a couple has an overseas state pension that is more than their New Zealand Superannuation, the excess amount is deducted from the New Zealand Superannuation entitlement of the other partner.

The best estimate from MSD is that in 2016 there were 500 couples affected by the spousal provision, and the average amount deducted is $4,000 per year – about $2m total per year.  

NZ Super is an individual entitlement but the cost of marriage for 500 hapless spouses can be very high.

So what did the Commissioner’s 2016 review say?  Couldn’t be clearer:   

Remove spousal/partner deductions with immediate effect.

Here is the government’s response to this festering sore:  

The Government does not support removing spousal/partner deductions. The purpose of spousal/partner deduction is to ensure that coupled with an overseas pension received the same level of government- administered retirement income as lifelong New Zealand couples.

Talk about comparing apples to oranges!  For some spouses, it may be a recent second or third marriage to someone who just happens to have an overseas pension.  Even if  it is a longer relationship, why should the spouse gets less when the pension is an individual entitlement.  The basis for the so-called “spousal provision” is the outmoded assumption that one spouse’s income is available to, and should be used to support, the other spouse.  

It is bad for the democratic process when government to fails to address such a clear injustice especially in this case when it poses little fiscal cost. But we don’t seem to know how to do sensible retirement policy any more.

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About the author

Co-director retirement policy and Research Centre, CPAG management committee

18 Comments

  1. CLEANGREEN says:

    This government will steal from anywhere to achieve their ill-gotten gains.

    Think of Ebenezer Scrooge Susan and you are looking at the ugly face of Bull English and Steven Joyce and their Nactional junta.

    But of course they will move to protect their own members as they cut and steal from others, so we need to get rid of these thugs come September for sure.

    Last week the nactional Government again stole from us all the tax payer again when they took the subsidies off the rural roading network all around NZ and put that money into the “roads of national significance”, (RONs) which is a fancy word for subsidised “truck routes”, they make me sick with their twisted under-underhanded methods of pilfering our taxes for their purposes.

  2. Bob Newcombe says:

    It is officially proved now the NZ govt uses overseas contributory govt pensions to subsidise its NZ Super by deducting them from entitlement to Super.
    It has also been proved that it uses UK State pensions here in NZ to fund Super plus when a Kiwi retires in the UK, under the 1983 UK/NZ Social Security agreement, NZ residency years are converted to UK contributory years giving entitlement to the UK basic State pension.
    This pension receives no help from NZ it is funded entirely by UK employee/employer National Insurance Contributions into the non govt National Insurance Fund
    So NZ rips off UK pensioners, UK workers and UK employer’s to fund its NZ social security entitlements.
    This has now been proved and will be released into the UK media to prove what a lousy thieving govt the Nats are.
    Bull Shine English and Alibaba Joyce are a about to be exposed.
    Anne Tolley signed off the govt response to our challenge to the United Nations Human Rights Council challenging the govt over its refusal to implement reforms its own reviews condemning the treatment of overseas pensions as unfair.
    The govt lied through its teeth, Tolley should be up in court in fact the whole govt should be!
    Wander over to http://www.migrants-to-nz-beware.info

    • Mike in Auckland says:

      “So NZ rips off UK pensioners, UK workers and UK employer’s to fund its NZ social security entitlements.”

      Nothing new, as you describe it, it has been going on for many years.

      As for those unhappy about it, what do they say so often to immigrants?

      “If you don’t like it, pack your bags and piss off”.

      “God’s Own Country”, what a joke.

      • Bob Newcombe says:

        A lot of Kiwis don’t realise that in this age of fluidity of travel they’ve been paying into overseas govt pension schemes no different to private schemes paid is for out of earnings.
        In the High Court In 2004 in the case of Mr Sant Raj Rai v MSD it was ruled by Judge Doogue that the Fijian state pension born out of employee/employer contributions into a pension fund was not by and on behalf of the Fijian govt therefore could not be snatched by WINZ.
        Yet similar pensions from the USA, Canada and Europe are ruled differently so they can be snatched.
        Labour, United Future, the Greens and New Zealand First all call for change but the National Party despite all govt reviews calling for change keep this cash cow from around 89,000 elderly going.

  3. Susan St John says:

    The overseas pension issue is a can of worms. The RPRC wrote a comprehensive report for the 2016 retirement review that set out some options for reform. Underlying each option was the presumption that the government would get rid of the spousal deduction as it is the one thing that is completely black and white. Not only are we not discussing the big issues around overseas pensions including the terrible agreement with Australia but the injustice of the spousal deduction remains inviolate under this government

  4. Paul Rea says:

    Letter to the Editor sent out yesterday

    There is NO equality in New Zealand
    In a recent email from MSD I was informed that Section 70 direct deduction policy applies to pensions that falls under the following:
    a) be administered by or on behalf of the Government of that country;
    b) form part of a program providing benefits, pensions, or periodical allowances for any of the contingencies for which benefits, pensions, or allowances may be paid under this Act, or under the New Zealand Superannuation and Retirement Income Act 2001 or the Veterans’ Support Act 2014;
    c) and not be a Government occupational pension.

    As a Government occupational pension is a tier two pension exactly the same as a UK pension then the question must be asked why is one NOT subject to direct deduction policy and the other is?
    On further enquiry I was also informed that there is no separate legislation covering tier two pensions so how can Section 70 direct deduction be applied where no legislation/law is in place to cover it.
    Immigrants from all over the world including many New Zealanders who have worked overseas are having their tier two employer/employee funded pensions stolen by a Government who are using questionable policies to protect their own staff pensions at the expense of others.
    They tell us we would be disadvantaging ordinary Kiwis and be “double dipping” if we were allowed to have two pensions despite having funded them ourselves.
    Given the above facts immigrants are the ones being disadvantaged not the ordinary Kiwis. It is time Government came clean and stopped hiding the truth about how they steal pensions from immigrants living New Zealand.
    End.

    Paul Rea
    Chairperson NZSP

    • Mike in Auckland says:

      On the topic of “double dipping”, one from Dipton, in the South, comes to mind, he is now PM, I lately heard, hard to believe that:

      http://webcache.googleusercontent.com/search?q=cache:b3wjQe_RGcIJ:www.nzherald.co.nz/opinion/news/article.cfm%3Fc_id%3D466%26objectid%3D10599678+&cd=1&hl=en&ct=clnk&gl=nz

      “The time has come for Bill “Double Dipton” English to end the charade.

      It has been apparent for a while that it is no longer tenable for him to stipulate his primary place of residence as being in his Clutha-Southland electorate when his real home has long been in Wellington.

      It is not just a matter of putting things right to satisfy the Cabinet Manual’s requirement that ministers “behave in a way that upholds, and is seen to uphold, the highest ethical standards”.

      His highly questionable claim to be an out-of-Wellington MP – a status which made him eligible for an accommodation allowance while in Opposition and which entitles him to taxpayer-funded ministerial accommodation now he is in Government – has become unsustainable in purely political terms.

      Yesterday’s announcement by the Office of the Auditor-General that it is making preliminary inquiries before determining whether to investigate whether English has satisfied the criteria of being an out-of-Wellington MP ups the ante considerably.

      The possibility of the watchdog of public spending investigating the Minister of Finance does not bear thinking about – at least from National’s point of view.

      English needs to forestall any investigation by removing the grounds for its taking place. English’s inclination will be to tough things out.”

      Comment:

      Yes, it is no longer found on the NZ Herald webpage, but still in the web’s cache, thank goodness.

      That was one of the better ones Mr Armstrong wrote in 2009.

  5. Paul Rea says:

    Letter to the Editor sent out yesterday

    There is NO equality in New Zealand
    In a recent email from MSD I was informed that Section 70 direct deduction policy applies to pensions that falls under the following:
    a) be administered by or on behalf of the Government of that country;
    b) form part of a program providing benefits, pensions, or periodical allowances for any of the contingencies for which benefits, pensions, or allowances may be paid under this Act, or under the New Zealand Superannuation and Retirement Income Act 2001 or the Veterans’ Support Act 2014;
    c) and not be a Government occupational pension.

    As a Government occupational pension is a tier two pension exactly the same as a UK pension then the question must be asked why is one NOT subject to direct deduction policy and the other is?
    On further enquiry I was also informed that there is no separate legislation covering tier two pensions so how can Section 70 direct deduction be applied where no legislation/law is in place to cover it.
    Immigrants from all over the world including many New Zealanders who have worked overseas are having their tier two employer/employee funded pensions stolen by a Government who are using questionable policies to protect their own staff pensions at the expense of others.
    They tell us we would be disadvantaging ordinary Kiwis and be “double dipping” if we were allowed to have two pensions despite having funded them ourselves.
    Given the above facts immigrants are the ones being disadvantaged not the ordinary Kiwis. It is time Government came clean and stopped hiding the truth about how they steal pensions from immigrants living New Zealand.
    End.

    Paul Rea
    Chairperson NZSP

  6. Sam Sam says:

    Well I’m getting bored waiting for the loony to build his wall. A lot of pensions where riding on that. Police pensions in the US are over wieght. That will have blow back for sure. Not sure how NZ will fair. But half way through earnings season top traders are getting caught unawares because Theresa May might not be able to pull off QE4 and bail out the city of London. So investors are having there shorts squeezed out.

    By my guesstimating Kiwi Bank should be able to take on a cash crises. Not sure about the other big 4 banks because they’ve already pulled out of small town NZ. Investors will also be disappointed Fynlason failed to get Ngapuhi across the settlement line.

  7. Strypey says:

    Maybe the best solution would be to establish an international treaty organisation that aims to provide every person in the world with a pension? This way, it wouldn’t matter where a retired person was technically living. They could live on a boat in international waters, visiting different countries to resupply, with no headscratching required about which government is going to pay which bit of their pension.

    Countries with an existing pension scheme could pay into the international pension scheme, and countries without one could establish entitlement for their people by paying into it. Perhaps, for an agreed period of time, countries whose people have been negatively affected by colonization and climate change could pay less, and countries that have benefited from colonization and carbon emissions could pay more?

    If this worked, perhaps an international UBI could work the same way, funded by a similar international treaty body handling the taxation of multinational corporations?

  8. LOSTRELIC says:

    Under neoliberalism, we’re all individuals and responsible for our own – except when those in power decide otherwise.

  9. Susan St John says:

    Why I wrote the blog and what I really want to know is whether leftwing people care at all about horizontal equity. Do you think that there can be a justification for a completely unjust treatment of some unfortunate spouses, a few of whom may indeed be in well off households (but the bulk are not)? Can the fact that only 500 are affected make it OK?
    How would you feel to be treated like the long time resident/ taxpayer NZ woman who gets very little NZpension because her third marriage was to an American?
    Why is the disgusting response from government not the cause of a huge outcry!!

  10. Andrea says:

    Does MSD still penalise partnered people if one is made redundant or fired and the other is working – refusing to pay a benefit?

    If you’ve paid tax on your job – why aren’t you entitled to income support as a single person? That’s how you’ve been taxed.

    This whole marriage/partners thing is way out of date – by at least fifty years.

    And, while I’m on a rant – when are we getting rid of special super for MPs? Let them fund their own out of their OTT pay – like the rest of us do. Or live below the poverty level on the ‘Govt super’.

    Plus – no pay rises for the term of the government. Or back pay.

    (stomps off, grumbling sotto voce…)

    • Susan St John says:

      Andrea Yes you are right there is a couple basis in the welfare system. And it is out of date by at least 50 years!!! BUT since 1977 we have never treated retired couples like they were on a welfare benefit. NZS is an individual entitlement albeit it a lower rate for those who are married as opposed to single sharing. (Ananachronsitic too of coourse ). BUT a person get its regardless of their partners income– except for the 500 who have married t he wrong person
      I am very grumpy and cranky about this-the silence from politicians is deafening

  11. Mike in Auckland says:

    Learn this:

    https://www.youtube.com/watch?v=ct8MZY9ZtJY

    But I am to be destroyed as a drinker and dissenter.

  12. Mike in Auckland says:

    Like those supporting Corbyn, we believe in more of folllowers:

    https://www.youtube.com/watch?v=VKNHfECZEaU

  13. countryboy says:

    The reason we Kiwis don’t have much money to come and go on is because crooks and con artists have swindled us out of it. They also embezzled our state owned assets and diverted what should have been our funds collected to run our country, gleaned from a fair tax system and wisely spent on our infrastructure, into the hands of privateers who bedded down with our politicians we thought were acting in our best interests since we voted them in and pay them well but were/are, in fact, crooks and con artists.
    Lets be clear on that.
    They’re crooks and con artists. Not naive people finding themselves out of their depth in a complex governmental world. No. They are crooks. And con artists.
    Even the term ‘ neo liberalism’ now bandied about as if it’s some kind of enlightening term to describe a system that was created out of the best intentions but is proving to be anything but that is really just another way of saying ‘ crooks’ and ‘ con artists’.
    Our money, has been stolen. Our assets and services have been taken from us.
    We really, really need to chase that down and get it all back. And as importantly, close the loop holes the crooks and con artists created, via changes to acts or parliament, to allow them to do so while giving themselves enduring immunity from prosecution.
    It really is that simple. NZ is a crook and con artist paradise.
    You think fay/richwhite/gibb/brierly etc, etc worked an hourly rate ? Or did they stuff our money into the crooked BNZ back in the day? Multiples of millions and billions of our dollars, now in their ownership while the now old you exploited are living cold, rough and in poor health. Must have been quite the hourly rate aye boys?

    privateer |ˌprʌɪvəˈtɪə|
    noun
    1 historical an armed ship owned and crewed by private individuals holding a government commission and authorized for use in war, especially in the capture of merchant shipping. she was captured by a French 44-gun privateer.
    • a commander or crew member of a privateer, often regarded as a pirate. Francis Drake disliked other privateers poaching prizes he regarded as his own.
    2 an advocate or exponent of private enterprise. it may be instructive to compare the supposedly wasteful public sector with the supposedly lean privateers.
    3 Motor Racing a competitor who races as a private individual rather than as a member of a team. he finished top privateer in the world championships.

  14. countryboy says:

    And I’ll tell you another funny little thing.
    My fabulously reliable Mac book pro’s misbehaving the moment I come here, to TDB. It drops off wifi while saying it’s still connected and I have to restart and quickly send material before it repeats the above. Paranoia? Hmmm?
    Perhaps.
    I have Apple working on it at the moment but they’re, thus far, stumped.
    The internet is such a wonderful thing. So wonderful, that if it were taken away, it’d be a disaster for all. Does that make you worried?