Super tricky pension rules

ROB STOCK
Last updated 05:00 23/12/2012
pension

Thorny rules: Retirement can be a headache.

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Though it seems simple, NZ Super is governed by a set of rules that can and do, on occasion, deliver nasty, and costly, surprises to those receiving it - or in the case of one man, severe irritation that New Zealand, which paid for his education, had to foot part of his pension despite him having barely worked here.

Decisions from 2012 made by the Social Security Appeal Authority, which is there to hear appeals from the public against on the way benefits are administered, show some of the thorny rules that people blunder into.

While many of the cases, which are appeals against decisions of the Benefits Review Committee, do seem to indicate an innocent lack of understanding, people need to realise that increasing "data-matching" between government departments means failures to follow the rules will be spotted more frequently. That can result in large debts having to be paid back to the Government, debts that might have been avoided were people better informed about their main source of income.

In other cases, the application of the rules, which are set out in some detail on the Work and Income website, creates genuine hard-luck cases in which there is no scope for Work and Income relief.

Conscientious objector

A man was shocked to find that despite working in Australia for more than 46 years, the land of his birth had to foot part of his pension.

"We understand that the appellant objects to being granted New Zealand Superannuation on the basis that he worked in New Zealand for only 13 months, whereas he worked in Australia for 46 years and seven months and he considers that the Australian Government should be required to pay the full amount of his old-age pension," the authority found in one decision.

Australia requires all New Zealanders who retire there to apply for NZ Super here under the reciprocal agreement between the two countries. Based on the appellant's 13 months working-age residence in New Zealand he was entitled to $6.01 per week in NZ Superannuation.

There was nothing he could do to prevent that except request that his payments be suspended, and indeed has done on principle, but the authority said that "may have implications for him in respect of the payment of his Australian old-age pension".

No backdating

Just before you hit 65, check out the NZ Super rules, because, as one man found, delaying only saves the state a lot of money. The appellant turned 65 in 2009, but did not bother to apply because he was in fulltime employment and believed he was not able to receive NZ Super while he was working.

Two years later he found out that wasn't true, and sought to have the NZ Super payments he had missed paid to him as a lump sum. He had been sent a letter from the Inland Revenue Department telling him he was eligible, but he swore he never received it, and argued Work and Income should "take greater steps" to tell people you could be working and still get NZ Super. Another case this year covered a different man with a similar belief.

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The overseas trap

An appeal against an order to repay $11,828 in NZ Super "overpayments" failed to win a reprieve for one superannuitant who claimed that he was overseas for longer than he expected because of a property dispute in Australia.

Recipients of NZ Super are entitled to full NZ Super to continue if they are out of the country for up to 26 weeks but intend to return. It is up to the recipient to tell Work and Income if they are going away for longer. The man was caught because of data-matching between Customs and Work and Income. The man claimed that if he was not entitled, and Work and Income could data-match, the overpayments should not have been made. That did not wash with the authority.

A new definition of income

Income is differently defined for the purposes of NZ Super means-testing. While NZ Super is not means-tested for New Zealanders, it is for those who seek to add on a non-eligible spouse to their NZ Super, so getting a higher payment.

An asset-rich man who was in receipt of income-tested NZ Super at the relevant time as his wife was not eligible to receive NZ Super in her own right was shocked to find that, in his case, "income" included drawings on debt. The couple owned a lifestyle property valued at more than $3 million, and had subdivided it and were trying to sell it to relieve a dire financial situation, and debt was used to fund part of their living expenses.

For the purposes of the New Zealand Superannuation and Retirement Income Act 2001, "income" is very broad and can include many kinds of periodical payments, in some circumstances drawings on debt, the authority ruled.

"The appellant and his wife had financial resources available to them well beyond the resources normally available to income-tested beneficiaries. They are well able to afford to repay the debt. Their failure to disclose their financial circumstances correctly contributed to the overpayment," the authority found.

No help on death bed

The family of a man who died overseas is seeking the payment of NZ Super denied to their father between the dates of March 24, 2004, and August 26, 2011. The man, who was not a New Zealand citizen but had lived and worked here for decades, had gone to visit children in Australia, but was unable to return because of his health.

He was not eligible for the Australian pension, and so became stateless as far as superannuation was concerned. His family in Australia said he had suffered a stroke and they had ended up caring for him, including eventually paying for a rest home, and felt it was unjust that after the period of time spent by their father in New Zealand that New Zealand had, in effect, disowned him.

The authority found Work and Income had acted correctly.

Foreign pensions

Many immigrants to New Zealand remain bitter that their foreign pensions are being docked to help pay for NZ Super despite having lived and worked here for decades. While they dispute its fairness and legality, they have been knocked back time and again.

In one appeal earlier this year, a woman had failed to notify Work and Income of British pension payments coming to her. These would have been deducted from her NZ Super payments under section 70 of the Social Security Act 1964, which resulted in overpayments, which had to be paid back. The woman questioned the validity of the application of section 70, as has happened time and again, but the authority did not accept her arguments.

System lacks a heart

A woman who was included as a non-qualified spouse in her husband's NZ Super went to Australia to look after a daughter who had cancer and was living there. She intended to return before six months were up, but had a heart attack, which prevented her from returning because her recovery was long and involved her having surgery.

Work and Income data-matching established she was out of the country and stopped her NZ Super payments, though only after allowing them to go on for 26 weeks under section 22 of the NZ Superannuation and Retirement Income Act. This provides that in the case of a temporary absence from New Zealand, NZ Super can be paid if the person's absence does not exceed 30 weeks, or if the person's absence exceeds 30 weeks the chief executive is satisfied that the absence beyond 30 weeks is because of circumstances beyond the person's control that he or she could not have reasonably foreseen before departure.

The woman wanted NZ Super payments for the rest of her time in Australia paid, but the authority declined that.

Cough up for accounting fees

The authority found Work and Income should pay the accounting costs of a man who was required to apply for the Australian Age Pension. The man successfully argued that it was unreasonable for him to apply to Australia, where he had lived and worked for many years, because of the cost of preparing the application, which he claimed required the help of an accountant to complete.

The authority found that Work and Income had an obligation under section 69i of the Social Security Act 1964 to take reasonable steps to assist any person to comply with the obligation to seek an overseas pension, and ordered it to pay.

- Sunday Star Times

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