Overseas pension inquiry shelved

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Last updated 12:15 12/04/2013

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A lack of money is behind the decision shelve an inquiry into whether the confiscation of overseas pensions received by New Zealand pensioners is fair and consistently applied.

It has long been a cause of protest among immigrants and returned-New Zealanders that the government takes some of their overseas pensions, built up from salary contributions, to help fund NZ Superannuation payments.

Also, New Zealand superannuitants who are in relationships with foreigners can have their NZ Super payments reduced as a result of the pensions their partners receive.

After years in the political wilderness, affected superannuitants' calls for an inquiry were championed by Labour MP Jacinda Ardern on the Social Services Select Committee.

Ardern persuaded the committee to gather evidence from the Ministry of Social Development as a preliminary step to decide whether an inquiry was justified.

But yesterday the committee issued a report revealing the six National MPs on the committee had outvoted the five MPs from Labour, the Greens and New Zealand First and the inquiry would not go ahead.

Although the opposition parties felt the evidence presented raised such serious concerns that an inquiry was justified, "the majority of the committee, while sympathetic to the anomalies in the system, decided not to initiate an inquiry," the report said.

"Prevailing fiscal constraints were also a consideration in this decision," the report said.

In evidence the Ministry of Social Development told the select committee that the deductions were part of a "one-pension policy" to ensure fairness.

"If a person were to receive their overseas pension entitlement as well as the full rate of NZ Super, they would be financially advantaged compared to people who have lived in New Zealand all their lives," the ministry said.

Salary contributions that helped build pensions were in many cases required by law "in much the same way as a person who is working in New Zealand is required to pay New Zealand tax, part of which funds the pension and benefit system."

The ministry also told the select committee that though the deductions added up to a large amount of money each year, the individual deductions for most were relatively small.

As at August 30, the annualised value of overseas pensions being paid into New Zealand was $236.7 million, with 64,662 people receiving an average of $3622 a year. Of those people, 51,327 of them were having less than $100 deducted each week.

However, pensioners have found even small deductions can be life-altering.

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Last year Beth Webster, a New Zealander who had worked in the UK, was evicted from her Mt Eden flat after she found deductions from a UK pension, into which she paid for many years from her salary when she worked as a counsellor in England, meant she fell behind in her rent.

Her weekly deduction was just $28, but it was the difference between getting by and falling behind.

But the ministry told the committee New Zealand paid about 80 per cent of the combined NZ Super and overseas pension amounts for superannuitants who have lived overseas.

Ardern acknowledged that major changes to the deductions policy could cost hundreds of millions of dollars each year, but said: "We were disappointed as the opposition members saw the need for an inquiry.

"We were particularly disappointed as it means the reduction of the NZ Super payments of New Zealanders because they have a spouse receiving an overseas pension won't be looked at.

"It is such an obvious inequity."

- BusinessDay.co.nz

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