Anger grows over foreign-pension law

Public support is growing for pensioners affected by legislation that drastically reduces their New Zealand superannuation entitlement because they have worked overseas.

About 52,000 pensioners and their spouses lose $185 million annually under the legislation, which enables Work and Income to cut their New Zealand super entitlement because they receive an overseas pension.

The direct-deduction policy makes no distinction between taxpayer-funded pensions such as New Zealand super and contributory pensions such as those in America, Canada, Britain, Ireland and Holland where people - on top of tax - have a percentage of their income paid into a Government-managed fund.

Under the legislation, the total amount received by a superannuitant must not exceed full New Zealand super.

The pensioners' ire has manifested in a series of public meetings throughout the country. A website, nzpensionabuse.org (see link below), is also up-and-running and advertising space has been bought in Grey Power's latest quarterly magazine.

Grey Power has also thrown its weight behind the issue, urging the Government to review the legislation.

A spokesman for the pensioners, Chris Arnesen, says anger is growing because the Government has done nothing, despite being aware of problems in the system for at least four years.

The Herald has obtained two Ministry of Social Development reports, dated 2001 and 2003, in which officials warned their minister, Steve Maharey - and in the later report Finance Minister Michael Cullen - of problems with New Zealand super portability.

The officials acknowledged the ill-will caused by the direct-deduction policy, and warned that a number of countries, including the US, Switzerland, Germany and Austria, were refusing to enter into social security agreements with New Zealand because of this issue.

Officials even recommended options that would allow those who have worked in New Zealand all their lives - cited by Mr Maharey's office as likely to be disadvantaged by any changes - to keep their full super, while those with overseas pensions would get a proportional entitlement based on the number of years worked in New Zealand.

Mr Maharey turned down requests for an interview, but said the issue was under review and would be looked at again after the election.

Super problem

* NZ super payments are reduced by the amount received from overseas pensions.

* The law makes no distinction between taxpayer-funded schemes such as ours and contributory pension schemes such as those in America, Canada, Britain, Ireland and Holland.

* Under these schemes people must pay part of their income into a Government-managed fund - on top of tax payments.

* More than 50,000 pensioners have their NZ super payments cut in this way.

* They say this is unfair as the overseas pensions are their money.