Report reveals government perpetrating major benefit fraud
Under section 70 of the Social Security Act 1964, the chief executive of the Ministry of Social Development is granted exclusive discretionary powers to determine if - in his opinion - an overseas pension is analogous to New Zealand Superannuation, and therefore subject to direct deduction from NZ Super entitlements.
To their discredit,
A foreign benefit that could be likened to NZ Super would be in the form of a government-funded retirement income granted to persons in need, or to anyone fulfilling basic residency criteria.
Many overseas pensions coming into New Zealand are second-tier (contributory, earnings-based) pensions - for example, the Canada Pension Plan and US Social Security. These pensions are paid only to those persons who have contributed to the program, the monthly amount dependent on the individual's contribution.
Such pensions are essentially different from first-tier (universal, flat-rate) pensions such as NZ Super.
Nevertheless, without censure, the chief executive has determined that Canadian and US retirement benefits and virtually all age-pensions administered by foreign governments are, in his opinion, similar to NZ Super and therefore subject to direct deduction. (Refer The Roe Case.)
Parliament provided the chief executive discretionary powers to determine those overseas benefits that may be used to reduce NZ Super entitlements: at no stage has Parliament ever given the chief executive discretionary powers to withhold NZ Super on account of people’s retirement savings.
The law does not support the capture of any pension which, in the chief executive's opinion, does not resemble NZ Super.
Section 70 does not authorize the reduction of NZ Super unless two conditions are met:
Earnings-based contributory pensions are not analogous to social welfare benefits and cannot be said to form part of a program for any of the contingencies for which benefits such as NZ Super may be paid. More importantly, in terms of the law, is whether it is the chief executive’s opinion that earnings-based pensions are not analogous to social welfare benefits.
One of the proposed options presented by the Ministry of Social Development in its 2005 Report is for the government to deduct first-tier (universal, flat-rate) pensions only:
“This option is designed to ensure that only overseas pensions that are similar to New Zealand Superannuation are deducted.”
The Ministry's implication is startling: NZ Super is currently being withheld on account of pensions which are not similar to NZ Super.
The chief executive makes a shocking admission.
The 2005 Report proceeds to admit that NZ Super is being withheld on account of pensions that are not similar to NZ Super:
“Currently section 70 authorizes the direct deduction of second-tier earnings-related pensions, despite the fact that, other than being administered by the state, they have little resemblance to NZ Super.”
It would have been accurate to say that the chief executive authorizes the direct deduction of second-tier earnings-related pensions. The report's explicit admission (“second-tier earnings-related pensions ... other than being administered by the state ... have little resemblance to NZ Super”) means that section 70 authorizes no such deduction.
The admission that second-tier earnings-related pensions have little resemblance to NZ Super affects the legality of withholding NZ Super only if it represents the opinion of the chief executive.
The chief executive has the power to withhold NZ Super by reason of the similarity - according to his opinion - between other pensions and NZ Super. If the opinion of the chief executive, by his own admission, is that certain pensions are not similar to NZ Super, those pensions are not legally deductible.
Every year, NZ Super is being withheld from thousands of beneficiaries on account of their other pensions despite one of the necessary legal conditions for deduction not being met.
The report, including the admission, was personally approved, authorized and signed by the chief executive of the Ministry of Social Development and dated
The integrity of the government is in question.
The revelation raises serious questions about the integrity of the person whose annual salary (exceeding half a million dollars) makes him
The 2005 Report was released to the Minister of Finance and the Minister for Social Development and Employment. The signature of Hon David Benson-Pope (27 November 2005) confirms that senior cabinet ministers received information from the chief executive of the Ministry of Social Development that deducting second-tier overseas pensions is not justifiable.
Ministers of the Crown continued to defend the capture of overseas pensions, falsifying the government's social security program and going to extreme lengths to conceal the telling content of critical reports.
There can be no doubt that the chief executive and senior cabinet ministers have disregarded the law.
Successive Social Development ministers attempted to suppress reports prepared in the course of the government’s Review of the Treatment of Overseas Pensions. None of these key reports has been published on the Ministry’s website. Their contents reveal why ministers tried to obstruct their release: they implicate the ministers and the Ministry in perpetrating fraud.
On 31 August 2008, the chief executive of the Ministry of Social Development appeared on the TVNZ program “Sunday”, threatening dire consequences for a man who had defrauded WINZ of half a million dollars. The Ministry reported that it had prosecuted 1001 people for benefit fraud over the previous financial year.
The number of people prosecuted for benefit fraud is miniscule compared to the number of superannuitants the government annually defrauds of their retirement savings. In terms of the amounts involved, citizen fraud is insignificant beside the millions of dollars the state misappropriates from senior citizens.