Justifying Discriminatory Policies

Interights - the International Centre for the Legal Protection of Human Rights - specifies that social welfare benefits in the form of state pensions provided as safety nets are not analogous to state pensions which result from either enforced or voluntary contributions assessed according to salary.

In order to deflect the force of the human rights stance and foster the impression that New Zealand's confiscation of overseas retirement funds is fully justified, there are standardized lines of reasoning used unfailingly in Ministry correspondence.

Eligibility for NZ Super on fulfilling a minimum of just 10 years’ residency is a two-edged sword.  On the one hand, the government is fond of pointing to its generosity in paying full NZ Super to individuals who have lived in New Zealand for only 10 years, having paid very little in the way of taxes.  On the other hand, the government turns this argument around - whenever convenient - by claiming that it is very unreasonable for anyone to expect NZ Super in full after just 10 years’ residency and the payment of very little in the way of taxes!  These arguments are used repeatedly, whichever way most suits the government’s purpose.

The government carefully avoids mentioning that the number of people receiving NZ Super in full after just 10 years’ residency is extremely low.  It also avoids mentioning that in most cases NZ Super is being substantially reduced or denied to people who have been resident thirty to forty years and who have paid a significant amount in taxation.

The most commonly used line of reasoning is as follows:

Migrants and New Zealanders who have worked in other countries should not be permitted to receive both an overseas benefit and NZ Super as this would put them at an advantage over New Zealanders who have not had the opportunity to work outside New Zealand.  The direct deduction policy (or abatement) applied to NZ Super of overseas retirement benefits ensures that all persons eligible for superannuation in New Zealand receive the same level of government support.

The above is a skillfully crafted stratagem, calculated to mislead.  The difference between a benefit and a pension has been obscured in order to create the impression that the overseas retirement income is a “benefit” or form of “state-funded government support”.

With any foreign retirement payments that constitute a “hand-out”, a “benefit granted to those in need”, a form of “state-funded government support”, or a non-contributory pension based simply on fulfilling a residency period (eg the first-tier Canadian pension program), then the abatement of this type of income against NZ Super could be argued as justifiable.

However, most overseas retirement incomes being subjected to the direct deduction policy are not forms of “government support”.  They are not “state-funded”.  They are, in fact, retirement savings and may be considered personal annuities.

In the majority of cases, individuals have put money aside for their retirement (either on a compulsory or a voluntary basis) in government protected and administered retirement programs. With rare exception, migrants receiving pension payments from another country are not receiving benefits or “full” pensions, but partial pensions reflecting, or strictly proportional to, the years they paid into a foreign retirement program.  In applying the direct deduction policy, the NZ Government makes the lofty claim that it is actually “topping up” partial overseas pensions to insure migrants receive a full pension.

It is not the migrant or the New Zealander with overseas working experience who is advantaged.  On the contrary, it is the New Zealander who stays home who has all the advantages - being permitted any number of supplemental superannuation schemes (many of them tax-free) in addition to receiving NZ Super payments in full.

The government insists that no person should be advantaged in being able to claim a benefit from New Zealand and a benefit from another country - that all persons in New Zealand must receive the same level of government support.

In truth, the application of Section 70 ensures that a great many people are receiving substantially less in the way of government support.  Most people affected by Section 70 are not trying to claim a benefit from any country other than New Zealand.  The simply want to be able to keep the money they put aside for their retirement before they came - or came back - to New Zealand.

Last modified: February 21, 2007