Rewarding Service

Civil servants and Parliamentarians are together responsible for the defense and retention of Section 70.  In his book “Rewarding Service; A History of the Government Superannuation Fund” (University of Otago Press 2002) author Neil Atkinson examines the various stages in the NZ Government’s employee pension schemes with emphasis on the GSF which had its genesis in 1948.  One of the aims of the GSF was to encourage and reward lengthy employment in the public service and allow state employees to retire with dignity.

Some groups, including senior civil servants and Members of Parliament, were accorded special treatment and Atkinson reminds his readers of the inglorious “Dead of Night” 7 minutes in 1987 (the same year as the decision in the infamous Roe Case).  In those 7 minutes, Members of Parliament on both sides of the House passed massive improvements in the superannuation of Parliamentarians and senior civil servants.

The scheme was never fully funded; the state legislated to supply the extra money for the pensions of top civil servants and politicians from general taxation.  Concerns about the size of the contingent liability eventually caused the closure of the scheme to new members in 1992.

In “Rewarding Service”, Atkinson’s facts as presented lead to a disquieting comparison.  The superannuation privileges available to longer-serving civil servants and those who have been in Parliament for several years are essentially government sponsored and administered pensions topped up by the taxpayer. 

The majority of overseas pensions subject to Section 70 of the NZ Social Security Act are no different from the GSF in that both are government sponsored and administered.  It would seem logical therefore - if Section 70 were fairly applied - for GSF pensions to be deducted from NZ Super entitlements.  It is both ironic and cynical under the circumstances that these pensions are in fact exempted.  The only tangible difference between overseas pensions subjected to Section 70 and the GSF is that the latter is tax free and topped up by the taxpayer - overseas pensions are neither.

It means that those authorities responsible for targeting the pensions of a minority to diminish the burden to the NZ taxpayer have been feathering their own nests at the expense of the NZ taxpayer.

The GSF currently has 72,000 members.  It consists of 48,000 annuitants - but only 24,000 contributors (for more information visit: www.gsfa.govt.nz ).

The shortfall between what is contributed and what is paid out costs the NZ taxpayer around one billion dollars a year.  The burden to the taxpayer is considerably reduced, however, by the revenue gained through appropriating overseas pensions.

In this context, consider the statement of Hon Ruth Dyson, Minister for Senior Citizens, explaining the government's official position on the abatement of overseas pensions:

"The general principle behind this legislation is that if someone is entitled to an overseas pension they must apply for this pension in order to diminish the cost of their NZ benefit or pension.  This is of advantage to the NZ taxpayers as our scheme is taxpayer funded, unlike many overseas schemes which are based on voluntary or compulsory contributions."

It is not surprising the government is anxious “to diminish the cost”.  Without the massive contribution the appropriation of overseas pensions provides, taxpayers would long ago have demanded to know why a pension perk over and above NZ Super should consume more than 2% of their taxes.

In stating, “our scheme is taxpayer funded”, Ms Dyson is referring to NZ Super.  But she might just as truthfully have been referring to the Government Superannuation Fund.

The Minister for Social Development has been asked if the revenue derived from the direct deduction of overseas pensions is used to subsidize the pensions of civil servants - including the pensions of those authorities responsible for retaining and enforcing Section 70.

The Minister could not deny that the revenue derived from the direct deduction of overseas pensions becomes available to top up the inadequately funded GSF.  He could only lamely reply, “It is not used directly."

FOOTNOTE

Among those benefiting from the inglorious “Dead of Night” are the present Prime Minister, Rt Hon Helen Clark, and former Speaker of the House, Rt Hon Jonathan Hunt.  When asked if it was appropriate to be accepting NZ Super payments in addition to his handsome parliamentary salary, Mr Hunt rounded indignantly, “But it is my right!”

In 2005, the Prime Minister rewarded Mr Hunt for his many years in the Labour Party by appointing him our highest ranking diplomat in the United Kingdom, the New Zealand High Commissioner to London.  On taking up the post of High Commissioner, Mr Hunt lost his right to NZ Super.

In spite of his loss, Mr Hunt was fortunate in that he not only had the use of a rent-free London home but also a 6 figure salary and a parliamentary pension amounting to $77,000 per annum.  Notwithstanding, Mr Hunt then had the audacity to ask the British Government to supply him with the British pension.

In his time as Speaker, Mr Hunt acknowledged having received detailed information outlining the many inequities associated with NZ Super – and was therefore fully informed as to the gravity and the extent of injustice.  Yet he made no attempt whatsoever to address these injustices.

Last modified: February 21, 2007