Discretionary Powers

Under Section 70 of the NZ Social Security Act the Chief Executive of WINZ is granted discretionary powers to determine if an overseas pension is “analogous to”, or has “like contingencies” with, NZ Super and therefore subject to the direct deduction policy.

In spite of the probable intent of Parliament when originally drafting Section 70, over the years the CEO has decided that virtually all pensions administered by governments in other countries are similar to NZ Super and therefore subject to the direct deduction policy. 

It is very much to the discredit of the New Zealand Parliament that in giving sweeping powers to a civil servant, Parliament completely failed to establish any system to monitor the Chief Executive to safeguard against possible abuse of authority.  Had an essential, responsible monitoring system been put in place, the situation today would probably have been quite different.

Any foreign retirement income in the form of government support granted to those in need or a retirement benefit granted from public funds to anyone fulfilling basic residency criteria, in either instance could be considered similar to the New Zealand system.  In actual fact, most of the overseas pensions being appropriated under the Chief Executive’s direction are vastly different from the NZ system.  The United States Social Security program serves as a perfect example of a system that, acting on his “powers of discretion”, the Chief Executive has been allowed to seriously misrepresent.

There are two forms of US Social Security.  The first, known as Social Security Insurance (SSI) is indeed a form of government support, a minimal amount paid to persons in dire need.  SSI is the form of US Social Security that the CEO has seized upon to warrant the abatement of US Social Security payments from NZ Super entitlements (refer The Roe Case).

The second form of US Social Security is quite different: it is not granted to anybody but paid only to those who have contributed to the program.  In the situation of Ruth’s husband, the Social Security payment he is receiving from the United States is from a government protected account that he paid into throughout his working life.  The amount of his monthly payment is dependent on his personal contribution and is identical to a privately purchased annuity in this sense.  His pension is neither funded nor subsidized by the US Government - but funded exclusively by his personal contributions.

If Ruth returned to the United States, she would receive Social Security payments in direct proportion to the amount she had paid into the American program.  Unlike the NZ Government however, the American Government would not require Ruth to apply to her country of origin for any pension due to her - then reduce her Social Security payments by the amount of the foreign pension.  She would be permitted both.

In contrast to New Zealand, the United States does not rely on other countries to subsidize its state pension program.  In this respect alone, the US Social Security program cannot be considered analogous to, or to have like contingencies with, NZ Super.

The Chief Executive has failed to properly understand the US retirement program and maintains, incorrectly, that it is a form of government support granted to those in need.

As a result, New Zealand authorities have been depriving hundreds of elderly people of their underlying property rights to money they have invested in the US.

It is a similar situation with most other overseas retirement programs.

Parliament provided the Chief Executive with discretionary powers to determine those overseas benefits that may be deducted from NZ Super entitlements.  At no stage has Parliament ever given the Chief Executive discretionary powers to deduct people's retirement savings from NZ Super.  In doing so, the actions of the Chief Executive should be treated as unlawful.

Last modified: February 21, 2007