NZ Pension Abuse

Executive Summary

Tens of thousands of superannuitants - almost one quarter of our elderly population - either have their New Zealand Superannuation substantially reduced or receive nothing at all despite repeated claims by the Retirement Commissioner that NZ Super is a “Universal Pension” subject to neither income nor asset testing.

Six years ago, the incoming government was informed by qualified officials that there were serious problems with NZ Super and its lack of portability. In February 2003 a confidential government Review of NZ Superannuation, involving six government departments, was submitted to Ministers Michael Cullen and Steve Maharey. The Ministers concealed the review from Opposition parties and members of the public until 2005, when a copy of the review was accidentally released.

The 2003 Review recommends urgent changes in the national interest. It calls for the repeal of Section 70 of the Social Security Act 1964 - the direct deduction policy - whereby 52,000 pensioners with retirement savings administered by overseas governments have their funds appropriated by WINZ. Under Section 70, the Chief Executive of the Ministry of Social Development has been granted powers to target any overseas state-administered and/or state-funded old-age benefits he considers similar to NZ Super. Most overseas pensions targeted by the Chief Executive are not state-funded old-age benefits but state-administered retirement savings programs - funded exclusively by the individuals’ contributions.

The 2003 Review warns the New Zealand Government that it is at serious risk of being challenged under the Bill of Rights Act 1990 because of the discriminatory nature of the direct deduction policy.

The government has been advised to remove the obstacles to a social security agreement with the United States - and to treat such an agreement as a major objective. The government has refused the advice of its officials (including New Zealand’s Ambassador to Washington) declaring, “The United States needs to recognize the unique nature of New Zealand’s superannuation scheme.” The US has never had any difficulty in recognizing New Zealand's superannuation scheme as unique - with unfortunate consequences for many New Zealand citizens living overseas.

Neither the former Minister for Social Development nor the current Minister has implemented any of the recommendations of the 2003 Review. A clue to their inaction is that Section 70 provides the government with revenue worth at least $185,000,000 a year. Over the past six years, the government has taken over $1,000,000,000 away from pensioners. The direct deduction policy has proved to be a goldmine which the government has shown extraordinary zeal in safeguarding.

The government defends existing retirement policies with the claim that they have overwhelming majority support, but it has refused to release details of the number of complaints it has received over the past six years. Superannuitants have been told by the Minister for Social Development that the number of complaints will be made available but only on the condition they pay the government for the information – a payment beyond the means of most pensioners.

Retirement policy has become less the preserve of the nation's elected representatives than that of senior civil servants. Government officials have misdirected Cabinet Ministers; their misleading testimony to the Courts has resulted in flawed decisions; they persist in attempting to justify discriminatory policy to the public. As a result, Parliament has been unable to properly understand, and rectify, the major superannuation injustices for which it is responsible:

	Every avenue by which pension discrimination can be challenged has been systematically blocked.
	The Office of Crown Law has not dealt justly with appeals.
	Every complaint to the Human Rights Commission has been dismissed.
	The Director of Human Rights Proceedings has denied legal assistance in every case.
	The Government Superannuation Fund, a state-administered old-age pension program massively funded by the taxpayer, is exempted from Section 70.
	The proposed KiwiSaver scheme, similar to most overseas programs, will also be exempted. The exemption of both these programs highlights glaring inconsistencies in the law.
	The authorities targeting overseas pensions are subsidizing their own retirement schemes at enormous expense to the NZ taxpayer.
	Every New Zealander is now likely to forfeit his/her right to NZ Super if he/she enters a relationship with - in the eyes of the law - the wrong person.

For tens of thousands of New Zealand superannuitants who have been wrongly treated, the only option is to unite in collective action. Few individuals can match a well-resourced government, but as a group with proper representation, we can fight to see Kiwi fairness returned. After reading through this web site, please feel free to register or seek more information on the Registration page.

Last modified: February 21, 2007