Pension changes could hit migrants hard
Some advisers may have to redo their clients’ retirement calculations if a proposed change to the entitlement rules for NZ Super goes through.
Tuesday, November 1st 2016, 6:00AM 
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Auckland University’s Centre for Retirement Policy Research prepared a document for the Commission for Financial Capability, as part of the Retirement Commission’s review of retirement income policy.
In it, it suggests extending the residency period required for eligibility for the pension to 25 years, from 10 years at present.
Researchers Susan St John and M Claire Dale said New Zealand’s 10 years was short by OECD standards, where the average is 26 years.
“This easy access to an age pension is particularly attractive to citizens of countries without such pensions, with the added advantage in New Zealand of access to emergency support in the years prior to meeting the residency qualification.
"As mobility increases, and populations in developed countries experience the demographic change of ageing, NZ Super becomes an increasingly desirable option internationally, thus creating a fiscal risk."
Retirement Commissioner Diane Maxwell had earlier said she supported an increase to the requirement but was not sure whether jumping straight to 25 years was the solution.
St John and Dale said extending the residency requirement would be one way to deal with the issue of pension deductions.
Some pensioners have deductions taken from NZ Super because they receive pensions that are deemed similar from other countries.
There is also a facility for any deduction that is worth more than the pension to be taken out of the person’s spouse’s NZ Super, which many feel is unfair.
Adviser Meredith Cornelius said it would affect a lot of people significantly and would affect what they needed to have set aside to fund their retirements. “There would have to be some sort of phase-in because people have planned their futures and retirements.”
Simon Hassan agreed. He said it would require an extra $800,000 invested to generate the same income as NZ Super provided, if someone was not drawing down capital.
“it’s a significant lump on money.”
But another adviser, John Milner, said he did not factor the pension in to his planning because he was not convinced it would remain available in its current form.
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- parents who come in via reunion should NOT qualify for any super. applicant should be solely responsible.
- increasing to 20-25 years residency, good idea. aussies should also be included.
- kiwis who have worked overseas should also need to have the 20-25 years residency qualifications. 'cos while working overseas, there's no tax contribution to nz.