Govt moves to fix pension 'unfairness'

One change coming in a new bill revamping the superannuation system rectifies an unfairness that should have been fixed a long time ago, researchers at the University of Auckland's Retirement Policy and Research Centre (RPRC) say.

Wednesday, January 22nd 2020, 6:08AM

At the moment, foreign pensions are often offset against local entitlements - both the individual's and that of their partner.

If the person receiving a foreign payment does not receive a local benefit or pension, the full amount from offshore is offset against their partner's super.

If they are receiving a benefit here but what they receive from offshore is more than their entitlement, the extra is offset against their spouse's New Zealand pension income.

That means someone who is over 65 married to someone younger who has pension income from overseas can end up receiving none of their own New Zealand entitlement.

The bill, which is currently going through select committee, removes that.

RPRC researcher Susan St John said it was something that should have happened a long time ago.

"The RPRC considers this bill to be a much-needed step in the direction of fairness. All aspects of NZ Super design must be made consistent with social and economic conditions of the 21st century and currently they are not. The spousal deduction, the direct deduction of government-administered overseas pensions received by a qualifying superannuitant’s partner, has been a weeping sore and while it is good to see that it will be fixed after the passage of this bill, it has taken too long at too great a cost."

She said the issue was the subject of a Human Rights Review Tribunal case heard in March 2018.

But one of the three superannuitants who took the case had since died.

"The extent and duration of the suffering caused by the spousal deduction to people who are not at all wealthy has been immense."

She said if the deduction was ruled unjust by this bill as of July 1 this year, it was unjust last year and the year before that.

People should be compensated, she said.

"At the very least the remedy could be backdated to the May 2019 budget announcement. Another approach might be to offer special compensation to those who have been affected for a long time – for example a payment on a sliding scale."

St John said it was an uncontroversial move but politicians on both sides of the house might be embarrassed over how long it took.

It was something the RPRC had campaigned on for a long time, she said.

"We should be feeling pleased but instead there's despair it's taken so long."

Tags: NZ Super retirement superannuation