A Culture of Deception

Shortchanging Truth

New Zealand was one of the first countries to provide old age pensions for its citizens. NZ Super as we know it today has remained largely unchanged since it was introduced in 1938. It was an admirable program for its time but in a vastly changed world it has become obsolete: what changes have been made over the years were ill-considered and out of keeping with its original intent.

Successive governments have avoided overhauling and updating the system in the myopic belief that providing a more equitable system could lead to major cost increases. Instead, outdated legislation unfairly penalizing many people has been retained, while attention has focused on maintaining the illusion that the nation is being providing with a magnanimous, benevolent state retirement program. Devious strategies have kept the majority quiet. The press has said very little.

A finely-honed culture of deception has been developed by the Ministry of Social Development (MSD). Replies from senior public servants and leading politicians to questions or complaints concerning NZ Super are noteworthy for deliberate obfuscation, evasion, distortion and misleading information.

The government is fond of pointing to its generosity in paying full NZ Super to individuals who have lived in New Zealand for only ten years, having paid very little in the way of taxes. This is an argument that the government turns around - whenever it is convenient - by claiming, on the other hand, that it isvery unreasonable for anyone to expect NZ Super in full after just 10 year's residency and the payment of very little in taxes! These arguments are used repeatedly, whichever way most suits the government's purposes.

Officials avoid mentioning that the number of people receiving NZ Super in full after just 10 years residency is extremely low. They also scrupulously avoid mentioning that in the vast majority of cases NZ Super is being substantially reduced or denied to people who have been resident 30 to 40 years and who have paid a significant amount in taxation.

And, of course, mention is never made of the New Zealanders who have lived, worked and paid taxes in New Zealand for up to 40 years (or more) and get nothing in the way of NZ Super because they were not resident on reaching 65 - or who retired in Australia.

One of the most dishonest claims is the often-used "Whenever they have been consulted, New Zealanders overwhelmingly have indicated that they cherish NZ Super in its present form and are opposed to changes". The population has been consulted once, in 1997, with a "Yes or No" referendum on a compulsory contributory scheme championed by Winston Peters: 92% of voters said "No" - however this was not an endorsement of NZ Super in its current form, but simply a rejection of the type of changes proposed by Mr Peters!

EVERY VISITOR TO THIS WEBSITE IS URGED TO READ THE FOLLOWING

The principle argument used to deflect criticism and justify Section 70 (the deduction of overseas pensions from NZ Super entitlements) has been quoted so frequently that it has become a classic. To this day, without fail, public servants and politicians continue to use the same argument:

Migrants and New Zealanders who have worked in other countries should not be permitted to receive both an overseas benefit and NZ Super as this would put them at an advantage over New Zealanders who have not had the opportunity to work outside New Zealand. The direct deduction policy applied to NZ Super of overseas retirement benefits ensures that every person eligible for superannuation in New Zealand receives the same level of government support.

The most insidious aspect of the above argument is the deliberate implication that migrants (and New Zealanders with overseas work experience) who complain about Section 70 are being greedy, want-to-be double-dippers. This implication continues to be a crucial element of MSD strategy.

The difference between pensions and benefits is cleverly obscured to give the impression that the foreign retirement income is a social welfare benefit, a form of state-funded "government support".

The argument could be applied justifiably to any non-contributory overseas pension in the way of a benefit granted to those in need, or state-funded government support based simply on fulfilling minimal residency criteria (such as the first-tier Canadian Old Age Security). This reasoning is being applied however to contributory overseas retirement schemes which are not hand-outs, social welfare benefits or forms of state-funded government support. Most overseas pensions subject to Section 70 are contributory and are therefore retirement savings or personal annuities.

In most cases, persons receiving pension payments from another country are not receiving full but partial pensions proportional to the years they have put money aside for their old age (be it on a voluntary or compulsory basis). In abating these retirement savings, the NZ Government makes the fatuous claim that it is generously "topping up" partial overseas pensions to provide migrants or returning Kiwis a full pension!

It is not the migrant or the Kiwi with overseas work experience who is advantaged. It is in fact the New Zealander who never went anywhere who has all the advantages - such as being permitted any number of supplemental superannuation schemes (often tax-free) and/or the government retirement plan KiwiSaver, in addition to receiving NZ Super payments in full.

The government insists that all persons in New Zealand receive the same level of government support, that no one should have the advantage of being able to claim a benefit from New Zealand and a benefit from another country. Fair enough; Section 70 however ensures that many people receive significantly less in the way of government support. Moreover, most people penalized by Section 70 are not trying to claim a benefit from any country other than New Zealand. They merely want to be able to keep the money they put aside for their retirement before they came or came back to New Zealand, and to receive proportional NZ Super reflecting their contribution to the New Zealand economy.

The continual use of the argument that people who have worked overseas should not be better off than Kiwis who never left home is a crude attempt to play to xenophobia. Whenever migrants try to explain to New Zealanders how unfair it is to have their overseas pensions deducted from their entitlement to NZ Super and are asked whether they actually believe they should be given two pensions, they should answer with a question of their own:

"Would you consider it fair if the government reduced your NZ Super by the amount of your personal savings?"