Pensioners with overseas state pensions – unfair treatment of spouses

28 July 2014

This is election year. The Retirement Policy and Research Centre challenges political parties to say what they will do about the unjustified marital discrimination faced by some retirees whose spouses have overseas state pensions. “This issue could be fixed immediately at very little cost. To simply ignore it is bad for the health of our democracy” says Co-director of the RPRC, Susan St John.

In a new PensionBriefing, the RPRC highlights the issue of increasing numbers of married superannuitants who find to their horror that they are unfairly affected by the application of an obscure part of our social security legislation.

As Section 70 of the Social Security Act is currently applied, a spouse with an overseas state pension may lose all their NZ Super. This is fair and reasonable if the overseas pension is like NZ Super, as no person should receive more than one basic state age pension. But New Zealand policy crosses the line into inequity when any amount of that overseas age pension that exceeds the individual rate of NZ Super may then be deducted from the other spouse’s NZ Super.

“This is the most egregious of many problems with current policy around overseas pensions. Many of those affected are not wealthy people” says St John. “Many have suffered ill-health from the stress and injustice they have experienced. Many have spent years fighting their cases with officials and appeal authorities and taking their cases through the courts.”

The RPRC says that the greater mobility of the workforce demands that there is a fundamental, principles-based policy reform to restore these discriminated-against pensioners as valued citizens of New Zealand. This reform would need to be underpinned by transparency around the basis for the MSD’s decisions.

“In the meantime the marital discrimination problem should be fixed immediately” says St John.