Payback time
Winston Peters is on the warpath after his Super situation became public. But it’s easy to fall foul of the pensions rules, writes Rob Stock.
The discovery that MP Winston Peters had been paid too much NZ Super meant the seasoned politician had to dig his hand into his pocket and pay it back.
Peters is reported to have repaid around $18,000, though he says the sum was smaller.
He had reportedly been paid a single person rate since he turned 65, when he was in fact cohabiting with his partner Jan Trotman.
The current single, living alone rate is $720.36 a fortnight before tax. The rate for a person who is living with a de facto, or married partner, is $600.30.
Under law Peters was in the same position as most people accidentally overpaid more NZ Super than they were legally entitled to.
The chief executive of the Ministry of Social Development (MSD) would have insisted on repayment. The Social Security Act requires the chief executive to take all practicable steps to recover overpayments, which means even small sums have to be chased.
Being unaware that you are being paid the wrong rate is no defence against not repaying.
Incorrect NZ Super payments are only one of a number of reasons why over 65s can find themselves in pensions debt to the MSD.
Last year, a Victoria University academic aged 69, who like Peters was getting NZ Super while working, lost his appeal against having to pay back just over $6400.
He’d been overseas on study leave in Australia.
NZ Super rules say you can be overseas for up to 26 weeks and still get NZ Super.
If you are overseas for a day longer, without permission or reasonable excuse, you have to pay the whole lot back.
NZ Super is a New Zealand benefit. It’s not designed to support people overseas, though there are cases where this is allowed. Excuses have to be good. One man argued he’d forgotten the time limits while helping care for a disabled grandchild in Australia. Good reason, but a poor excuse. He had to pay back more than $6000.
The absent-minded professor was caught by a ‘‘data match’’.
Government departments are allowed to share information under data-match agreements, of which there are more than 50.
It’s a ‘‘big brother’’ system designed to ensure people aren’t paid money they are not entitled to.
MSD has more than 20 information-matching agreements.
There are agreements with Internal Affairs (to catch things like name changes, and payments continuing to dead people), ACC (no double-dipping for accident victims), Corrections (no paying benefits to prisoners), Customs (to catch people being paid NZ Super overseas, for example), Justice (fines defaulters), and the Inland Revenue Department.
If a superannuitant is paid too much because of a bureaucratic error, MSD can forgive the debt.
The superannuitant can’t have intentionally contributed to the error, or have known they were getting money they weren’t entitled to.
The MSD chief executive must also decide whether forcing repayment would be fair.
The base salary for an MP who is also a party leader is just over $175,000, so asking Peters to repay his debt wasn’t about to force him into penury.
Sometimes there’s a case for the MSD paying costs related to sorting out a mess caused by its error.
In 2015, a woman unsuccessfully asked MSD to pay her costs (lawyer and accommodation) over an error which saw her paid just over $2100 in NZ Super she wasn’t entitled to.
It appeared to be a case where a woman had told the MSD her ‘‘circumstances’’ had changed (code for she started cohabiting), but MSD had failed to cut her payments.
MSD eventually accepted she shouldn’t have to repay, but she lost her bid to get her expenses paid.
People aged 65 or over can work and get NZ Super with no penalty.
But some under-65s can get NZ Super too, but only as the spouse of someone entitled to NZ Super, and the amount they get is reduced if they work.
Under-report your income, and it’s easy to fall into an overpayment trap.
One woman, who worked parttime as a cleaner, did that in 2014 and 2015.
She was in her 50s, though her husband had been getting NZ Super since turning 65 in 2012.
Her income, which was low, fluctuated, and it was hard for her husband, who did the paperwork, to predict it, resulting in the overpayments.
The Appeal Authority accepted estimating his wife’s varying income was not an easy matter, and suggested: ‘‘If he does not wish to incur overpayments in the future the appellant would be best to overestimate his wife’s income or alternatively not have his wife included in the assessment of his entitlement to NZ Super at all.’’
Being caught in receipt of an overseas pension can also, depending on the nature of the pension scheme, result in an NZ Super debt that has to be repaid.
Trying to shoehorn the vagaries of human relationships into the NZ Super system is fraught.
In one case a woman married, but she and her husband decided to maintain separate households, and remain financially independent, sharing only one joint account for funeral expenses.
As a result of the marriage, MSD cut her NZ Super payments from the single, living alone rate to the lower married rate.
She objected, saying her circumstances were no different the day before her marriage than the day after her marriage, and her costs hadn’t changed either.
She appealed MSD’s decision but lost.
The woman had told MSD about her relationship, but in other cases tip-offs to the MSD, and MSD investigations, have revealed pensioners living together while being paid at the single person rate.
In another heart-rending case, a man and his estranged wife, who had split in 1997 but never divorced, sold their homes and bought a place together in 2008 after a stroke left her blind.
They split the house, with her living upstairs, and he downstairs. They shared the kitchen, but had separate bathrooms.
The Appeals Authority applied clinical bureaucratic logic to their living arrangement, finding: ‘‘Maintaining separate bedrooms and the absence of a sexual relationship will not be determinative of whether or not a married couple are living together.’’