Pension fix looms after 80 years

Hard look taken at controversial legislation widely considered to unfairly penalise some superannuitants

Changes could be on the way to a controversial piece of legislation allowing the Government to make deductions from some pensions. Minister for Social Development Carmel Sepuloni has sought advice on New Zealand Superannuation.

This includes a section currently before the Human Rights Review Tribunal amid concerns it unfairly penalises some.

Section 70 of the Social Security Act contains a policy giving the Government the right to reduce a pension dollar for dollar if they also receive a pension or fund from overseas, and in some situations if their partner receives a foreign pension.

“I have commissioned a wide range of work looking into the wider welfare system settings, including NZ Super,” Sepuloni said in a statement.

“As a result, any proposed system changes will be made with the best possible advice, in a careful and considered manner.”

The section 70 policy has long been the subject of controversy, with Prime Minister Jacinda Ardern calling it a “human rights violation” in 2015.

An Upper Hutt woman affected by the policy said she felt like a “bludger” because she had to claim food grants to get by, despite working until she was 70.

Marie Brophy and husband John Brophy are each eligible for Superannuation, but also receive payments from overseas funds that they and their employers contributed to.

Their pensions are deducted under section 70, forcing them to turn to Work and Income for food grants and other assistance.

“I don’t like doing this, it’s so embarrassing,” Marie Brophy said.

“I worked hard all my life . . . now I’m a social welfare beneficiary. I don’t want to be a welfare bludger.”

Their payments from Ireland and England did not come through on a regular basis, and how much they received depended on the dollar. Marie said this meant they often lived on less each week than the average couple receiving only the NZ pension.

Ministry of Social Development (MSD) senior international and policy general manager Justine Cornwall said it tried to ensure fairness: “We appreciate the Brophys are trying to make the best of their situation and we are working hard within the law to continue to support them.”

The Brophys have the option of using a Special Banking Option, which allows the overseas money to be held in a New Zealand bank account and managed by MSD. Those using the option will get the same amount and regular payments, regardless of dollar fluctuations. They have chosen not to do so.

Auckland man Graham Astley is in a similar boat, but doesn’t receive an overseas pension.

His New Zealand pension is reduced under the spousal deduction policy because his partner receives a pension from overseas that is higher than the New Zealand one. The excess is deducted from his pension.

“[It’s] a huge injustice, not just to me but to a large amount of other New Zealanders. Some of them are old and doddery now, some are incoherent, some are infirm, but all have suffered from this wretched law,” he said.

“I’m ashamed of my country. How do they do such a thing?”

Acting Prime Minister Winston Peters said spousal deductions were of concern “but we are pleased that MSD officials are also examining section 70 as part of the superannuation reform work programme”.

National’s spokeswoman for seniors, Maggie Barry, said the policy had been in place for 80 years and successive governments had left it in place.