Pension reforms ‘discrimination’
Issues of fairness emerge under proposed reforms that would deny superannuation to younger partners, writes Susan Edmunds.
Harry is planning to retire next year, when he’s 65. But he’s worried that changes planned for the superannuation system from July 1 this year will make life much more difficult for him and his wife.
The New Zealand Superannuation and Veteran’s Pension Legislation Amendment Bill is working through Parliament at the moment.
It introduces a number of changes to the current law, including removing the provision that means foreign pensions are offset against a partner’s local superannuation.
At the moment, someone who is retired and entitled to the pension can end up receiving nothing if they have a younger partner who receives a pension from overseas.
But while that change has been welcomed, others are raising eyebrows.
The bill, if passed by Parliament, removes the ability for a pensioner to include their underage partner in their payment – or a partner who does not meet the residence requirements for New Zealand Superannuation or Veteran’s Pension.
At present someone who is on the pension with a partner who does not qualify can receive up to $601.22 each after tax a fortnight – reduced if the couple’s combined other income is more than $100 a week.
Pensioners who are currently including their partner will be able to continue to do so. But if their partner is not already included in their payment at July 1, they will not be able to be included. A spokeswoman for Minister of Social Development Carmel Sepuloni said non-qualified partners of pensioners would be able to access support through the welfare system in the same way as other people. Harry, who did not want to be identified, said his wife was 81⁄2 years younger but he had been supporting her for 13 years because she suffered from osteoarthritis.
‘‘As she would no
‘‘After 38 years of marriage, do we now need to get divorced to be treated fairly?’’ Harry, pensioner facing the effects of superannuation reform
longer qualify I thought we would be living off my single pension of $411 a week but no. It’s not even [the single-sharing rate] of $380 a week. Because we are discriminated against for being married, it will be $316 a week [before tax].’’
He did not understand why there was this discrimination, which meant that the sole income earner, who happened to be married, received the lowest rate per week there was.
‘‘After 38 years of marriage, do we now need to get divorced to be treated fairly?’’
He said he had been told the other options were for her to apply for a benefit or for him to keep working.
Researcher Susan St John, of the University of Auckland’s Retirement Policy Research Centre (RPRC), said the change would offer no protection for underage spouses who were not in paid work and could be caregivers of an older partner.
‘‘At very least to protect the nonqualifying partner in a relationship with an NZ Superannuation recipient, the RPRC recommends individualising the Supported Living Payment and the Jobseekers Benefit, even if it is confined at first to people over 60 years and under 65.’’
She said she had also hoped there would be a change so that there was no longer a difference between the single-sharing pension rate – currently $759.04 a fortnight after tax – and the married rate – currently $632.54 a fortnight each.
That had not happened and St John said it left people vulnerable.
Last year, flatmates Shirley Eyre and Karel Modderman were caught out when it was determined they were in a relationship in the nature of marriage – and now must pay back $150,000.
St John said the single sharing and married rates should be levelled by holding the married rate flat while the single sharing rate moved up. Many older people lived together for companionship but kept their finances separate, she said.