Pension hurdles to clear
Each year, some of my client base as an accountant are applying for NZ Superannuation.
There are two hurdles in particular people often face when when applying for NZ Super, and hopefully the present government will bring some relief to people who encounter them.
Overseas work
If you worked overseas, you are obliged to apply to the government of the country you worked in to see if you are entitled to any pension from them. If you are, this reduces what the New Zealand government will pay you. If you don’t apply, then your NZ Super is cut.
For many people, the overseas country they worked in will have been Australia. The Australians expect you to fill out a book containing 60-plus questions.
One of the questions is what flight you arrived on in Australia. Who would remember that after 40 years, having worked for say two years in Australia in their early twenties? Well, the answer is no one.
The Australian equivalent of our Work and Income (Winz), who call themselves Department of the Human Services, clearly state on their website that they will only consider you for an age pension if you have worked in Australia for 10 years.
It seems somewhat draconian that Winz make prospective superannuitants apply. It can take a considerable amount of time to get such information together but Winz will only let you apply for NZ Super within three months of your 65th birthday.
If you have not been approved within the three month window, the NZ Super is not backdated.
Spousal deduction
This is the term the bureaucrats use where part or all of an overseas pension received by one partner is deducted from the other partner who receives NZ Super.
While under Section 70 of the Social Security Act this is quite legal, it is probably not what the politicians had intended.
The net effect is that it discriminates against people who have formed a relationship with someone who has immigrated to New Zealand.
There are approximately 600 couples who are affected by spousal deduction.
It is always wise to contact a chartered accountant or financial adviser before making a financial commitment.
❚ To find out more about managing your finances in retirement, contact Paul Sheehan, chartered accountant, on 03 355 2636.