BEFORE HEADING OVERSEAS, CHECK WHETHER YOUR NEW ZEALAND SUPER IS SAFE
New Zealand Superannuation is the jewel in the crown of our pensions system. Envied overseas, it's as simple a system as any country has devised. It is a universal pension and it is not means tested in any ordinary way. But that surface simplicity hides a complexity that trips some people up, and that can cost the over 65's dearly. How are you planning for retirement? Cases that have been heard by the Social Services Appeal Authority in the past 36 months illustrate some of the ways NZ Super can trip up those getting it, or wanting to.
It's not just a priest or a marriage celebrant who can pronounce you married. Work and income can do it too. Cases before the authority illustrate it can inquire into the personal lives of recipients who live in unusual circumstances. They do this because people get different rates of NZ Super depending on their living situations. In one case, two people decided to live together as friends. He was 77. She was 66. But instead of paying them the 'single sharing' rate of NZ Super ($396.17 a week before tax), Work and income decided to pay them each the married, or de facto rate ($326.30)
They had met at a dance 16 years ago and regarded themselves as flatmates, taking holiday and spending Christmas together. They shared a bedroom. After comtemplating these facts, the authority decided Work and Income were right under the terms of the Retirement Income Aut.
In another case, Work and Income even accepted there was no sexual relationship between two people living together, but decided they were a de facto couple. Evidence included testimony from a Work and Income staffer who knew them socially. The authority agreed 'on the balance of probabilities' Work and Income was right. In neither case were past 'overpayments' demanded back. Work and Income wanted that, but the authority did not think the people had intentionally mislead the department.
NO BACK PAYMENTS
don't just expect the NZ Super payments to start when you hit 65. You have to apply. The onus is on you to apply a few weeks in advnce of your 65th birthday. If you fail to apply, don't expect back payments. One man thought he couldn't get NZ Super while still working. When he realised that was wrong, he sought a back payment. The authority agreed that Work and Income didn't have to pay.
Many of us don't plan our lives particularly well. That can come back to haunt us later. Take the case of one man who lived here for 30-odd years, then headed to Samoa to take up the role of a village elder. He only returned in 2012, applying for NZ Super in 2013, and was initially granted it.
Then someone at Work and Income realised the man had not met the minimum residency requirements for NZ Super. To be eligible for NZ Super a person must have lived in New Zealand for 10 years after the age of 20, with five of those years since the age of 50.
While he had spent more than 10 years in New Zealand in totoal, he had not spent at least five years here since age 50. The man said he "had no thoughts of New Zealand Superannuation" when he headed off to Samoa. The system does not forgive these mistakes. There is some lobbying for making the residency requirements tougher which is a reminder that rules can be changed. Before moving overseas, it is worth researching entitlements so you know when you need to come back by.
THE FOREIGN PENSIONS BUGBEAR
Many new Zealanders work overseas at one time or another. Many others are immigrants who have done so. And many are probably unaware that if they qualify for an overseas pension, their NZ Super payments can be reduced by the amount of those payments. That can even cover some pensions built up from contributions made from people's own salaries while working in another country. The rules demand people applying for NZ Super also apply for any overseas pensions they may be entitled to. which may then be taken to help pay for their NZ super. failing to apply when asked can result in NZ Super payments being stopped, or never started, as one man found when he was faced with having to fill in long, complicated forms from the Australian authorities, who he saw as bullies. His refusal imperiled his NZ Super payments. The NZ Super payments to spouses of people with overseas pensions can also be reduced by the amount of those payments. Take the example of one man who younger wife received a pension from Britain at 62. As a result his NZ Super payments were reduced. The moral of this is that your NZ Super payments can be lower than others' depending on who you fall in love with. Campaigners against this have so far failed to sway succesive governments to reform the rules. The authority acknowledged. "There are some issues around the deductibility of the oversears pension of a spouse from entitlement to New Zealand Superannuation which leave an impression of unfairness and which cause resentment."
People receiving NZ Super need to plan their jaunts overseas carefully. NZ Super is mainly a domestic payment, and in most cases, recipients need to be permanently based in New Zealand and can only go on temporary forays overseas. With the exception of some Pacific Islands, people can be "absent" for 30 weeks and can continue to collect NZ Super for the first 26 weeks. One couple were gone for more than 26 weeks. Work and income swaps data with Immigration and spotted it. It demanded nearly $1,000 back. There was an excuse. The elderly man had sinus trouble and was told to delay his return. The money still had to be repaid.
IF MY PARTNER IS UNDER 65 AND INCLUDED IN MY NEW ZEALAND SUPERANNUATION, DOES HIS/HER INCOME AFFECT MY SUPER?
If you spouse or partner is included in your payments, you can earn up to $100 (before tax) a week between you, before your New Zealand Superannuation is affected. If you earn more than $100 (before tax) a week your payments are reduced by 70 cents for every dollar of income over $100 (before tax)
for example, if a couple have a combined income of $15,000 per year, then the effect of this income on their NZ Super would be as follows:
Annual income before tax $15,000
Weekly income before tax $288.46
Less allowancable income per week before tax $100.00
Chargeable income $188.46
A reduction of 70 cents for every dollar of income over $100.00 results in the couple's combined NZ Super being reduced per week by $131.92 (ie $188.46 x 0.70)
Please note that if your combined income is equal to or more than $26,394.46* (based on the rates as at 1st April 2014) then it may not be to your advantage to include your spose/partner.
This example is intended to be indicative only and you should note that the actual amount paid will depend on your tax rate, any deductions that are made and any additional assistance that you may be entitled to
To confirm how your income may impact on your NZ Super, please contact WINZ on 0800 552 002
Help with Housing costs
Accommodation supplement: If your income and cash assests are below a certain amount, you may be able to get an accommodation supplement. This is to help with the costs of renting, boarding or owning your own home
Help with Health costs
Community Services Card: The community services card give you and your family discounts on doctors' visits and prescriptions. It can also help towards the costs of services such as home insulation. You may be able to get a card if you're on a low-to-middle income, even if you work.
Disability Allowance: The disability allowance can help towards the extra costs you have due to a disability or medical condition. It can help pay for a range of things like regular visits to the doctor, medicines, lawn mowing or a medical alarms. Your doctor will have to tell us you need them because of your disability or medical condition.
Help with emergency or unforeseen costs
Advance payment: If you urgently need something you cannot afford to pay for right now, you may be able to get some of your New Zealand superannuation/Veteran's pension payment paid ahead of time. for example, for essential house repairs, dental treatment or household appliances.
Special needs grant: This is a one-off payment to help with urgent things you've no other way to pay for, like food, bedding and emergency medical care. You won't usually have to pay this grant back. There are other conditions so talk with Senior services if you'd like to know more.
Temporary additional support: If you're finding it hard to cope financially, you may be able to get a temporary payment for up to 13 weeks, to help meet your essential living costs. To get this payment your cash assets will need to be below a certain level.
Funeral grant: This can help with some of the funeral costs of someone who died. The amount you get depends on what money or assets the deceased person had. If your're their partner, parent or guardian it also depends on how much you earn and any money or assets you have.
Help to care for children
If you are th main caregiver of a dependent child you may be able to get the following extra help
* Unsupported child's benefit/orphan's benefit
* Child disability allowance
* Childcare subsidy/ OSCAR subsidy
Help with residential care costs
Residential care subsidy: If you need long-term residential care in a rest home or hospital, you may be able to get a Residential care subsidy from the Ministry of Health. This subsidy helps with the cost of your care and is paid directly to the rest home or hospital.
Residential care loan: Residential care loans help older people who can't get a residential care subsidy to pay for the cost of their care.
SUPERANNUATION PAYMENTS RATES AS AT 1ST APRIL 2017
New Zealand Superannuation payments are made fortnightly into your bank account on a Tuesday. What you are paid depends on your personal circumstances.
Maximum payment rates
NZ Superannuation and Veteran's Pension rates
Fortnightly Payments Before Tax Taxed at 'M' (if you have no other income)
Single, living alone $900.20 $780.40
Single, sharing $827.20 $720.36
Marrived, civil union or de facto couple
(both partners qualifies) $681.60 each $600.30 each
Marrived, civil union or de facto couple*
(only one partner qualifies) $645.56 each $570.56 each
*This amount may be affected by other income you receive. Rates at 1st April 2017 (adjusted 1st April each year)