Diana Clement: How to avoid being caught out by NZ Super rules when retiring overseas

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NZ Super recipients can travel for up to 26 weeks of the year and still retain their full entitlement. Photo / 123RF
THREE KEY FACTS
Diana Clement is a freelance journalist who has written a column for the Herald since 2004. Before that, she was personal finance editor for the Sunday Business (now The Business) newspaper in London.
OPINION

Kiwis considering retirement overseas have voiced their concerns about harsh rules that see
some stripped of the NZ Super they believe they’ve worked a lifetime for.

Last week’s deep dive into NZ Super portability struck a chord with readers, who came forward in roves with personal experiences and opinions. Those comments, emails, texts, messages, and phone calls, ranged from frustrations over losing all or some of their NZ Super after moving overseas, to perceived unfairness of being means tested if they moved to Australia.
NZ Super recipients can travel for up to 26 weeks of the year and still retain their full entitlement. But if they want to retire permanently overseas they have to apply for NZ Super “portability” before leaving New Zealand.
That’s easier with some countries than others. Kiwis who move to Australia will have their NZ Super cut off if they aren’t poor enough to qualify for the means- and asset-tested Australian pension. A wealthy (or poor) Aussie moving here and qualifying through residence can get full NZ Super.
There were a variety of other complaints. Reader “Harold” waited several months after applying, and had to leave the country unsure if his super would simply be cut off. Paula Rātahi-O’Neill, general manager centralised services at work and income, advised that people apply six weeks before leaving New Zealand and the department’s timeliness measure for the work was 20 working days.
Harold and his wife found Work & Income’s International Services section difficult to deal with and had their NZ Super cut off twice while sailing the world. One form had no return address or email on it, he said. Paula Rātahi-O’Neill said Work & Income required clients to give a postal address to make sure they’re receiving forms.
There was no room in my original article to cover one more fish-hook that can catch retirees by surprise in our globally mobile world, that’s the pro-rata payment of NZ Super if you haven’t worked your full life in New Zealand from age 20 to 65.
Someone who lived 50% of their working life in New Zealand, and for five years after the age of 50 would get 100% of NZ Super when retiring here. If the same person relocated overseas they’d most likely only receive 50% of NZ Super in most countries.
“Graham”, my original case study, is annoyed that the amount of NZ Super he qualifies for if he wants to move overseas is reduced by 30% because he spent some of his working life from age 20 to 65 overseas. His years working from age 17 to 20, don’t count and nor does still owning a New Zealand company, which pays tax here.
People who apply for portability of their NZ Super will also find they no longer qualify for the Single Living Alone Rate for NZ Super. Nor are they entitled to Disability Allowance and Accommodation Supplement. The highest rate for payment is the single sharing rate, said Rātahi-O’Neill.
Reader “Aaron” pointed out that only New Zealand citizens, not residents, can apply for the Australian age pension, meaning they can’t get NZ Super over the ditch, even if they are below the income and asset tests. Often this affects non-Kiwi-born clients, he said.
Some readers were concerned that retirees living overseas and receiving NZ Super weren’t spending that money to the benefit of our country’s economy. That works in two directions, with retirees here from overseas contributing to our economy. Kiwis who retire overseas free up houses and may not use the New Zealand healthcare system.
While retirees can find it harder or impossible to get their NZ Super paid out in Australia, the UK and a handful of countries New Zealand has a Social Security Agreement with compared to most countries in the world, there are special rules for most Pacific Islands, making it easier.
David, an advocate on behalf of a retiree who was living in New Zealand but had worked much of his life in Australia, was concerned that New Zealand was not clawing back money from the Australian Government. Once his client had turned 67, he should have had to apply for the Australian pension, but New Zealand didn’t get him to complete the forms until alerted.
Finally, one reader complained that I linked to very complex information on the Work & Income website. It’s a complex topic. Te Ara Ahunga Ora Retirement Commission’s policy paper at Tinyurl.com/SuperPortability is another long, but useful read for anyone concerned about their options.
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