National to support NZ First MP's member's bill that seeks to increase the NZ Super residency requirement from 10 to 20 years 

National to support NZ First MP's member's bill that seeks to increase the NZ Super residency requirement from 10 to 20 years 

A law change to make it more difficult for some migrants and kiwi expats to get New Zealand Superannuation (NZS) is looking increasingly likely.

National has confirmed to interest.co.nz it will support NZ First MP Mark Patterson’s member’s bill, which seeks to increase the length of time someone needs to have lived in New Zealand to be eligible for NZS, from 10 to 20 years, from the time they’re 20-years-old.

Immigrants from Australia, the United Kingdom, Ireland, Canada, the Netherlands, Denmark, Greece, Jersey and Guernsey, and as well as New Zealanders who have lived in these countries, wouldn't be affected. Social Security Agreements New Zealand has with these countries mean time spent there is considered time spent in New Zealand.

Immigrants from the likes of China, India and South Africa would be affected.

Labour hasn’t committed to supporting the Bill.

Its senior whip Michael Wood said: “The Bill has not yet gone through our caucus committee process for discussion, but I expect it will relatively early in the new parliamentary session.”

The New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill is seventh on the list of members’ bills to be heard before Parliament.

All going to plan, it could pass its first reading within the next month or two. From there, it would need to go through the regular parliamentary process, which could take time and not wrap up before the September election. 

The Bill doesn’t seek to change any other parts of the NZS scheme.  

So someone would still need to be a New Zealand citizen, permanent resident, or hold a residence class visa to be eligible. And they would need to have lived in New Zealand (or the Cook Islands, Niue or Tokelau) for at least five years since turning 50.

Cost saving to Crown relatively small

NZ First leader Winston Peters last year said that while his party had campaigned before the 2017 election on extending the threshold to 25 years, he was happy to settle at 20 years to compromise with National.

National in early 2017 announced it would increase the NZS residency requirement to 20 years, but didn’t have a chance to do so before its term in government ended.  

A paper the then-Finance Minister Steven Joyce presented to Cabinet said Treasury projections indicated the net saving to the Crown would be $39 million in 2030 and $195 million in 2041. Put in context, the gross cost of NZS was $14.6 billion in the year to June 2019.

Treasury’s calculations were based on the assumption that 30% to 35% of people who would miss out on NZS due to the rule change would end up receiving another benefit like Jobseeker Support or a Supported Living Payment. It therefore subtracted this cost from the gross NZS cost saving.

There are of course a number of unknowns and variables involved in making these sorts of projections, including the possibility that immigration is much higher than Treasury is known to conservatively forecast.

Joyce recognised New Zealand and Australia have the lowest residence requirement in the OECD, with most other governments paying different rates depending on the number of years someone has paid tax in that country.

On the flipside, Joyce noted that increasing the residency requirement could dissuade potential migrants from coming to New Zealand, affecting the labour market.

Greens and Interim Retirement Commission opposed

The Green Party told interest.co.nz it won’t support Patterson’s bill.

Its superannuation spokesperson Jan Logie said: “After the Retirement Commissioner’s comments this week, we are focused on shoring up the existing superannuation system and making sure New Zealanders feel secure, and do not experience instability through lots of incremental policy change.”

The Commission for Financial Capability (CFFC) has changed tack and is no longer calling for the residency requirement to be extended, or the age of eligibility for NZS to be raised from 65 to 67.

Interim Retirement Commissioner Peter Cordtz said, in the CFFC’s three-yearly Review of Retirement Income Policies released on Wednesday, that NZS in its current form provides good value for money.

He said the government’s focus should be on preparing people for retirement by tackling issues around housing affordability and people’s abilities to work and save.

He maintained future generations of retirees would face “far greater challenges (and require far more support) than retirees today” if these issues weren’t addressed.

Cordtz said if the government disagreed with him and was concerned about the cost of NZS, he favoured increasing the residency requirement over increasing the age of eligibility.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

40 Comments

Comment Filter

Highlight new comments in the last hr(s).
19
up

The Green party who grew from the values party which formed in the days when people cared about population growth etc won't support this bill - are we surprised? The Green party along with all other party's are "big NZ" supporters regardless of the economic, environmental or social consequences. We need a new party with a new narrative.

13
up

One co-leader of the green party has six children. What part of sustainable did that person miss? One CANNOT be sustainable with six children. Modulating population growth is far more important than worrying about whether ones energy comes from sequestered carbon or renewable carbon... then again, maybe my concerns about population growth may be overcome by current events.

Have to agree with that. Hypocritical. I think that person is a waste of space. Just seems to have a permanent smirk.

So what if we have six or ten children, that is six or ten we don't have to bring into the country. What is the point of limiting our own births then allowing others to take their place?
Surely if some countries are over populated that is their problem not ours.

The trouble with your idea Yvonnelee is that NZers that have 6 to 10 children are usually sponging off NZ taxpayers to bring up those children. They are usually having children as a career choice. You know: "it's coming up to two years since my last baby so I better have another one or else Winz will expect me to get a job. Why should I care if free birth control is available? And my male mating counterparts don't like contraception cause its unmanly. Why don't I go ahead and overpopulate NZ instead of the immigrants that are willing to do the work that I don't want to do because I would rather get the benefit and bring up my ten kids that the taxpayer can pay for".
I think it's probably fair that if an immigrant is working in a skilled position that cannot be filled by a New Zealander because they're too busy having 6 to 10 children or they won't put in the effort to train for that skilled position, then I think it's ok that the parents of the skilled immigrant can be eligible for superannuation after 10 years residence. The presence of the parents will make the skilled immigrant feel more at home and more likely to make NZ his permanent home.
The real problem is that NZ is also importing riff-raff that aren't skilled and aren't prepared to work, or that try to rort the system by ripping off New Zealanders. Winston Peters is patently grandstanding because it's election year...he does it every 3 years. If Winston wants to be taken seriously then why hasn't he devoted his time to ensuring we only import serious skilled workers; wasn't that the plank he was elected on?

Don't immigrants on average have more children than native born New Zealanders? Did you notice Prof Spoonley's comments about deducing the origins of children born in Auckland from their given names?
I'm old and retired and receiving Super but maybe it is my view is old fashioned but I consider every child (whether born to native or immigrant) an investment in the future and we ought to be giving them more attention and maybe less attention to the elderly like myself.
I think your last paragraph is rather prejudiced - most recent immigrants have great work ethic; you see it at the checkout, fuel outlet, driving buses, etc - good people but just too many. The importing of serious skilled workers depends on definition of skilled - INZ think they can detect it by job description but truly it can only be measured by earnings: a chef earning $200k is skilled and a chef earning 40k isn't.

It all depends on how you fill out your application form doesn't it?

https://www.newsroom.co.nz/2019/11/11/901678/to-these-civil-servants-wor...

26
up

This still doesn't go far enough in my opinion.
It is not only about time spent here.
How do politicians think that it is fine to not collect any tax from them and still pay them pension.
We are subsidising these people.
If you don't pay in (taxes) then you can't take out (pension).
Stupidly simple for a serf like me.

Yeah and this:
'Treasury’s calculations were based on the assumption that 30% to 35% of people who would miss out on NZS due to the rule change would end up receiving another benefit like....'
Whaaat? Who are these immigrants?

Don't worry about it, this is going to clean the slate of older population in next 6 months:

https://www.youtube.com/watch?v=Gp3CuR6Zwa8

Are there any immigrants in New Zealand who do not pay taxes? I think this is a figment of your xenophobic imagination.

Recipients of the parental visa after 10 years recidence if they have not worked in NZ. They would also qualify for Accomodation Supplement on top of their NZ pension if their children host them in one of their investment properties.
If they happen to be retirees from China, any pension they receive from China does not reduce their NZ pension, unlike NZ pensioners who qualify for UK, Australian, Canadian and other country's pensions.

You are trolling for a bite.
Either that or you need to scrub up on your NZ immigration laws.
I haven't seen you on this site before so bugger off with your weak rant.

The onus is on you to provide the evidence. You’re the one making assertions without any facts to back them up.

Evidence - well I pay GST and I pay income tax on my NZ Super which I qualified for after arriving aged 54. However I don't feel too guilty since my UK state pension is deducted from the NZ Super - at present I get about $150pw from the NZ taxpayer and I pay just under 20% income tax on it.

Lets be honest: some immigrants have paid immense taxes to IRD; some have not simply because of unexpected illness. It is quite conceiveable that some immigrants have arrived; worked in low paid employment; paid IRD well below average wages for a short period and new are getting NZ Super. Although I suspect INZ are not quite as naive as they used to be it obvious that NZ is a gullible country.

The OP is arguing that immigrants don’t pay taxes yet you’re demonstrating that as an immigrant, you pay taxes.

With regards to your second comment, I agree entirely. And would add that this is also the case with citizens. There will always be some take more than they contribute in terms of tax. That is the nature of living in a society.

My argument in many comments on this website is that any comment about immigrants is misleading. Generally low paid immigration is bad for any country (except when there is a significant new resource to be exploited). High paid immigration is usually good.
Everyone pays taxes. If you were 65 and attempted to buy a pension equivalent to NZ Super you would pay over $400,000. Some immigrants such as myself arrived too late, earned to little and paid insufficient tax to cover that amount. Bear in mind the taxes we pay cover far more than our pension; there is healthcare, education, law enforcement, roads and sewers, etc. So currently my pension is being subsidised by some poorly paid hard working Kiwis - they are entitled to take umbrage.

Currently, most older people are New Zealand Europeans but our seniors are becoming more culturally diverse.

Of the total population aged 65-plus in the 2013 Census:
•88 per cent identified as NZ European
•6 per cent as Māori
•5 per cent as Asian
•2 per cent as Pacific

but that’s changing

While the older population will continue to be mainly New Zealand European, other ethnic groups will increase the diversity of seniors in the next 20 years.

It’s projected by 2036, among those aged 65-plus, the number of:
•NZ Europeans will increase from 608,000 to 974,000 people, a 60 per cent rise
•Māori will go from 44,000 to a population of 121,000, an increase of 115 per cent
•Asian peoples ( comprising people who already live here and those migrating to NZ)will increase from 43,000 to 156,000, that's a 260 percentage rise
•Pacific peoples will increase from 19,000 to a population of 50,000, a 160 per cent increase.

*Statistics are based on national population projections by age and sex (2016 base) from Statistics NZ.
Credit: the interpreted data on this page has been sourced from Statistics New Zealand http://www.stats.govt.nz/

I think they will all settle for a middle of the road 15 years. It will be good if they start collecting a lump sum of say $30/50k from each successful PR application from now on and invest that in the Super Fund.

When I started work in the UK pension was pro rata on the number of years you had paid social security up to 40; a decade ago it was changed to 30. So my landlady a South African Jew had to work to supplement her pension which was for her 20 years living in the UK. Seemed reasonable to me. I would make it 25 years (rare for me to agree with NZF) but permit annual payments from overseas for Kiwis working abroad (this is similar to the UK) and make the Super payment proportional to the years an immigrant has paid NZ income tax.
At present 9 years 11 months and you get nothing and 10 years 1 month you get the full amount - something is wrong and it ought to be put right.

Cost saving for our immigration economy

The vast numbers of working age native kiwis living off the government tit is far more annoying/concerning to me than issues surrounding immigrant kiwis getting the pension. I’m also far more concerned about proposals to means-test the pension despite the fact that I’ve paid for someone else’s pension all my working life as well as paying into the NZ Super Fund. If you want to means-test, pay me back what I’ve put in and make KiwiSaver compulsory. I’m in my early 30s and I’m pretty sure I won’t be paid a pension.

I agree, means-test Super and you penalise those who have been careful. It certainly mustn't be retrospective. Agreed immigrant Kiwis getting pension is not a major hit to our economy but at present it is unfair: 9 years and you are 100% out and 11 years and you are 100% in. It is worthwhile tidying it up for the sake of simple fairness but they should avoid penalising existing immigrants with changes made since they decided to gain residency.

Yes, I agree that the 10 year system isn’t fair and that existing immigrants should be exempt from any changes. I’d support some sort of pro rata system for immigrants that have been here for less than 20 years.

I agree, means-test Super and you penalise those who have been careful.

That argument applies equally well to the dole.

Super is basically the only welfare benefit we hand out regardless of need, and it's over 50% of our welfare benefit spending.

That said, I'm not against it...it's simply context we need to keep in mind when we discuss other spending.

I am confused. If by not meeting the criteria e.g. Less than 10 years in NZ or less than 5 years after 55 y.o., does this just mean that your right to receive Super will be delayed until you do meet the requirements? I am a NZ citizen and worked in NZ from 18 y.o. til 46 y.o. - If I do not come back to NZ until I am 62, then I need to just wait until I am 67 - is this correct?

I suspect this is the next step. Whoever is in government will claim Super is no longer affordable and must be means-tested; there will be no real opposition and it will be the law.

12
up

No brainer.
But should be 25 years.
At least 20 years is much better than the ridiculously short 10 years.

Agreed
I know of a person who migrated here when 55. He had worked in a number of countries on contracts over a period of 20 or 30 years. As he had been absent from his native country he would qualify for little so looked at alternatives; NZ was chosen simply on the basis of favourable superannuation conditions. As reasonably financially secure, he worked casually - not applying specific skills - when he migrated here and was due to qualify at 65 (including piggy backing his wife who was 10 years younger and did not work).
He did trip-up a little; he travelled overseas for a month or two each year (on different national passports) but I think dobbed in and periods overseas not countered as qualifying residency.
He simply chose to come to NZ at 55 with the intent of immediately being semi-retired, as we offered the best superannuation which was universal and did not rely on any personal contribution other than simply 10 years residency.

I see the point your making that in this case not much income tax was paid on wages. But consider, this person was making an income somehow (interest, dividends, rental income, capital gains...) some or all of that may have been taxible in NZ. He was then also spending money in the economy, paying GST, fuel tax etc. Any income or capital he brought into the country to support himself would have economic benefit here. While I wouldn't nessacarily argue that the taxpayer was getting a great deal, he may infact have been a bigger contributor (tax wise) than first meets the eye (even if he didn't work for a wage) and be of overall economic benefit. Some native NZers probobly contribute much less in their lifetimes and still qualify for a pension. Of course it would be even better if he was here 20 years before getting super also!

Assume a scenario where an expat is sitting on NZD100K or 200K in cash. That cash is in a NZ bank. Given how the NZ economy operates, those savings are effectively providing bank capital for the property market, which appears to be the be-all-and-end-all of how NZers think about investing and growing wealth. Now let's say that cash is sitting there for 10+ years, to what extent is that expat contributing to the NZ "economy"? IMO, to say that this person is not contributing in any way doesn't make sense. So in some ways, the expat is almost like Mexican wetbacks or the Filipino diaspora.

This is just a distraction from the real issue. I just can’t see how NZ super can work if we retire at 65. I started work at 22 after heavily subsidised tertiary study, if I stop at 65 I will have only worked 43 years. If I then live to say 100 (seems quite likely with the probable improvements to health care), I’ll spend 35 years on NZ super. I’ll also suck up a huge amount of money in health care and rest homes. Even though I currently pay a lot of tax it’s possible I might end up taking more than I give. A person on a lower income than mine will almost certainly do so, and then some people don’t work at all.
Back in the old days when you started work at 15 and died at 70 it was feasible. Surely it can’t be feasible now.

It is only feasible by taking money from other govt activities. As a pensioner I would prefer lower Super (virtually my only income) and all cancer drugs funded by Pharmac and no waiting list for hip and knee surgery. My preference is for a universal child benefit and although very worthy and IMHO a good investment it would be expensive.
The solution is easy - stop talking about what is the qualification age and start talking about the average years of entitlement. So lets give 15 years pension on average; since lifespan is 81.6 then entitlement today would be 66.6.

see https://www.stats.govt.nz/tools/how-long-will-i-live
for example for a 30 year old female:-
93 years (assuming low death rates)
91.2 years (assuming medium death rates)
89.3 years (assuming high death rates)

So why are we planning for 28 years of pensioned retirement paid for by 40 years of tax paid employment?

I mean...good? We have a massive imbalance between our infrastructure and rate of immigration population growth which is pushing up the costs of living for Kiwis who actually live and pay taxes in NZ. Throwing returning ex-pats into the mix who expect everyone to have maintained the state in their absence so they can get a pension after well-paying jobs overseas is a recipe for disaster. If we had plenty of houses and transport and hospitals to go around, then fine, but the last thing we should be doing is making it easier for people who have spent the bulk of their working, taxpaying lives somewhere else to draw down a weekly stipend from the state.

Seems OK as a first step but wouldn't want to see it applied retrospectively. Ultimately I'd like to see a formulaic payout based on the number of years you've been resident and working (or on maternity leave) or lived in a country with a reciprocal arrangement.

Still paying at the 33% rate and NZ will never pay a penny in Super for me or my Kiwi wife, who was only out of the country for 27 years. US Social Security is based solely on "user pays" system. Thus each year 14.6% of my income to a maximum annual limit (currently about US$120,000). came out of taxable payroll-50% employee/50% employer--or 100% if self employed as I was.) The lowest quartile pay almost no income taxes and Social Security taxes are the much higher amount that comes out of their wages packet. That is why the gig economy for young people will be so detrimental to their retirement health if they are not paying higher substantial payroll taxes, and American's earning under US$50,000 per year generally pay higher Social Security & Medicare payroll taxes (Medicare is socialized medicine once you retire) than they do personal Income Taxes.
Bottom line as of right a Married couple can elect to draw against the higher earning partner's social security account upon retirement. Thus a stay at home Mum who earned little for 25 years and would have contributed so little that her pension would be less than half of a Kiwi Super instead has the right to collect 50% of her husband's account. Thus my 100% +her 50% of my monthly Social Security makes us both more than ineligible to collect any NZ Super at all despite nearly 20 years of working in NZ. There are likely 10,000 or more retired permanent residents like us throughout the country right now from many other countries not just the USofA. Many are Kiwi spouses.

Majority of migrants elderly parents from China, India & Philippines - will steer their off springs that bring them here to vote... any party that would like to retain the current status quo.

it is a shame we have become a bolthole for those looking for a cushy retirement.australia cancelled its reciprocal agreement with the UK because they refuse to index their pensions and maybe we should do the same.they freeze it when you leave and let the host country provide for inflation.after 10-15 years their contribution diminishes and ours compound.so they got a lifetime of taxes and we get to provide for your old age.

The current Act says: "8(b) has been both resident and present in New Zealand for a period or periods aggregating not less than 10 years since attaining the age of 20 years; and"

This amendment bill just says: "In section 8(b), replace “10” with “20”. "

There is no provision in the amendment for a gradual increase in the number of years required, so does that mean an immigrant who is claiming NZS because they have been here 15 years will suddenly stop being able to because they are no longer entitled?