Labour and National to support first reading of NZ First bill to increase the NZ Super residency requirement from 10 to 20 years 

Labour and National to support first reading of NZ First bill to increase the NZ Super residency requirement from 10 to 20 years 
Image sourced from Pixabay

A bill that seeks to make it more difficult for migrants and kiwi expats to get New Zealand Superannuation (NZS) is expected to pass its first reading in Parliament this week.

Both Labour and National have confirmed to interest.co.nz they will support the first reading of NZ First MP Mark Patterson’s member’s bill - the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill.

The bill 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.

It proposes the change takes effect immediately, meaning some migrants on NZS would have this benefit taken away from them. Other migrants or kiwi expats who made plans to move around the world on the assumption they’d qualify, might also be disappointed.

The bill could however be tweaked when it goes through the select committee process after its first reading. It would need to pass an additional two readings before becoming law.  

Immigrants from Australia, the United Kingdom, Ireland, Canada, the Netherlands, Denmark, Greece, Jersey and Guernsey, as well as New Zealanders who have lived in these countries, would be exempt. Social Security Agreements New Zealand has with these countries mean time spent there is considered time spent in New Zealand.

The bill doesn’t 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 for NZS. 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.

The bill says: “Currently, a resident of 10 years is entitled to full New Zealand Superannuation without any requirement to contribute to the economy. Globally, 10 years is an unusually short time for full entitlement to a universal, non-means tested pension at age 65.

“Considering average life expectancy, New Zealand Superannuation is paid for 20 years, which is up to $480,000 per person at current rates.

“This proposal contributes to the sustainability of New Zealand Superannuation and addresses fairness to New Zealand superannuitants who have lived in New Zealand their entire lives.”

Treasury in 2017 projected changing the threshold from 10 to 20 years would save taxpayers $39 million in 2030 and $195 million by 2041.

Put in context, the cost of NZS was $15.5 billion in the year to June 2020. In the year to June 2021, it’s expected to reach $16.3 billion - the equivalent of 5% of gross domestic product (GDP).

Treasury’s calculations were based on the assumption that 30% to 35% of those who’d miss out on NZS due to the rule change would end up receiving another benefit. It therefore subtracted this cost from the gross NZS cost saving.

It recognised there were a number of unknowns and variables underpinning its projections.

The Commission for Financial Capability in February told interest.co.nz it had changed tack and no longer supported extending residency requirements.

Interim Retirement Commissioner at the time, Peter Cordtz, said 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.

Cordtz said if the Government disagreed with him and was concerned about the cost of NZS, he favoured increasing residency requirement over increasing the age of eligibility from 65 to 67.

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?

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56 Comments

40
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That is so sensible and so overdue. Hells bells can any reasonable ordinary NZr really understand and accept firstly why there has had to be this open slather immigration in the first place, why it carried on and on and on, and secondly why all the incomers were gifted this unearned entitlement so readily out of the taxes of generations of existing citizens earnings. Oh was that though actually the political Catch 22, ie the incentive for immigrants as opposed to the disincentive of no immigrants?

17
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This draft has taken 30 months to get to this point. Unbelievable. I dont agree with the exceptions, if you haven't lived and subsequently paid taxes in NZ for any of the 20 year blocks then you shouldn't qualify for NZ Super. As stated, other countries like Australia make sure you have paid the appropriate taxes to quality for their super. Why don't we do the same. I have family who have lived their for decades and they couldn't give a toss what happens in Enzed.
The existing and past governments think kiwis in foreign places are going to cast a vote for them in an election so look after them financially. I would say the vote amount would be very low.

21
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Like so many other things, this should have been done years ago.
There are instances where students come here, get a job, get their old ailing parents in and then scarper. All part of their plan.
Naive NZ politicians. But it sounds like they have finally woken up to this.
Except perhaps that they can get onto some other benefit as mentioned. There will be legitimate cases but overall, that needs looking at too.

Can you give some figures?

This happened under John Keys government didn't it. He realised he made a huge mistake and shut it down in his last term.

Yes. But then Labour resurrected the policy of allowing a newly minted resident to import their parents.

Such a privilege should only be extended to citizens.

Another tick on something The Chinese National Party wouldn’t do. Tis why I’m a floating voter and why I’m still relatively satisfied with many of the changes labour has delivered. Still waiting fo National to do something new directionally after leadership change.

Keep waiting.

And waiting.... Oh isn't Nationals main policy to sell NZ out to a dictatorship as quickly as possible to they can reap the finical benefits for themselves.

I agree with you. What is your position within the labour party though?

I don't understand why Muller is so obsessed with opening up the borders considering the new outbreaks of Covid. I realise europe has opened its doors but is this sustainable.

That’s easy, you don’t understand because, to me anyway so far, he hasn’t demonstrated much logic or much thinking.

Drrrrrr.....

It's already a requirement of those 'special' countries mentioned ( Australia etc) that any superannuatant residing in NZ has to apply for whatever portion of pension is available from the countries that a person worked and paid tax in ( say, someone who lived and worked in Australia for the proposed 20 years, has to apply to them and may be given a pro-rata Aussie pension if they are within Aussie guidelines that is then deducted from the NZ payment). If they don't apply to the overseas country, the NZ pension can be withheld.
So just a welcome extension of what we already have.

16
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Ho hum, empirical evidence would suggest several outcomes.

1. The government passes the wrong law.
2. The government passes the law, but it's so error prone, government needs pass it again in a weeks time (like they did tonight).

Is it any wonder the PM gets so rattled she needs get on facebook in the evenings in order to "clarify" a few facts.

#ominshambles.

*YAAAAWWN*

Never mind Henry - you will be waving your fist (and shouting) at clouds for another 3 years come September.

Henry do you feel a bit miffed due to some immigrants that are not included in the exemption like the US and China?

13
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Excellent. If you never paid tax here why should you every think you can put your hand out?

12
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A good starting point, hugely overdue. Better late than never.
A threshold of 25 years would have been more appropriate, but 20 years is much better than the current system.
Next step, assuming that money does not grow on trees (contrarily to what the Greens may think) it would be great to have an overhaul of the current bloated welfare system so to make it more efficient, selective and targeted at the really needy. But I am asking too much, I guess.

.. don’t pick on the greens. All central banks think money grows on trees.

LOL. Very true indeed.

The main cause of poverty and inequality in NZ is overpriced housing costs. If housing was more affordable, the welfare system would have a lot less to do.

Very true. I strongly agree. Moreover, landlords are subsidized by the taxpayers in more than one way.

10
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Wasn't it Winston First who wanted to exclude the aged parents of permanent immigrants from being allowed in as well during an election campaign one or two elections ago? Nothing about that in this Bill then?

Depends on how you look at it. Those parents may well be permitted to come in, but they won't be able the get NZS unless they've been here for 20 years. So any permanent resident who wants to bring their parents in will likely have to provide evidence that they will be able to support them.

If they have sold a house in London when they left then they can easily afford to pay their own Super.

I don't know why we allow permanent residents to bring in all their family members.

In most other reasonable, sane, logical countries, this benefit is only offered to citizens.

It's one of the "rewards" if you like, of becoming a citizen of that country.

If, as New Zealand continues to allow, the distinction between a citizen and a resident is to be blurred, then what is the point of holding citizenship of a country?
There should be *some* benefit to being a citizen, that would not apply to residents.

I would suggest that sponsoring others to come into the country should only apply to citizens. Otherwise when the going gets tough, the residents are the first to scarper.

However, in this Covid19 infected world, it's the other way around. Residents who haven't been in New Zealand for many many many months (and indeed, only come back for their mandatory 1 day every 2 years to renew their visa) are now flocking en masse to NZ in order to take advantage of our free healthcare and welfare which in many instances, is not offered in their own country.

Our own Bill of Rights at s 18 specifically offers the "right to enter NZ at any time" to Citizens! Nothing about residents having that right!

The ongoing discussion about charging "residents and citizens in breach of the NZ BORA" is factually wrong. Residents do not have the right of free entry in the same manner that Citizens do.

I agree with most of your post.
However I think that the current immigration laws make no significant difference between permanent residents and citizens regarding the right to enter and live in NZ. But I am no immigration expert, so I might be wrong.

Section 18(2) of the Bill of Rights states:

"Every New Zealand citizen has the right to enter New Zealand."

Section 73 of the Immigration Act 2009 states:

The holder of a permanent resident visa is entitled -
(a) to travel to New Zealand at any time...
(b) to be granted entry permission
...

there is a clear distinction there in terms of the right to enter for Citizens, and the grant of entry permission to PR.

The Immigration Act also provides further for the Government to impose conditions on any such permanent resident visa as well. So in the midst of a raging pandemic, there is the option there for the government to pass a bill limiting the entry conditions of PR Visa holders to people who were living in NZ and paying taxes within the last 6 months, for example. Now, this is completely different to limiting entry for PR visa holders already overseas, and is NOT a mechanism to deport PR visa holders already in New Zealand right now.

It's not a perfect example by any means. But when 500,000 PR visas were granted in the last 5 years (and how many more before then!) in conjunction with the estimated 1 million Citizens still overseas, that's a LOT of Citizens AND Residents all flocking back to NZ if the pandemic continues.

Well, by the time I am able to retire, the scheme will be means-tested so I definitely won’t be eligible.

You should have KiwiSaver, essentially, to fund your retirement. If NZ super is available then it should top you up providing you aren't earning $300k like 3000 of the current superannuitants are claiming. Stat comes from outgoing Super Commissioner, last year.

And always with the proviso that a Wealth Tax doesn't hollow out that KS (and bank account, and other assets).....

Thank God I been here more than 20 years!
Same time don't want to argue that this is good or bad for other people.

In the UK pension is pro rata to the years of being resident to a max of 30 (used to be 40). So work in UK for 16 years and you get 16/30 of the pension. Why not similar here? I qualify for the full NZ super but if I had arrived a year later it would be zilch. It is an arbitrary system (like many other NZ benefits). NZ should introduce proportionality.

I paid NZ tax for 11 years before retiring at 65. I'm middle-class wealthy but never paid anything like $480,000 tax in my 11 years. Fo fairness sake elderly immigrants should be required to contribute to the cost of Super.
For example in my situation I ought to have paid $200,000 extra for my residency visa. In fact when investigating residency I naively assumed to the $200k required for the point count would be paid to the govt not just sit in my bank account. On second thoughts who was most naive me or the govt of NZ?

The pro rata pension thing seems so sensible. I thought that it was NZ First policy - 1/40th of the pension for each year of residency between 20 and 65. Also with no deductions for any super/pension earned elsewhere ( OZ, UK etc).

There are nuances. For example how relatively expensive were the years back in NZ? I came back to NZ with my children's schooling largely done and we have never been on a benefit. In the years to 65 we will have well and truly paid our share. Should we look at NZer who have not had any paid work in their lifetimes? To be honest, I have a far bigger problem with those that skip across the ditch and then send their children back here to Uni, especially for courses like Medicine. Ultimately, we need to stop country arbitrage shopping, not just with Super but other tax payer provided services. Disclosure: We used NZ birthing facilities for all our children, so am somewhat hypocritical.

The pro-rata system looks brilliant. Why did not our politicians think about implementing such system ?

13
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I believe the Green's new proposal for a universal wage has caused the Immigration Department's computer to crash under the weight of immigration inquiries today. I believe that 2 million preliminary inquiries were received before the computer crashed at 11 am. At least 500,000 inquiries were received from India, Bangladesh and the Philippines respectively, and the number received from the Pacific Islands was so great that the Green's party had to field calls from the Tongan, Samoan, and other Pacific Islands' Prime Ministers pleading with them not to go ahead with that policy as it would strip these small nations of most of their populations and render their economies unsustainable. The Tongan Prime Minister was particularly distraught at the prospect of only the Royal Family remaining on the Island.
Those Pacific Islanders, Asians, and other nationalities already residing in NZ have meanwhile been lobbying the Labour government not to increase the residency requirement from 10 to 20 years as they had already done their domestic budgets on the basis of the 10 year requirement, and were relying on the parents and grandparents, and various aunts and uncles, and great-aunts and great-uncles, all receiving super on the existing basis; extended families would unfairly have to keep their elder relatives in all manner of congested bedrooms, garages, sleepouts and other out-buildings for a further 10 years if the new 20 year requirement came into force.
One could say it was a very busy day in Wellington today.

But, but, but, the extra boost to the economy from bringing in new people and paying them, whether via universal wage or super, will more than pay for itself as it sets off a virtuous circle of spending. MMT is just so seductive.

Hey more people in garages is a necessary evil if we hope to maintain life's true purpose and kiwi dream - steadily increasing house prices.

You forgot the massive increase in number of refugees promised by the Greens.
And 1.4 billion Chinese wanting to be reunified with their NZ relatives (or MPs)
And quite a few others..

I agree with your comment. But I would like to add that there is no chance in hell that these nutters (the Greens) will have their crackpot policies ever implemented. Theirs is only electoral posturing: they know perfectly well that they represent only a negligible part of the population and that no mainstream party will ever accede to their extreme views.
I still don't know if they are beneficial to the Labour party (by making them seem moderate and reasonable by comparison) or damaging (by scaring the center-leaning electorate away from the nightmare prospect of a government where the Greens might have a significant voice).

I agree their policies may scare some rich people with socialist leanings into reverting back to the comfort of National

What does the ACT party think about this? I am surprised National supports this; maybe they feel guilty.

If a law or policy makes complete sense, every party should be on board.

But I also understand that as soon as Labour (or someone) waves their banner to claim that they are fixing and saving the country with this policy, and while doing this claim that the previous government failed, then the minor parties have a reason to get up in their face.

"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."

Doesn't this mean that the Retirement Commission think government needs to crash house prices while improving financial literacy?

I don’t really think the proposed legislation quite closes the circle. I think a fairer and more sustainable approach would be to divide the period from age 20 to 65 into months (540 to be exact). Then for every month that a person (regardless of colour, creed, religion, citizenship, etc) was resident in New Zealand for tax purposes, they should be entitled to 1/540th of the regular Super payment from age 65, for as long as they continue to reside in New Zealand. All it takes is a little information sharing between the IRD and Immigration. Job done!

Another administrative nightmare that would be. Universal pension is what we have and should stay at that.

I disagree. Not only would simple info sharing between IRD & Immigration quickly confirm an individual's "resident for tax purposes" record, but a simple computer programme would also calculate automatically the ??/540ths attributed to that individual (or couple). Where's the rocket science in that? Also, I fail to see how this, in any way, jeopardises the concept of Universal Pension.......

I disagree about fiddling with the residential formula- we still heavily rely on migration and also have a huge diaspora. If we are worried about the cost, just do what most OECD countries (incl Oz) do - means test the super payments. The well-heeled don't need a benefit at 65, it's crazy esp when there is no cgt (again we are an OECD outlier here) . Stopping taxpayer handouts to the top 2% for example would save far more - 300 mill per year.

No where near strong enough. What you receive should be a proportion of the total rate, reduced on a pro rata fraction of 40 years for the number of years that you are a full tax paying New Zealander.

Can we have cameras on all commerciql fishing boats in operating in NZ waters as well.

NZ First have been killing this proposal, so whilst the Super bill makes sense we also need to get other stuff done that they are opposing.

Yes, like in the US where you can attach some legislation to a bill that is about a completely different thing.

So at the end of this superannuation bill, there's a small sentence saying "Cameras will be installed on all commercial fishing boats in NZ waters within 6 months."