Don’t drop the ball on this one Jacinda

Along with many others, the Retirement Policy and Research Centre has worked assiduously for more than a decade to alert the public, policy-makers and politicians to grave anomalies in the policy for superannuitants with overseas state pensions.

Of these multiple anomalies the most egregious is the ‘spousal deduction’. This policy reduces a person’s superannuation when their partner has an overseas pension. A woman could have lived and worked all her life in New Zealand and entered into a second or third relationship later on only to find she gets less NZ Super, or even none at all, and so loses precious financial independence. Increasingly, men who marry women with long working histories from other countries are affected as well.

Fobbed off with promises for years that change was imminent, usually after yet another report, a great deal of bitterness and cynicism festered. Early in 2018, three affected superannuitants, at great personal cost, went to the Human Rights Review Tribunal. In an expensive week-long court hearing, lengthy and banal filibuster submissions flowed from the Ministry of Social Development to justify this indefensible policy. More than two years on, there is still no decision from the Tribunal nor any hint of one pending. What an indictment of the justice process in New Zealand.

But then there was a ray of hope. This time last year it seemed we could at last break open the champagne. There had been an announcement buried in the 2019 Budget that the unfair spousal deduction policy would be removed. “From 1 July 2020, your NZ Super or Veteran’s Pension won’t be affected if your partner’s getting an overseas pension."

Change appeared to be coming, not because the spousal deduction was a human rights abuse (as Prime Minister Jacinda Ardern described it when in Opposition in 2015), but because the system needed ‘modernisation’.

Since the Retirement Policy and Research Centre became involved back in 2008, many of those affected by the spousal deduction have since died, and many others in their 70s and 80s are worn out by their fight for justice. So it was unfathomable that once the government had agreed it was unjust, there would be no redress until July 2020, and furthermore there would be no backdating.

We are talking about a policy that at most affects 500 people with minuscule fiscal implications. There was an appropriation in the 2019 Budget of $2 million to fix this anomaly, so why not just do it? Was it too early to break out the champagne? Worryingly, the minister began to hint it would be only implemented in July if the legislation could be passed in time.

Then the bombshell arrived this week. Blaming Covid-19 work pressures at the MSD, the bill has been delayed until November, i.e. until after the election. Worse, even if it passes, there will be no backdating to July let alone prior to that. What a contrast to Covid policies that can be implemented almost overnight.

The Government can’t blame Winston Peters for this one. While New Zealand First has not been a strong voice on this issue over the years, he was first in the media with the news and has pre-emptively exonerated himself.

“New Zealand First is disappointed that the removal of the spousal deductions has had to be delayed by the Ministry of Social Development, due to Covid-19 workload pressures. New Zealand First has always stood for fairness when it comes to superannuation so we are very committed to removing what we consider an unfair deduction from New Zealanders who happen to have partners with an overseas pension.”

It is beyond time for the Government of kindness to put the well-being of people first, and not delay the removal of this anachronistic and heartless, foolish, petty policy. Generous compensation must also be a priority.

Susan St John is Associate Professor of Economics in the Business School and Director of the Retirement Policy and Research Centre; Dr Claire Dale is research fellow at the Retirement Policy and Research Centre in the Business School.

This article reflects the opinion of the authors and not necessarily the views of the University of Auckland.

Used with permission from Newsroom Don’t drop the ball on this one Jacinda 5 June 2020.

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