Expat Pension Grab Inquiry Shelved

By Retirement
New Zealand

An investigation into the controversial practice by New Zealand to grab a slice of an expat’s pension has been shelved because the cost is too much.

The pension grab has been a contentious point for years because it takes the pension which is paid by a foreign government – built up after years of working and making contributions – to help New Zealand’s own superannuation fund.

The issue also affects New Zealanders who are returning home after working abroad.

The country’s Social Services Select Committee was gathering evidence over whether an inquiry into the practise would be justified.

Now the majority of committee members have said that there isn’t the money available to undertake an inquiry.


A report from the committee revealed that its six National MPs outvoted their five fellow members to bring the inquiry to an end.

The report stated while the MPs were sympathetic to the system’s anomalies there were ‘prevailing fiscal constraints’ to investigate further.

In its evidence to the committee, the Ministry of Social Development said that the deductions ensured that New Zealand’s pension’s policy was ‘fair’.

The ministry said expat pensioners who received their overseas pension as well as the full rate for New Zealand’s pension would be at a financial advantage compared to those who had lived and worked in the country all of their lives.

The ministry acknowledged too that while the total sum involved was large – it’s around £133 million – the actual amounts being deducted were ‘relatively small’.

There are 64,662 expats and returned Kiwis who receive an average of £2,000 a year from their foreign pension and of those, 51,300, were having deductions of less than £56 per week.


The ministry also pointed out that New Zealand is also paying out about 80% of pensions for those Kiwis who had retired overseas.

However, one vocal critic is Labour MP Jacinda Ardern who sits on the Social Services Select Committee and she said that while a change to the country’s policy would cost ‘hundreds of millions of dollars’ it would be the right thing to do.

There is also an issue with the country’s system which discriminates against New Zealanders who retire but have a foreign-born spouse.

The rules for New Zealand Superannuation, or NZ Super as it is known, have been unclear but now make clear that it is a universal benefit but not to anyone in receipt of an overseas pension.

That includes the spouse of someone applying to the NZ Super who is married to someone receiving a retirement income from overseas.

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