Allowing retirees to take their superannuation overseas is unfair to those who stay, a select committee was told today. Photo/BOP Times
Legislation that would allow superannuitants to take their superannuation with them if they move overseas is not fair to retirees staying in New Zealand, a select committee was told today.
The bill, introduced last year by the Labour government, would allow New Zealanders who live overseas to get 100 per
cent of their superannuation entitlement.
The entitlement would be based on how many years a person had lived in New Zealand and would be an improvement on the current flat rate of 50 per cent.
In order to receive the full pension, the person would have to have lived in New Zealand for at least 45 years.
Retirees would also be able to move to a range of countries, rather than adhering to the current rules where they had to reside in one particular country.
At Parliament's social services select committee today, retirement policy researcher Claire Dale, from the University of Auckland, said if people moved to countries that didn't have a reciprocal superannuation agreement with New Zealand, they would receive their super as a gross payment.
That country would then be responsible for removing the tax, Dale said.
"There's no control whether or not tax would be taken off in those countries."
The legislation was not fair on those who chose to either stay in New Zealand or move to a country with a reciprocal agreement, such as Australia, she said.
More agreements needed to be made with countries such as the United States, she said.
Pension consultant Peter van Bussel told the committee the provision in the legislation that retirees had to apply for their superannuation while they were still in the country was flawed.
A retired person and their younger spouse could travel overseas, but then the spouse, once turning 65, would not be able to apply to get the pension sent to them because they were not in the country.
"They should be able to apply overseas," he said.
The legislation followed a review of the treatment of foreign state pensions paid into New Zealand and payment of NZ Super overseas.
The review looked at balancing access to retirement provisions between the country where people worked and where they retired.
- NZPA
