National shadow treasurer Andrew Bayly. Photo / Mark Mitchell
National shadow treasurer Andrew Bayly. Photo / Mark Mitchell
A bill doubling the residence test to qualify for New Zealand superannuation from 10 years to 20 years has had its start date extended to allow more planning for people approaching retirement.
The bill will make it tougher to qualify for NZ Superannuation, the universal state-funded pension paid to people aged over 65. The age of eligibility is not being changed.
The bill provides for a staggered approach, with annual increases in the residence requirement.
As it emerged from the finance and expenditure committee, it would have affected all those turning 65 after July 1 next year.
But after a request from the Retirement Commissioner, Jane Wrightson, the Government and the sponsor of the bill, National's Andrew Bayly, agreed for the start date to be pushed out by two years.
Whether born in New Zealand or overseas, it will require people to have been in New Zealand for a minimum of 20 years since the age of 20, instead of the current 10-year minimum.
The new law will affect all those who turn 65 on or after July 1, 2024 and they will face more than a 10-year eligibility, depending on their birth date and the phasing.
Those who turn 65 on or before June 30, 2023, will still face the 10-year eligibility rule.
Only those who turn 65 on or after July 1, 2042 will face the full 20-year requirement.
The current requirement to have spent at least five years in New Zealand since the age of 50 will remain.
Age as at June 30, 2023, and residence requirement (after age 20) 64 and over ….10 years 62-63 ... 11 years 60–62 ... 12 years 58–59 ... 13 years 56–57 ... 14 years 54–55 ... 15 years 52–53 ... 16 years 50–51 ... 17 years 48–49 ... 18 years 46–47 ... 19 years 45 and under ... 20 years
The bill, the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill, has passed its third and final reading in Parliament. It was supported by Labour, National and Act but opposed by the Greens and the Māori Party.
The residency requirements apply equally to people who were born overseas or born in New Zealand. They also apply to the Veterans' Pension.
The bill was first introduced by former New Zealand First MP Mark Patterson but the party was not returned to Parliament at last year's election. He asked Bayly to take over the bill which, at that stage, did not have a staged approach to its implementation.
Bayly said the Retirement Commissioner had been particularly concerned about how it might affect people close to retiring.
Social Development Minister Carmel Sepuloni. Photo / Mark Mitchell
The minister responsible for NZ Superannuation, Social Development Minister Carmel Sepuloni, agreed to the request and moved an amendment in the committee stage of the bill pushing out the start by another two years.
"We have struck a nice balance. We have now got a transition where people close to retirement won't be affected by the change but those who are affected by the change can now increasingly plan for their retirement and have those discussions with their employer if that's the case and make arrangements accordingly."
Bayly said it would not have a huge financial implication "but it is one step to making it more sustainable".
Australia was the only country in the OECD with a 10-year test but it was means-tested. The average in the OECD is 26 years.
National superannuation is paid currently to 15 per cent of the population, and that would increase to 20 per cent by 2040 and to 25 per cent by 2060.
The bill does not disadvantage the realm countries of Niue, Cook Islands and Tokelau, and allows residence in them to count towards the increased time requirement.
Refugees have been accommodated as well to account for them having no control of when they are accepted into the refugee quota programme. It retains the 10-year residence requirement for a refugee or protected person who becomes a resident at age 55 or higher.
Retirement Commissioner Jane Wrightson. Photo / Michael Craig
Labour MP and chair of the finance and expenditure committee Duncan Webb said while the bill could be pitched as managing ongoing costs, "the more important point is to make sure we have a framework where people coming to New Zealand essentially understand that they can't walk in at a relatively late stage and get all the benefits of people who have been in New Zealand, contributing to society in all kinds of ways for pretty much their whole life".
He said it was surprising that the Retirement Commissioner had not made a submission to the select committee but raised concerns later.
Green MP Jan Logie said now was not the time to be "picking away" at the superannuation scheme.
"It will push people into a welfare system that will have a lot more hurdles."
There was no research backing the intention of the bill to make superannuation more sustainable "but it will increase hardship for a group of people, just vibes, just harmful, racist, ageist, xenophobic vibes that will result in hardship for migrant families for years to come."
