No one in New Zealand is allowed to receive two pensions. As a result, Swiss living in the South Pacific country receive considerably less pension income. This is felt to be unfair, and many of the people involved have found a way around it.
“In the past five years I’ve been trying every approach I know to find a solution for this problem faced by our Swiss pensioners,” says David Vogelsanger, Swiss ambassador to New Zealand.
“Although the problem is well-known to the parties in power and was even an issue in the last elections, the necessary reforms have been postponed indefinitely.” Vogelsanger, whom swissinfo.ch meets at the Swiss embassy in windy Wellington, sounds glum.
From his 12th-floor office he has a magnificent view of the bay and the port where generations of newcomers immigrating to New Zealand have come ashore. Among those immigrants have been numerous Swiss. At present there are about 7,000 of them, and of those, some 1,200 have reached pensionable age.
More than 80 years ago New Zealand introduced a universal old-age pension. The government provides the Superannuationexternal link (Kiwis call it the “Super”), which is due to anyone who has lived legally in the country for ten years since they were 20, with five of those years being after their 50th year.
Getting this pension, which is paid for out of tax revenues, does not depend on length of paid employment, nationality, income or social status. A millionaire is entitled to it, as is someone who has never worked.
The law expressly forbids drawing two old-age pensions. Besides the New Zealand pension, no one is allowed to draw a pension from another jurisdiction where the person might have lived and worked previously. The government was legislating to prevent any inequality in the treatment of pensioners who have worked for their whole lives in New Zealand and paid taxes, and those who have been abroad for a long time.
New Zealand therefore pays Swiss citizens in retirement just the difference between the NZ Super and the Swiss old-age pension they are getting. Whatever the amount of their Swiss pension (depending on their length of paid employment, income and childrearing and educational credits), the retirees see that full amount docked from the CHF1,100 ($1,090) worth of Superannuation they get every month.
‘Slap in the face’
“They’re thieves. Criminals,” says Erich Widmer, referring to the Kiwi authorities. “I worked for decades, paid my taxes – and now they’re stealing a part of my New Zealand pension.”
Widmer, 67, and his wife Regula both moved from northeastern Switzerland to New Zealand 39 years ago. Their Swiss pensions are deducted from their New Zealand pensions. “What I get from the state isn’t enough to live on,” he complains.
Conny, originally from Switzerland, and her Kiwi husband Mike agree. When Conny turns 64 in five years, she’ll start receiving her Swiss pension. However, not only will she not receive a New Zealand pension (because her Swiss one is larger) but because the couple are considered an “economic unit”, her New Zealand husband won’t receive a New Zealand pension either.
“It’s a slap in the face for anyone who’s lived a lifetime in New Zealand and who’s paid their taxes,” she told swissinfo.ch. “The state is depriving Mike of his right to a pension. It’s outrageous!”
“It’s an old, out-of-date system. We’re all living in a globalised world now with constant mobility,” David Vogelsanger says.
According to the most recent population census, the “Land of the Long White Cloud”, as Maoris call New Zealand, continues to exert a fascination on many foreigners: the percentage of the population born overseas rose from 19.5% in 2001 to 25.2% in 2013.
The ban on double-dipping is meanwhile affecting more and more people: both foreigners resident in New Zealand and New Zealand citizens who have worked abroad. Whereas in 2016 there were 84,000 people being hit by deductions from the NZ Super, in 2018 there were 98,000.
“This development is really grounds for hope,” Vogelsanger thinks. “The greater the number of New Zealand returnees being affected by this, the greater the pressure on government here to change the legislation.”
Vogelsanger believes the country is saving itself hundreds of millions of dollars yearly by getting other jurisdictions to support their pensioners. He thinks the pension deductions are unacceptable.
In 2018 the New Zealand government managed to save NZ$430 million (CHF285 million), more than twice what it saved in 2010.
“Although Switzerland and other jurisdictions have been pushing for it, New Zealand has always refused to enter into an agreement that would improve the situation of people who receive an overseas pension,” Vogelsanger says.
Many Swiss have found their own way of getting around this much-disliked legislation: they simply don’t report their Swiss pension to the New Zealand government and they get the Swiss authorities to pay their pension into a Swiss account.
This seems to be relatively common. The New Zealand Ministry for Social Development counted 471 recipients of Swiss pensions at the end of 2018, whereas the Swiss government counts 1,179 Swiss pension recipients in New Zealand. So about 700 Swiss are failing to report. On the other hand, some of these might not even have applied for a New Zealand pension, because their Swiss pension was worth more than the NZ Super they would get.
It is only a matter of time before this all catches up with them. On January 1 2018 the automatic exchange of tax information started between Switzerland and New Zealand. Expats in New Zealand had opposed this in 2017 without success.
“I’ve been recommending to all of them to turn themselves in voluntarily, so they don’t have to pay fines,” Vogelsanger says.
The first batch of data will be going to the New Zealand Inland Revenue Department this year. If this information gets into the hands of the Ministry for Social Development (which, under the agreement, it shouldn’t), Swiss pensioners in New Zealand would have to pay fines and back tax, and even face prosecution.
Translated from Italian by Terence MacNamee, swissinfo.ch