The New Zealand Superannuation Scheme Not So Super?

Personal client | Print Article

September 2019

Thought that the NZ Super is a given on reaching 65? Well not quite. Many New Zealanders would be surprised to learn that there are other criteria to meet before eligibility can be confirmed.

So what are the criteria?

To obtain the NZ super you not only must be 65 or older, but also ordinarily resident in New Zealand at the time of your application, and have resided in New Zealand for a period of 10 years or more after the age 20.[1] This seems simple enough, but the concept of ordinary residence in New Zealand for the NZ Super is different from say tax residency or residency in an immigration sense. In other words, having New Zealand citizenship or being a permanent resident who ordinarily pays tax in New Zealand is not enough.

The Supreme Court considered this issue and held that to determine if one is ordinarily resident is to establish where that person’s home is at the time of the application.[2] To do this involves an analysis of the candidate’s own view of where their ordinary residence is and the domestic realities of the subject person’s life. With new ways of working, and ability to travel, assessing one’s domestic reality may not be so straightforward.

Maintaining that New Zealand Connection

Applicants could jeopardise their eligibility by spending too much time overseas and not maintaining a significant connection to New Zealand. So how do you demonstrate that you have the necessary New Zealand connection? If you live and work in New Zealand with no gaps overseas, this will be relatively easy. However for those who wish to travel overseas or set up a retirement for yourself outside of New Zealand, it is important to avoid establishing a new home overseas before you become eligible and apply for the NZ Super.

There are several key considerations that apply to determine whether someone is ordinarily resident in New Zealand at the time of their application, these are:

  • how much time you spend physically in New Zealand;
  • what assets you own in New Zealand (think the family home or business interests);
  • whether or not you are currently working in New Zealand when applying for the NZ Super, or if not working, whether your last form of employment was in New Zealand;
  • whether you have family in New Zealand; and
  • whether you have a social or familial connection with New Zealand such as clubs or sporting memberships, friends and local community commitments.

What if I want to travel?

It is important to understand that residence for the purpose of the NZ Super is assessed at the time of your application. After your eligibility has been established and the NZ Super granted, you do not have to re-establish your eligibility at a later date. You can even apply to have your NZ Super paid to you overseas in certain places. This won’t restrict you from heading off on the holiday of your dreams in retirement, provided you are mindful of the timeframes and apply before you jet off overseas.

Living as a non-resident in Australia?

It appears that this will be a similar situation for New Zealanders permanently based in Australia. New Zealand and Australia have a social security agreement where a person who would otherwise be eligible for the NZ Super, who is now resident in Australia, can claim the Australian equivalent when reaching that qualifying age.

To be resident for the purposes of the NZ Super in Australia, you must be a New Zealand citizen with either a Special Category Visa or a permanent residence visa for Australia and be able to demonstrate a clear intention to permanently remain in Australia. For example, the permanence of your accommodation, familial ties, frequency of travel outside of Australia, any employment or business you are involved in and any other matters that could illustrate an intention to permanently reside there.

Not so super after all?

There is a changing idea of the standard Kiwi domestic reality, and the days of the standard family, house, work, and retirement at age 65 are now over. These days it’s not uncommon to have close family and friends across the globe. With the ease of travel it is no wonder many wish to head off overseas to see the world, especially in retirement when many finally have a break to do this travel. However, the NZ Super has not yet caught up with the changing dynamic of Kiwi life leading up to and in retirement.

[1] New Zealand Superannuation and Retirement Income Act 2001, sections 7 and 8.
[2] Greenfield v MSD [2015] NZSC 139.