Note: This report has been prepared by a private citizen
who has used information that is available in the public domain.
The report explains the complexities of an ongoing international problem
and makes proposals that could resolve the associated injustices.
EXECUTIVE
SUMMARY
1.
New Zealand has NO bilateral arrangements with the United States
of
2. Provisions exist
in both the US and NZ legislation whereby injustices
3. New Zealand
legislation provides for the payment of only 50% of its
4. Conversely
US legislation withholds all pension payments to eligible
direct consequence of the 50% provision in the NZ
5. Economically
New Zealanders are the major losers in this situation.
6. The simplest and
most expedient resolution to this injustice is to alter
This in turn would pave the way for NZ citizens to collect
their full
7.
This action would not only remove an ongoing and growing irritant in
8. In
the application of social insurance both the US and NZ governments
Declaration of Human Rights.
INTRODUCTION
By
law, all citizens of New Zealand who live and work in the United States are
required to put money aside for their retirement in the form of annual payments
into a compulsory retirement scheme, known as Social Security (SS).
Any person who fails to comply with this law is subject to legal
proceedings that can impose severe penalties.
Eligibility for retirement benefits is dependent upon a minimum of 10
years US residency and a minimum of 40 quarterly payments into SS.
Beneficiaries can elect to draw retirement benefits upon reaching the age
of either 62 or 65. In contrast to
NZ, the benefit paid is not a standard rate for all, but dependent on the amount
each individual has paid into SS.
However,
a major anomaly exists for those New Zealanders who decide to return to NZ upon
retirement or in fact live anywhere outside the US. These persons are denied all rights to the pensions they have
legitimately earned and paid for, for no other reason than that they happen to
be NZ citizens. In addition, they
are neither entitled to any refund of their lifetime contributions nor are they
permitted to bring any legal action against the US government to recover their
investments. What seems further
iniquitous is that this harsh regime does not apply to American citizens, nor
does it apply to Australians, Fijians, and Solomon Islanders or in fact to the
citizens of almost 200 other nations including several who are openly hostile to
the US.
Since
independence in 1911 NZ has supported the US in every major international
conflict; Kiwis have fought and died defending the interests not only of Oceania
but American interests as well. In
spite of the anti-nuclear hiccup, the unswerving loyalty of the island nation
has made it one of Washington’s most trusted, dependable allies.
Nevertheless the US maintains a social insurance policy that punishes NZ
citizens but rewards those of a country such as Afghanistan – even during the
horrific Taliban regime and its al-Qaeda network.
Considering
the so-called high regard that Americans hold for the people of NZ, their
punitive SS policy towards the people of this South Pacific nation defies all
logic. Out of almost 200 world
nations, why would the US government single out New Zealanders for such
unjustified and unfair treatment? In
addition why have successive NZ governments seemingly turned a blind eye towards
the appropriation of the retirement savings of its citizens that amounts to
untold millions of dollars? Fundamental
questions need to be answered. Who
is really to blame for this travesty of natural justice? How can the situation be equitably rectified, and who should
take that responsibility?
THE
UNDERLYING REASONS FOR THE DISPUTATIONAL RELATIONSHIP
In
the late 19th century NZ was one of the first countries in the world
to ease the insecurity of old age by introducing universal pensions for the
elderly. Unlike superannuation
schemes that were to be established by other governments, the NZ pension plan
was, and remains, unique in that it has never been based on personal
contributions. Because it is funded
from general taxation, eligibility for “NZ Superannuation” (NZS, or
“Super”) is based entirely on fulfilling residency
requirements These requirements
necessitate a period of adult residency not less than 10 years, 5 years of which
must be over the age of 50.
American
citizens (as are all foreign nationals) who settle in NZ are granted immediate
and full access to the nation’s excellent public health system and after just
one year’s residency obtain full voting rights. Treated in exactly the same manner as New Zealanders they
qualify for NZS as soon as they have met the residency criteria and as a result
upon reaching the retirement age of 65 they may apply for, and receive, NZS at
the full rate. NZ has negotiated
reciprocal pension agreements with eight other nations, whereby New Zealanders
who choose to live in those countries may receive retirement benefits in full.
This policy equally applies to those American citizens who have fulfilled
the eligibility requirements for NZS.
However,
any eligible person (New Zealanders and foreigners alike) who moves to a country
that does NOT have a pension agreement with NZ, and this applies to the US, is
only entitled to NZS at half (50%) of the going rate.
In addition to this reduction in the NZS benefit paid there are strict
limitations on where application for benefits may be made.
In
comparison with NZ it was not until 1935 that the US government established a
pension program for the elderly. Within
the myriad of conditions contained in the US Social Security Act, Congress
inserted a provision that denies SS benefits to the citizens of any nation whose
social insurance policies in turn place restrictions on the eligibility of
American citizens to receive retirement benefits in that nation.
As a consequence, US authorities have steadfastly
maintained a rigid and unequivocal interpretation of this provision, i.e.
section 202 (t) (2), that NZ places unacceptable restrictions, in this case the
50% provision and application limitations, on Americans who have earned the
right to NZS. Effectively, this
means that all New Zealanders are deemed ineligible to receive SS outside the US
irrespective of whether their length of residency and level of contributions
meet the SS requirements.
It
seems incongruous that the majority of nations with which the US grants SS
portability do not have any substantial form of social insurance.
Further, an examination of these countries shows clearly none compare
with the favorable treatment afforded US citizens by NZ.
But, irrespective of these indisputable facts the official US line is to
fall back on a strict interpretation of section 202 (t) (2) to the acute
financial detriment of New Zealanders who have spent a substantial part of their
working life in the US.
THE
CONSEQUENCES OF THE US POLICY FOR NZ CITIZENS
It
is not unreasonable for people to expect they will be provided a number of basic
services in return for the taxes they pay. For example it seems unbelievable anyone would ever be denied
police protection or the Post Office would refuse to deliver their mail on the
basis of their place of birth. But
this is in fact the case for thousands of New Zealanders who have been compelled
to set aside money for their retirement with the world’s richest, most
powerful nation. They have done so
in a spirit of trust, confident of a relatively modest but secure pension in
their retirement years. It seems
unimaginable that they might be “robbed” by the state of their lifelong
retirement savings because they have the “wrong” nationality.
Nevertheless, this is the bleak reality awaiting many unsuspecting Kiwis
who work in the US.
To
make matters worse, Social Security Administration (SSA) officials, who are
aware of and impose the provisions, have failed to demonstrate any
responsibility to inform Kiwis paying into the system that their entire
retirement funds will be appropriated if, for any reason, they should leave the
US. The SSA cannot be accused of
acting covertly. The SSA has
published a pamphlet on this subject (SS publication #05-10137) that, for those
who know what to look for, can be found in SS offices.
However, most of those affected by the provisions only learn the truth
after they have retired, left North America and then requested their
entitlement. The refusal by the SSA
to consider any form of refund has lead to emotive accusations that the American
system is fraudulent.
Although
ignorance of the law is considered no excuse, for those unfortunate persons who
suddenly face the stark realization that they have no retirement income, the
prospect can only be described as “devastating”. This is especially true for low-income earners who possess
little or no means of financial support. The
situation is aggravated for those New Zealanders who, having returned home,
discover that they do not have 10 years adult NZ residency and are therefore
ineligible for NZS. Many persons
faced with this situation have little choice but to return to North America,
only to confront a new complication.
As
a result of recent changes in US immigration laws, foreign citizens who have
lived in the US lose their residency status if they are absent from the country
for as little as 180 days. It means
that by the time returning New Zealanders learn the truth about their SS
situation, they now also discover they have lost their US residency status.
If they have no immediate relatives living in the US the Immigration
Service (INS) will not renew their residency status leaving them in a state of
retirement limbo.
In
perhaps one of the most perverse pieces of legislation ever conceived, it has
been decreed that eligible NZ citizens can receive their SS payments, but
only if they travel to the US every 180 days and stay there for one
calendar month. This process has to
be repeated every 180 days thereafter until sickness or frailty makes further
long journeys across the Pacific impossible, at which stage the SSA immediately
curtails all further payments. The
SSA apparently has no standardized procedures in place to handle the New
Zealanders drawing SS payments in this fashion.
Most persons in this situation are required to register with a SS office
immediately upon arriving back into the US, with passport, airline tickets and
boarding cards then register again 30 days later to ensure that “they are not
acting in a fraudulent manner”. In
some cases recipients have been required to report on a weekly basis.
Other recipients have been instructed to register with the US Embassy in
the Republic of the Philippines leading to a variety of frustrating problems for
beneficiaries including expensive long distance calls, “lost” files, and
waiting up to one and one half years for the first payment to be received.
This is further evidenced by the fact that the Ministry of Social Policy
in Wellington has asked the SSA in Baltimore several times to provide written
clarification of the correct method for registering beneficiaries from NZ, but
these requests have fallen on deaf ears.
It
must be stressed that there appear to be only a few New Zealanders who are
receiving their pensions in this inhumane fashion and there is no reliable
estimate as to actual numbers involved. The
plight of elderly New Zealanders traveling across the Pacific every 180 days to
obtain their pensions (including a pathetic case of an aging, partially crippled
man and his wife afflicted with Alzheimer’s) has not proved newsworthy and
their plight goes largely ignored by the nation and the politicians.
Even though some of these people have been urged to go public they remain
silent for cogent reasons. The loss
of their residency status effectively means that they can only enter the US on a
visitor visa. There is a very real
fear that if the actual reasons for their visits became public knowledge, then
given the reputation of the INS for ruthlessness, there is justified concern
they could be declared non bona-fide visitors and denied entry.
NZ
GOVERNMENT INTEREST AND INTERVENTION
In
recent years this situation has been brought to the attention of various Members
of Parliament who have failed to exhibit any genuine and visible concern.
However, it is pleasing to observe that the present government has shown
that it recognizes the problem exists. The Minister of Social Services, Steve
Maharey concedes “it is patently wrong for New Zealanders to be unwittingly
paying into a SS system from which they may never receive a benefit”.
Regrettably, the Minister has avoided any form of protest with the
American diplomatic corps in Wellington, instead choosing to arrange for
the NZ Embassy in Washington to notify expat Kiwis (as many as possible) who are
working in the US the truth about the SS situation.
At
last count (July 1999) there were 590 American citizens living in NZ receiving
SS payments from the US. Many of
these persons are actually New Zealanders with dual nationality.
Some of them, already aware of the SS situation, took out US citizenship
(sometimes against their wishes) for no reason other than to protect their
rights to SS payments. The more New
Zealanders informed the truth about the SS pension program, the greater the
number who will apply for American citizenship to thwart the US government from
seizing their pensions. Even if
they retain their NZ nationality it means they must forsake their allegiance to
the Crown and pledge loyalty to a foreign power.
What is encouraging to see is
that for the very first time a Cabinet Minister is recognizing the gravity of
this problem and taking a step – albeit a small one – to address an
injustice affecting his fellow countrymen.
EFFORTS AND
OPTIONS TO RECTIFY THE SITUATION
It
is highly improbable that Members of Congress acted maliciously and knowingly to
create laws injurious to the citizens of a nation that has always acted as a
close ally of the US. When SS
legislation was drafted no consideration would have been given to the unusual
non-contributory nature of social insurance in NZ. In recent years there have been some efforts made,
unsuccessfully, to try and find ways to circumvent the punitive effects of SS
legislation. This report contends
that neither side has approached the problem with any real determination.
There are no political kudos in protecting the interests of NZ citizens
working in the US. This viewpoint was confirmed in a memo (August 6, 1998)
confiding a degree of exasperation in dealing with NZ authorities, sent by Barry
Powell, the chief negotiator for the SSA, to California attorney Sarah
Patterson, a specialist in complex SS cases.
Although couched in diplomatic language Powell left no doubt he suspected
that, behind the façade, NZ’s politicians in reality did not want to see any
changes to the status quo.
There
is a body of US legal opinion that believes the SS policies towards New
Zealanders are in violation of the Fifth and Fourteenth Amendments of the US
Constitution. Although individuals cannot file lawsuits against the American
government it is not impossible for a foreign government to do so.
However, the NZ government should never countenance such a legalistic
approach (for obvious reasons); it would be preferable instead to seek a
diplomatic solution.
One
realistic option would be to explore and agree at the bureaucratic level various
ways in which NZ might satisfy SS requirements without major legislative changes
being required by either party. Historically,
it was the US authorities and not NZ who took the initiative in this direction.
In 1991 the SSA in Baltimore sent a high ranking official to Wellington
to meet with civil servants in an exhaustive effort to find a way to resolve the
problem. Unhappily they concluded
that there seemed to be no way out of the impasse within the existing framework
of SS legislation and the policies of NZS, ruling out any possibility for
superannuation portability between the two nations. Given these findings it is difficult to comprehend why in
1998, then again in 1999, the NZ government armed with nothing new to offer sent
representatives to Baltimore to re-enter negotiations.
Not surprisingly, both attempts failed.
If anything, these meetings added some legitimacy to the stock phrase
used by politicians and bureaucrats, when responding to concerned inquiries
about the pension imbalance, “Rest assured, senior officials are continuing to
work on the problem”.
In
1996 the SSA considered a proposal to Congress requesting changes to SS
legislation that, although not specific to NZ, may have led to a social
insurance arrangement with the island nation.
Nothing came of this approach for reasons unknown, but what is
known is that even though it was aware of the proposal the NZ government never
sided with, or supported, the SSA initiative.
More recently the suggestion has been put to the new Labor/Alliance
Coalition government that NZ should directly approach Congress at the diplomatic
level to request a minor law amendment allowing portability.
The Social Services Minister has expressed reservations about the
proposal, and to date no moves have been made in this direction.
The
case of a New Zealander who had been working in the US and became seriously ill
with AIDS, then fought with stubbornness to obtain SS disability benefits,
received nationwide (and eventually international) publicity.
It was the first time the NZ public became aware of the US policy of
denying pension payments to their countrymen.
American authorities badly mishandled the case fueling further publicity
damaging to their nation’s image. The
US ambassador at the time (Josiah Beeman), alarmed at his country’s tarnished
image took the unprecedented step of telephoning the most widely read newspaper,
The Herald, requesting an
interview with seasoned journalist Ron Taylor to explain the US position.
In a major article (published April 29, 1999) under the headline “US
eager to have reciprocal Super but NZ holding back” Beeman claimed that
the US was not to blame for the pension problem between the two nations, that it
was the fault of the NZ government. Surprisingly
not one person connected with the media thought to look deeper into the
ambassador’s accusation.
Ambassador
Beeman pointed out even low-income earners contributing to SS throughout their
working lives would receive retirement payments more than double what they would
receive from NZS (since the subsequent decline in the Kiwi dollar the
disproportion would now be greater). He
emphasized that pension equalization between the two countries would be very
much to NZ’s financial gain. Shortly
after arriving in Wellington his successor, Carol Moseley-Braun, made a similar
comment in a letter to Prime Minister Helen Clark, namely that equalization
would be a net gain for NZ. Obviously
these US authorities were aware of the anomaly and the negative publicity
surrounding the issue.
SS
funds not paid to eligible New Zealanders become part of the huge SS surplus.
At the time of the NATO led bombing of Serbia President Clinton obtained
congressional approval to use the surplus SS funds to contribute to the cost of
US military involvement. A large
audience of New Zealanders listening to Kim Hill on the national program were
astounded one morning to hear one of their countrymen, just returned, make the
claim that the US was using confiscated Kiwi pension funds to help finance an
act of war.
It
is known that the US Embassy received angry letters soon after the broadcast.
Naturally perturbed, Ambassador Beeman requested a meeting at Parliament
House to re-examine the bilateral pension issue.
For unavoidable reasons the meeting had to be postponed at short notice:
soon after the ambassador fell ill and a young vice-consul was deputized to take
his place. At this meeting, the
vice–consul presented to the few still able to attend a list of conditions
that NZ must agree to accept before the US would release pension funds belonging
to NZ citizens. Nothing progressed
at this meeting of the two parties.
Based
on their actions and comments, doubts cannot be cast on the bona fides and
integrity of the vice-consul and Ambassador Beeman. However, it does not sit well when State Department officials
present a perceived solution as a fait accompli.
Telling a sovereign nation to re-write its laws or forfeit the pensions
of its citizens would tend to raise the hackles of participants who felt some
in-depth discussion would have been more helpful. In addition, it is not considered good diplomacy for an
American ambassador to resort to the tabloids to ascribe blame for a problem
that is largely of his own country’s making.
AN
UNOFFICIAL EFFORT, A NEW AMBASSADOR, PROMINENT VISITORS
Concerned
at the total lack of substantive progress on the ongoing SS injustice, in May
1999 New Zealander Chris Arnesen, long time California resident, and American
Law Professor Richard Boswell, Director of Human Rights International, visited
Washington, D.C. Assisted by
Congresswoman Nancy Pelosi (Calif.), and the prestigious Amercian law firm
Shepperd, Mullin, Richter and Hampton, the two men lobbied the offices of every
Member of Congress who sat on the Social Security Subcommittee with regard to
the unfortunate bilateral situation with NZ.
It quickly became apparent that not one Member of Congress appointed to
the SS Subcommittee, nor any of their staff, was aware of the policy of
discrimination towards the South Pacific nation. Arnesen and Boswell were received with interest, and in
conversations on Capitol Hill learned that no
representative or delegation from the NZ Embassy had ever called on Congress to
raise the SS issue. On the
second morning of their visit to Washington D.C. Arnesen and Boswell made a
courtesy call on the NZ Embassy to inform officials of the nature and purpose of
their visit to Washington. Although
they were received politely, no interest was shown in their endeavors and they
were basically snubbed. The Embassy
made no attempt to follow up on their efforts nor has the NZ government.
Presumably the appointees to the SS Subcommittee concluded that the issue
was unimportant in the scheme of things as no interest was shown by NZ
officialdom.
After
returning to California, Arnesen began a draft document examining the SS
situation from perspectives not previously considered.
The draft roundly condemned the US for its stance, questioned the legal
and moral right of any government to authorize discrimination, and concluded
that the US Congress should amend SS legislation to end the injustice.
Unfortunately it was a flawed document because it omitted to question the
culpability of successive NZ governments in dragging the chain on the issue.
When completed in April 2000 it was sent to the NZ government with copies
to selected politicians in other political parties.
The response was frankly disappointing.
Those who acknowledged receipt of the document were mostly guarded,
non-committal and clearly anxious not to be drawn into the complexities of the
subject.
There
were five notable exceptions: Ministers Steve Maharey, and Lianne Dalziel, MPs
Tim Barnett and John Tamihere, and United Leader Peter Dunne.
Their positive response in an ocean of indifference was heartening.
At
this time the first ever African-American woman to become an ambassador for the
US, Carol Moseley-Braun, was appointed to Wellington as the successor to Josiah
Beeman. Shortly after taking up her
new post she met with Maharey to discuss the SS problem, with both reaching a
tepid agreement that the current situation was “undesirable”.
No other action took place. Some
time after this meeting a copy of the Draft California document on SS
inequities, distributed to selected MPs, found its way to the US Embassy
prompting Moseley-Braun to request a meeting with Cabinet Ministers “to take a
new look at the SS issue”.
For
inexplicable reasons the decision was made, presumably at senior government
levels, not to honor the ambassador’s request for a meeting.
One reason for this course of action may have been that as a democratic
appointee the election of a republican president would have left Moseley-Braun
stranded as a “lame-duck”. At
this point the US authorities could be excused for thinking that NZ had little
or no interest in resolving the issues between the 2 countries relating to SS
and pensions. The ambassador never renewed her request.
In
retrospect this may have proved to be an unfortunate decision on the part of the
NZ government. At the time when the
ambassador asked for the meeting she knew that even if the democratic candidate
(Al Gore) won the presidential election her term as an ambassador was over.
Moseley-Braun had previously been a senator for Illinois and possessed a
vast wealth of political experience. Her
well-publicized confrontation with Senator Jesse Helms (who tried to block her
appointment to NZ) added to the controversy surrounding her long before she
arrived in Wellington. During her
tenure in NZ as ambassador she was subjected to further controversy when unnamed
Embassy officials leaked sensitive information to the press to discredit her.
It was unfortunate that members of the NZ Parliament seemingly failed to
realize this remarkable woman, unlike any of her predecessors, knew
the American political scene intimately. After
she had read the California draft document she had something she wanted to say
to the NZ government that was almost certainly of significance, though why she
was so anxious to renew pension discussions will now never be known.
A potential opportunity was squandered.
Towards
the end of the Clinton administration, NZ welcomed three of the five most
powerful political figures in the US. Prior
to their arrival they would have been thoroughly briefed on issues of mutual
interest along with matters of contention such as trade restrictions and the
anti nuclear policy. They may also
have been briefed on the SS question, another thorny area that their hosts might
raise. The first visitor, Secretary
of State Madeleine Albright, spent a mere nine hours in the country; with such
limited time in all likelihood discussions did not go beyond the most pressing
issues.
The
second arrival was none other than the
head of the US Social Security program, Donna Shalala, Secretary of Health
and Human Resources. The Secretary
spent five days in the country but the main reason for her visit was,
ostensibly, to investigate women’s refuge centers. At a press conference in Christchurch (April 8, 1999) a
reporter asked the distinguished visitor a pointed question about her
department’s appropriation of New Zealanders’ pension funds. Visibly flustered by the question, she gave an evasive
response and abruptly ended the conference.
Before flying out to the US next day, at a scheduled press conference in
Auckland the Secretary was more forthcoming over the SS issue.
She claimed that “officials are continuing to work on the problem in
good faith” and promised to personally look into the matter on returning to
Washington. When media
representatives subsequently contacted the office of then Prime Minister Jenny
Shipley to ask if she had raised the SS question with the visitor, it was
disappointing to be told by Mrs Shipley’s press secretary that this was a
subject not open for comment or
discussion under any circumstances. As
for Shalala, she was never heard from again.
The
third VIP to arrive was the President, Bill Clinton. He stayed five days, visiting both islands, meeting and
mixing with many political figures. The
scandal plagued, charismatic leader was one of few occupants of the White House
who openly championed civil liberties and human rights and of all recent
presidents he was the one who would have been the most approachable on the SS
injustice. No information has been
made available to indicate any discussions were ever held on the pension
imbalance and it is reasonable to assume that not one of the nation’s elected
representatives raised this serious matter with the president, or with either of
the other two American dignitaries who preceded him.
Even
the most charitable person would be hard pressed not to construe the obvious
lack of resolve and action on the part of NZ’s elected representatives as a
sign that this matter is deemed of little importance.
COULD NZ
MEET THE SS LEGISLATION REQUIREMENTS?
Currently
the US has totalization treaties with 17 other nations (as well as special
agreements with Israel and Japan). Often
years in the negotiating process, these are formal treaties covering a range of
bilateral issues, executive functions that must be approved by Congress and
signed by the President. In
addition there are less formal reciprocity agreements, equalization and
portability arrangements that accommodate most otherworld nations.
Essentially NZ is left out in the cold because it appears unwilling or
incapable of making some basic changes that the SSA has identified.
Barry Powell, chief negotiator for the SSA (mentioned previously) has
made the following statement. “If
NZ removed the unacceptable restrictions it imposed on American citizens, and if
a person in authority in NZ sent me a formal diplomatic note to that effect, the
US would free the pension funds of NZ citizens literally overnight, without
the need for any formal treaties”.
Two
unassailable facts have emerged from NZ’s engagements with the US on this
matter. First, NZ cannot circumvent
the strictures of the SS legislation without diplomatic intervention.
And, secondly, the NZ government has shown an unwillingness to approach
and engage Congress on this issue at a diplomatic level.
With
a seemingly intractable impasse, what options remain? The first option involves entering into a treaty that would
necessitate significant changes to NZ’s tax laws, an option that is neither
politically nor economically justified. The
changes to taxation laws would only make sense if they were the first step
towards the eventual establishment of a totalization treaty with the US.
However the second option does not
present the NZ government with insuperable obstacles and further is completely
within the scope of its powers and control.
Namely,
this option involves the NZ government making changes to NZS legislation that
would lead to bilateral portability with the US, effectively removing the
unjustified limitations imposed on the rights of US citizens who qualify for NZS.
As a first step, Americans who return to the US should be allowed the
retirement benefits they have earned at the full rate, not 50%, thereby
removing the major obstacle to portability agreements with the US.
The immediate reaction of government and its officials to this proposal
is that it opens up the potential for significant cost increases.
But a close examination of the situation shows that this potential is not significant.
By
current estimates there are just 30 beneficiaries living in the US who are
receiving NZS payments; the total number of beneficiaries has not changed for
some time nor is it expected to alter noticeably in the foreseeable future.
If the NZS Act was amended to pay these pensioners 100% of their pension
entitlement, as opposed to 50%, then the additional cost to NZ is trifling.
The number of qualifying Americans who have since departed NZ to settle
in countries other than the US is unknown, but once again, the numbers that
would fit into this category would also be trifling,
Foreign
nationals (including Americans) who have chosen to reside in NZ or who have been
accepted as refugees, after establishing ten years residency in NZ are hardly
likely to be tempted by the increased pension amount to leave and start life all
over again in new and unfamiliar lands. The current single adult rate of NZS converted to US dollars
could not be described as a munificent sum.
The
mathematics of the exercise is not complicated and the amount involved by
increasing NZS payments from 50% to 100% can
be established. If all 30
beneficiaries were single, living alone, the added cost to the nation would be
NZ$220,568 annually, or if they were all married couples a yearly increment of
NZ$167,216. In stark contrast, in
early 1998 the US released financial information concerning New Zealanders who
were denied SS payments. There were
150 retired New Zealanders with US Social Security credits (at today’s
exchange rates) approaching NZ$70
million, who could not receive payments because either they had never
taken out US citizenship or they could not afford to return to the US every 180
days to reconfirm residency. (Four
years later that figure would be closer to $80 million, the amount escalating
with every passing year). The
figures speak for themselves, for little outlay to the NZ taxpayer a significant
inflow of funds would be generated.
WHO PAYS THE
PIPER?
Politicians,
both in the US and Down Under, have attempted to play down this issue by making
statements to the effect that people should not rely on SS or NZS to support
them in their retirement. There may
be an element of truth in this claim, but people who unsuspectingly rely on and
who contribute based on trust in government-operated retirement programs should not
have their expectations unrealized by bureaucratic mandate.
The
pension systems in the US and NZ differ in terms of their funding methodology.
Residents of the US, in addition to paying federal income tax, pay an
additional separate percentage of their income/earnings into a state operated
retirement fund. Residents of NZ on
the other hand pay indirectly through the general taxation.
However, it would be an unfortunate mistake to think people in NZ do not
pay for social insurance – they most
assuredly do. Super is not
a gift from the government, as some in government would like people to think.
One
of the more serious criticisms of NZS is that it is not “tagged”, i.e.,
there is no earmarked percentage successive governments must set aside to ensure
the system continues to operate in a satisfactory financial manner.
Cabinet Ministers have enjoyed carte blanche in designating as much or as
little finance to keep NZS afloat – as long as too little doesn’t lead to
public protests or potential defeat at an ensuing election.
National Super (along with Health and Education) is a critical area where
politicians must tread cautiously; suggesting changes to NZS that do not find
favor with the public can wreck a political career or cost a party the election.
Politicians who meddle openly with NZS do so at their own risk.
In spite of public wariness ways of cutting the huge costs of state
pensions have been introduced that do not affect the man in the street - who
continues to remain blissfully ignorant NZS has evolved into a system that
reduces or denies pensions to many eligible persons.
WHO HAS
RESPONSIBILITY?
Elected
representatives who hold parliamentary office constitute the highest court in
the land. They are the ultimate
lawmakers, with an overarching mandate to enact laws that are equitable and
beneficial to the nation. By the
same token, it therefore falls on the shoulders of elected representatives to
investigate and rectify injustices or inequitable practices no matter what the
source or cost.
Somewhere,
somehow, men and women elected to parliamentary office have compromised a
pension program meant for all
into a system where all no
longer means everyone. The simple
definition of an injustice is “a condition or practice that is unjust or
unfair”. A practice where some
people are denied the benefit they have paid for (or at best can receive just
half of their entitlement) can only be described as an injustice.
There
is absolutely no accusation being made that this situation arose due to malice
or unscrupulous behavior. On the
contrary, it is believed that the policies in effect today most likely stem from
an earlier philosophy that as a ‘residency qualification” based system, the
government had the right to set conditions restricting retirement benefits to
persons actually resident in the country. However,
in the latter half of the last century the international mobility of labor and
the creation of global labor markets have now highlighted a glowing deficiency
in the NZS legislation. It is
disturbing that the deficiencies in NZS legislation appear to have gone
unchallenged; equally disturbing that the media, often the conscience of a
nation, has failed to question, at any stage, the unfair aspects of NZS.
The
restrictions dictating that application for NZS can only be made from within NZ
are arbitrary and capricious, bureaucratic obstacles designed for no other purpose than to deny people their benefits.
It must be remembered that every taxpayer in NZ pays for retirement
benefits, no argument. After ten
years residency and on reaching 65 it is their right, under the law, to receive a state pension
regardless of need, without income testing.
Nevertheless, for years the right to a pension has been denied to many
people. No matter how much
political rhetoric is used to justify these circumstances, when it comes down to
the bottom line, to pay some people only
half of the benefits they have earned and some nothing at all is an injustice,
and an injustice that need to be addressed without procrastination.
A QUESTION
OF FAIRNESS
The
Minister for Senior Citizens, Lianne Dalziel, has made the argument that it is
patently unfair if Americans, and others, are able to leave NZ after just 10
years residency and take half of the NZ pension allowance with them.
It is an interesting point. But,
at the other end of the scale, if they have lived in NZ 30 years, or their
entire working lives, to retire outside NZ with only half of the pension they
had earned is also unfair. If NZ
had a system where the amount of benefit paid was proportional to the years of
residency (which would be somewhat in line with other countries’ systems) then
Dalziel would have no objection to make. It
should not be forgotten that the residency criteria governing NZS eligibility
was established by politicians. And,
until politicians consider changing the current residency criteria, or consider
a proportional system, then the present law must be observed which states that
eligibility for NZS is based on 10 years residency, not 20 years or 30 years.
ANOTHER
IMPEDIMENT TO PORTABILITY
In
recent decades, as even hitherto isolated countries have been drawn into the
wider international community, nations with social insurance programs have
recognized the importance of reciprocity with other nations. There is no little irony in that NZ, one of the first
countries to provide pensions for the elderly, should be amongst the last to
move towards any kind of reciprocity with another country.
The first international agreement took effect as recently as 1988, and
today the figure stands at just eight. There
are no agreements or arrangements with any of the major economic powers, the US,
Japan, Germany and etc. NZ does not
have portability with a major player such as Germany, but boasts of a formal
agreement with, of all places, Guernsey.
In
today’s world it is common for some people to receive government pensions from
not just one, but two and even three different countries.
Nations around the world accept without question the legitimate right of
people to receive benefits they have paid for in other countries, no matter how
many countries might be involved. All
people living in NZ are denied this right (Canberra applies a similar
restriction but only to foreign nationals with less than ten years Australian
residency), in fact NZ is the only country in the world to penalize the elderly
in such a manner.
There
are many American citizens, and other nationalities, living in NZ who are
receiving NZS, and SS payments from
the US, the latter being paid into bank accounts in North America and unreported
to NZ authorities. Although SSA
officials have not actually specified that this aspect of NZS fails to meet the
requirements of SS legislation, they have made it clear to the NZ government
that the policy of restricting people’s rights to pensions earned in other
countries is offensive. The SSA in Baltimore has declined to make known the
names of those persons in NZ who are receiving SS payments from the US.
Similar reactions have come from other countries.
The NZ government’s insistence that one nation’s pension must be
deducted from the other nation’s pension (to NZ’s advantage), was considered
so objectionable by Germany that it balked at engaging in social insurance
negotiations with NZ. The same
thing happened with Austria, then Switzerland; how many countries in total have
turned their backs on reciprocity with NZ because of this policy is unknown.
The
policy is almost impossible to enforce and the country can hardly rely on
peoples’ honesty when it adheres to a policy that is legally questionable.
If any political party in power ruled that NZS beneficiaries could not
have other investments either offshore or onshore, it would be the end of the
party, period. Nevertheless the
nation has been denying those who have earned the right to NZS the right to also
receive, unrestricted, pensions from overseas that they have paid for, that are
in essence investments. This misguided policy may not be in breach of the US
requirements for SS but it has cost NZ the opportunity to have reciprocity with
several other nations, reciprocity that would have been to everyone’s
advantage. Meanwhile, hundreds of
persons are showing their contempt for the lack of ethics on the part of the NZ
government and quietly “double dipping”, in some cases “triple dipping”.
ENDING THE
IMPASSE
When
nations benefit from an individual’s lifetime of labor and the payment of
taxes, do they have the moral right to absolve themselves from all
responsibility to that individual when he/she ceases to be productive?
It is a question that may be put to both the NZ and the US governments.
NZ
is in no position to take the moral high ground on social insurance, nor can
Americans take pride in the fact that their government has authorized
legislation that provides bureaucrats with the ability to single out certain
nationalities for worse treatment than others.
To inform elderly persons on retiring that their retirement funds are no
longer theirs is barbarism more befitting banana republics than civilized
nations.
New
Zealanders working in the US do not have American voting rights, they are not
provided health care and their pensions are taken from them if they wish to
retire in their native country. In
contrast, American citizens working in NZ are given NZ voting rights, they are
provided excellent health care and if they return home they can take at least
half of the NZ state pension with them after just 10 years residency.
Putting it in plain terms, the US is getting a lot and giving nothing in
return. Bearing this considerable
disparity in mind, it is disappointing that the US has not done more to end the
pension imbalance that continues to impair relations between the US and its
long-standing friend and ally. Despite
claims to the contrary, it is not
impossible for the US to make minor changes to accommodate NZ in the social
insurance arena. However, State
Department officials have maintained an unwavering line that it is NZ that must
make all the changes, and with the hawkish mood now prevalent in Washington any
remaining hopes that the US might adopt a more positive attitude towards NZ
should be abandoned once and for all.
If
there is ever to be social insurance portability with the US, it
is NZ that will have to make all the moves.
With the reluctance to pursue a solution at the diplomatic level, the NZ
government must make changes to NZS that will meet the requirements of SS
legislation, namely section 202 (t) (2) of the SS Act.
Social Services Minister Steve Maharey may be moving in this direction in
recently appointing senior civil servants to review the provisions of
portability with the US as well as other countries.
The move is encouraging, however the Minister has the following comment
to make: “Unfortunately, given the current policy framework for NZS it is
unlikely the review will result in portability rules that entirely satisfy
section 202 (t) of the SS Act”. With
this foregone conclusion, there is very little room for optimism that the review
will bring about any change in the situation with the US.
CONCLUSION
Regretfully
for more than twenty-five years attempts to seek a resolution to the problems
outlined in this report have all met with failure. No one denies that current SS legislation creates an unjust
situation for many New Zealanders, however despite this admission there is
abundant evidence to show that the political will does not exist to set in
motion the corrective measures needed.
In
efforts to defend the status quo politicians have invariably employed a range of
economic and political arguments that are either irrelevant or spurious.
Consider two major counter arguments.
The
“potential argument” is a political excuse that has been over-used.
That is, “any correction could potentially raise issues with other countries”.
If ‘potentially’ means ‘possibly’ then it cannot be
disputed that nearly all things are possible but it is the ‘probability’
that is the critical element. Upon
examination it can be seen that this argument ignores two fundamental issues.
The first is that the ‘probability’ of other countries raising issues
is absurdly low, and second, the possibility of ‘other countries’ raising
issues has absolutely no relevance whatsoever to the present injustice being
perpetrated on NZ citizens. In fact
the two issues are mutually exclusive.
Another
excuse lacking in conviction is that “corrective
measures will cost too much to fix”.
This argument is not only illegal but patently untrue.
Politicians would not deny that the aggrieved parties have paid for the
funds in question. In reality the
people are not asking for anything more or less than their entitlement.
Failure to pay these people their entitlement is in fact a form of
institutional theft that cannot be justified on any grounds, especially on the
basis of cost. In a written response the government has expressed alarm that
granting beneficiaries in the US payments at the full rate, and removing
application restrictions, could lead to an increase in the number of New
Zealanders in North America applying for Super. Never mind any preposterous suggestion that a rash of Kiwis
from Alabama to Alaska would immediately start applying for NZS; what the
argument reveals is that those elected to government consider it acceptable to deny
the entitlements of their own citizens in order to trim government
expenditure.
The
argument is despicable as it is tantamount to stating that the cost to correct
this particular social injustice is unacceptably high in the opinion of
politicians, an argument that has no place in modern politics.
Most prior social injustices, for example those perpetrated on Maoridom,
are only now being rectified at considerable cost to the government.
The merits of social legislation, A.C.C., Paid Parental Leave, Maori
Television and so on are not determined on the basis of economic merit or cost,
but programs part of the accepted cost of government.
The
issue can be debated from any number of points of view.
However, in the final analysis the fact that an injustice has been and
still is occurring cannot be denied or logically explained away.
In the end, injustice is all about fairness and there is nothing fair
about governmental systems that do no deliver on the social contracts they
undertake. These are social contracts that people have relied on in good
faith unaware that their faith in a state system was misplaced, often with dire
personal consequences. Within the
structure of democratic nations ordinary citizens have no other choice but to
rely on the good offices of their elected representatives to ensure that justice
and fairness prevail. When those
representatives fail to carry out this duty they not only fail their citizens,
they fail their country and ultimately themselves.
There is no denying that to date appeals to the sense of fairness and
justice of NZ politicians have mostly fallen on deaf ears.
Both
the US and NZ governments are signatories to the 1948 Universal Declaration of
Human Rights, but both countries may be charged with breaking the spirit of this
major international agreement, specifically Article 22, Article 23, section (3)
and Article 25, section (1). Article
22 of the Declaration states the following.
“Everyone, as a member of society, has the right
to social security and is entitled to realization, through national
and international co-operation and in accordance with the organization and
resources of each State, of the economic, social and cultural rights
indispensable for his dignity and the free development of his
personality”.
With
the numbers of New Zealanders working in North America (including the nation’s
best and brightest) on the increase, Members of Parliament cannot continue
indefinitely to turn a blind eye to the problem concerning retirement benefits
their fellow citizens have earned in the US.
Nor can they continue to ignore the inequities in NZS without eventually
being accused of willfully condoning a system of unfairness and refusing to
honor the country’s commitment to a major international accord protecting the
welfare of mankind.
There
is absolutely no doubt that the resolution of the injustice outlined in this
report lies squarely in the hands of New Zealand’s politicians.
The report concludes with a call to all Members of Parliament, both in
government and in opposition, to recognize the moral responsibility required of
all elected representatives of the nation.
To put the future of their fellow countrymen and women ahead of personal
or party political gain, and to proceed with a will to rectify the inequities in
the state retirement benefits program. To
support a solution that would allow all of the thousands of NZ citizens
working in the United States of America to return home on reaching their
retirement, if they wish to do so. To
return home as New Zealanders - not as American citizens.
To return home and benefit the NZ economy by bringing back with them
millions of dollars in pensions they paid for in good faith and have honorably
earned.
PREPARED
BY: April 14, 2002
Christopher
R. Arnesen
460
Marine Parade
Christchurch
8007, New Zealand
(3)
38 22 500