Age Concern New Zealand

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Canadian pensions short-paid in New Zealand?

Are you receiving all you are entitled to?  You may be in line for a reimbursement.

Age Concern supporter Ron, who is living on a Canadian pension in New Zealand, advises:   

"As a result of the global financial crisis from 2007 to the present international currency exchange rates have been subjected to greater than normal fluctuations. These fluctuations directly impact on overseas pensions that are paid direct to the retirees.

In particular, retirees receiving Canadian Government Pensions, Old Age Security and/or Canada Pension Plan as well as a reduced New Zealand  Superannuation will most certainly find that for the calendar years 2007 - 2009 their NZS was less than their entitlement. In one case the pensioner receiving about NZ$800.00 a month is short nearly $500.00 over three years.

How does this work?

(Work and Income) Senior Services, through International Services, are required by section 70 of the Social Security Act 1964, to reduce NZS by the amount received from the overseas country. Because of variation in currency values and the fluctuating nature of the exchange rates a procedure was enacted as the Social Security (Overseas Pensions Deduction) Regulations 1996, to calculate the NZ$ value of the overseas pension.

In practice Service Canada provides International Services with the CA&/NZ $ exchange rate averaged over the previous month, this “Cross rate” is then used to calculate the NZ$ value of the gross Canadian pension(s), which is the amount by which the NZS is reduced.

Even though there is a time interval between the approximation and the actual negotiation of the payment into NZ $ and differences in the rates applied, the rate fluctuations are in both directions, over time it would normally be expected that the differences would average out.

How does it affect you?

New Zealand superannuants receiving  Canadian Government Pensions, Old Age Security and/or Canada Pension Plan in addition to a reduced New Zealand Superannuation will have, for the calendar years 2007 to 2009, received NZS that was less than their entitlement.

In one example, a pensioner receiving approximately NZ$1,000.00 per month from Canada has been short paid by approx. $450.00 over the three years ($210.00 short in 2007, $25.00 over in 2008 and $265.00 short in 2009).

Can I be reimbursed?

Yes, your NZS is your entitlement and if the method used to calculate your pension means that you do not receive the full entitlement you can claim the difference, in this case, from International Services. 

International Services has no automatic review to catch discrepancies resulting from fluctuating exchange rates, too much cost in time, but if a case is brought to their notice and documented they may consider it otherwise nothing is done. 

What is needed for a claim?

A claim is relatively complicated because Canada’s pension payments are made calendar monthly while NZS is bi-weekly. Also Canada’s fiscal year is January – December while New Zealand is April – March. Both however use an annual rate as the basis for their pensions. Using the calendar year January 1st to December 31st is logical for calculating a claim. You need to establish:

1. Your NZS entitlement for the Calendar year. Adjustment will have to be made for any rate change on 1st April.

2. Provide details of the gross NZS received for the year with the first and last payments adjusted for the extra days.

3. Using the actual exchange rate used to negotiate each Canadian pension payment, calculate the NZ $ value of the gross Canadian pension.

4. Total the gross NZ $ Canadian pension add it to the gross NZS and subtract the gross NZS entitlement.

Perhaps the greatest difficulty will be in determining the NZ $ value of the gross Canadian pensions, payments received are net so the amount of the Canadian withholding tax if any will need to be known.

Resources

> VISIT the Canada Pensions Services website

> VISIT Work and Income International Services