Stuffing up New Zealand Super
This blog post comes from an excellent article written by Rob Stock that highlights how easy it is to muck up your New Zealand Super entitlements. Here is a link to the article.
Some important points about making sure that you are aware of all your entitlements relating to NZ Super:
1. Check that you fulfil the residency tests for application for NZ Super.
These residency tests have been static for many years, but there are mutterings that these might be changed in the future (to make the time period living in New Zealand longer). In general these are the requirements, but more information is available here.
- lived in New Zealand for at least 10 years after you turned 20
- spent five of those 10 years living here after you turned 50.
2. You need to apply to receive New Zealand Super.
If you meet the residency requirements outlined in item 1. you need to apply to get NZ Super, it doesn't come to you automatically. If your application hasn't been lodged before you are 65 years old, there is no backpay owing.
3. Get your tax rates right
If you are still working, you will receive your NZ Super after the deduction of your top marginal tax rate.
If you have personal earned income or investment income, while receiving NZ Super, remember, NZ Super is a taxable income, so you will need to add your other income to the gross amount of NZ Super to make sure you select the correct tax rate.
From 1st April these rates are:
Earning over $180,000 pa 39%
Between $70,000 and $180,000 pa 33%
Between $48,000 and $70,000 30%
If you get your tax rate wrong (ie your tax rate with Ministry of Social Development. is too low), you are likely to have an unwanted tax liability to pay.
Gross rates of NZ Super can be found here. Please note that this payments increase on the 1st April each year.
4. Be aware that if you have paid into a superannuation scheme overseas while you were working, there may be an offset against your NZ Super income and you may not receive the full amount of each income.
5. If you are planning on retiring overseas to be close to family, be aware that any asset or income testing rules in that country will apply to your NZ Super entitlement and different countries have different rules about how much you will receive from their public pension plans. Check these carefully before you move.
6. Declare your overseas travel.
When we can travel freely again post Covid, it is important to note that if you are overseas for more than 26 weeks you need to tell the Ministry of Social Development as you aren't entitled to receive NZ Super while you are overseas for extended periods of time (eg over 26 weeks) (there a handful of exceptions.)
Department of Immigration and the Ministry of Social Development share records. As Rob Stock points out, $1.5 million was owed by people who travelled, didn't tell the ministry and got caught.
The time period for receiving your Winter Energy Payment is 28 days, so remember to let the authorities know.
7. There are different rates for different living situations
It is important that you are clear about who you are living with, as if your information is not accurate (refer Winston Peters....) then you will be found out and any additional payments will need to be repaid.
The main categories are:
Single person living with others
Single person living alone
Married couple both entitled
Married couple one entitled.