He's paid taxes for 60 years but is being denied full pension as his partner is Russian

Friday, 4 May 2018

'I worked all my bloody life and it's like they've made a promise and then pulled it out from under my feet,' says William Hyde.

William Hyde probably wouldn't count himself as one of the world's great romantics.

But he's got some advice on love: be careful who you fall for, because the Government might dock your pension.

The Northland man has been hit by a policy which sees him lose almost 20 per cent of his superannuation because his partner receives an overseas pension.

A review authority which has looked at the case and others like it says what's happening is not what Parliament intended, but officials say while they're sympathetic, the law is the law.

William Hyde and his wife Nadya Gordeeva are struggling to survive on William's deducted pension.

* Retiree takes pension case to Human Rights tribunal

* Tens of thousands overpaid pensions**

'It's disgusting,' says Hyde, of Whangarei.

'I paid my taxes for almost 60 years, worked all my bloody life and it's like they've made a promise and then pulled it out from under my feet.

Northland pensioner William Hyde and his Russian partner Nadya Gordeeva.

'They should be honest and up-front and warn immigrants and people who become their partners: 'Come to New Zealand and your pension will be stolen'.'

Hyde, 71, and his Russian-born partner of 12 years, Nadezhda Gordeeva, 66, are one of about 588 couples subject to what the Ministry of Social Development calls 'spousal deduction' where part or all of the amount of an overseas pension paid to one partner is deducted from the New Zealand superannuation of the other.

In Hyde's case, he's lost about $9000 over the past three years because of overseas pension payments, even though he's only been overseas in his life three times and has 'never stopped working in New Zealand since I turned 15 years old'.

The couple have appealed to Government ministers and even to NZ First leader Winston Peters when he was Northland MP - with no success.

Last year, then Social Development Minister Anne Tolley said she had no intention of changing the law.

But this week, there was a breakthrough when the new minister, Carmel Sepuloni, says she had asked for advice about spousal deduction by the end of the year.

'At that stage, I will have a better understanding of the impact any change may have on particular superannuitant groups,' she says.

Nearly 600 Kiwi pensioners are caught up in the overseas pension deduction.

A spokeswoman says Sepuloni has long held an interest in these cases and earlier this year included the issue in work she asked officials to report back to her on 'the issues at play and their impact on New Zealanders'.

And Peters, too, told Stuff he was concerned about cases like Hyde's.

'Resolving situations like this are matters being considered by the New Zealand First caucus. We welcome that MSD officials are also examining this as part of the superannuation reform work programme.'

So, with the minister and Labour's coalition partner looking at the problem, there might be hope for Hyde and Gordeeva and the others. It's the first glint of anything positive - or at least potentially - in the three years they've been fighting.

But in the meantime, they are stuck with their situation.

Gordeeva, who has New Zealand residency, receives about $65 a week in a Russian pension. She does not receive any New Zealand superannuation, but under the policy, designed to stop double-dipping of pensions, the money is deducted from Hyde instead.

Social Development Minister Carmel Sepuloni is awaiting further advice on spousal pension deduction.

The ministry has the power to apply discretion and reinstate the full payment, but the Social Security Appeal Authority says it is not 'extreme' enough to 'warrant us filling the gap in the legislation'.

Hyde is appalled that officials could say that. '$65 a week would make a big difference - it's over half of our grocery bill.'

And it's true - they're hardly living the high-life. They live in rural Northland in one of two cabins Hyde built himself in the bush (they rent the second one out). They're about 50 sqm each and there's no mains power - not that he's complaining, since they have electricity courtesy of a hydro scheme powered by a creek on the property (he designed and built the system himself too).

Hyde still has a mortgage to pay, so he works part-time driving a six-wheeler truck. If he didn't do that, his only income would be the less than $12,000 dollars he received in superannuation last year.

Susan St John, a poverty campaigner and Auckland University associate professor familiar with similar cases, says the policy hits people hard - and she can't understand how officials would dismiss a $65 a week deduction.

'That's a huge amount and what we find is that people affected by [this], they are not wealthy, well-resourced people and the amount they lose makes a big difference.'

St John is calling on the Government to fix the law, estimating it would only cost about $2 million a year to deal with all the cases.

Instead, it has been fighting individuals who take cases through review and appeal procedures.

Deputy Prime Minister Winston Peters has so far been unresponsive to appeals for help by William Hyde.

'The trouble is that the ministry has got all the money in the world to fight the individuals,' she says. 'This is hopeless for people in retirement.'

In March, three superannuitants took a case to the Human Rights Review Tribunal over a similar argument, claiming the spousal deduction rule is a breach of human rights. The decision has not yet been issued.

In those cases, the partners were entitled to NZ super, but received an overseas pension worth more - so the excess deduction was taken from the spouse's pension.

Two of them have been receiving no superannuation at all, thanks to deductions due to payments to their partners by Germany and Norway. A third received less than $40 a week because of benefits paid by the United States to a husband.

Other spousal deduction cases taken to the Social Security Appeal Authority have led to decisions highlighting unfairness - and not what the law apparently intended.

'It is a reasonable inference to draw that it was not intended that recipients of overseas pensions and their spouse or partner be disadvantaged by the legislation as compared to those not eligible for an overseas pension,' says one decision.

St John points out, too, that in 2014, in its briefing to the incoming minister, the MSD pointed out that the policy was 'unpopular with other countries and with those affected by it'.

But still it continues.

In Hyde and Gordeeva's case, she is not entitled to superannuation because she does not meet the residence eligibility criteria. Hyde is on the half married rate (normally $340.80 per week before tax).

The Russian pension Gordeeva receives is deducted under section 70 of the Social Security Act, the ministry says.

'The policy intent of section 70 is to ensure that those entitled to a New Zealand benefit or pension are treated equitably and receive the same level of government retirement support,' says the ministry's general manager of client support services, Dwina Dickinson.

'Were it not for section 70, those who have lived, and worked, in overseas countries may be entitled to a greater overall level of government retirement support than those who had solely resided, and worked, in New Zealand.'

In Hyde's case, even though he has only ever lived and worked in New Zealand, he is receiving less than he would normally be entitled to, simply because of who his partner is.

An appeal authority decision accepted that the way the law was worded was not as it was supposed to be operated.

'We accept that the effect of deduction of an overseas pension from the single or half-married rate of NZS produces a consequence which is likely to be unintended and that this outcome creates financial pressure for the appellant,' says the decision.

'While the effect on the appellant's NZS entitlement may not have been intended by Parliament, this Authority is bound to give effect to this provision in the Act.

'The establishment of criteria for benefit entitlement and applicable income tests are matters of policy.'

One of the ministry's general managers, Justine Cornwall, says while the MSD is sympathetic to the couple's situation, it does not warrant discretion.

'Mr Hyde does have the ability to include his partner in his New Zealand Superannuation, so they would receive the 'non-qualified spouse rate'. This is a married couple rate which is subject to an income test, and the spousal deduction would still apply.'

But by doing that, he would be worse off because of what he earns.

Hyde's daughter, Leigh, has calculated that if he moved to the non-qualified spouse rate, his pension would be reduced to just $30 a week.

She cannot understand how the ministry would raise a solution which leaves her father in a far worse position.

'That remedy would leave him more disadvantaged - that's not a remedy,' she says. 'How's that fair?'

It's just another thing that doesn't make sense.

'If Nadezhda was getting $65 a week more than a New Zealand lady, I'd have no problem at all with it,' says William Hyde.

'But to deduct it from my half married rate, when she is getting nothing from New Zealand is…a violation of human rights and discrimination against a group of pensioners.'

With appeal options almost exhausted, Hyde is at the end of his tether - not how he imagined his retirement would be.

'I planned my life around the pension. I've got a mortgage but we were managing quite okay until they started deducting the pension.

'Multi-millionaires still get the pension - why should mine be deducted?'