Will my Australian Age Pension be deducted from my NZ Super?

Is an Australian pension really an overseas pension?

Yes, and Work and Income says so without any hedging: "The Australian payment from Centrelink is classed as an overseas pension."

That one sentence is what pulls the Australian Age Pension into New Zealand's deduction rules. It is not treated as savings or as private income. It is treated the same way as a state pension from anywhere else.

How much gets taken off?

All of it. Section 189(1) of the Social Security Act 2018 says the rate of the benefit "must be reduced by the amount of the overseas pension".

There is no partial offset and no threshold you get to keep underneath. A dollar of Australian Age Pension is a dollar less of New Zealand Superannuation.

Section 188 sets out who this catches. You are affected if you are qualified for a New Zealand benefit and you are entitled to receive, or do receive, an overseas pension.

The practical effect surprises people who were expecting two pensions. In most cases you end up with roughly what New Zealand Superannuation would have paid you on its own, arriving in two parts from two countries rather than as one payment from one.

Does my partner's Australian pension reduce my NZ Super?

No, and this is the exception worth knowing about.

Section 189(3) says the rate of New Zealand Superannuation "must not be reduced under this section by any amount of an overseas pension that" the person receives in respect of their spouse or partner, or that their spouse or partner receives themselves.

So the deduction is personal. Your own overseas pension reduces your own New Zealand Superannuation. Your partner's does not touch yours.

One caveat sits in the Act itself. Subsection (4) points to clause 82 of Schedule 1, which deals with people receiving New Zealand Superannuation at certain grandparented rates. If you are on an older rate, check that clause rather than assuming.

What if I move overseas?

Then the deduction stops applying to that payment.

Section 189(2) says New Zealand Superannuation "must not be reduced under this section by any amount of an overseas pension if the New Zealand superannuation or veteran's pension is payable to the person overseas" under section 26 of the New Zealand Superannuation and Retirement Income Act 2001.

Being paid New Zealand Superannuation abroad is its own subject with its own rules, and the amount is worked out differently. The point here is narrow: the overseas pension deduction is a rule about people living in New Zealand.

How the money reaches you, and why it matters for tax

If you live in New Zealand you choose between two arrangements, and the choice changes your tax position rather than your total.

Under the Direct Payment Method the Australian payment comes to you and your New Zealand payment is reduced. Work and Income notes that you may then have to pay New Zealand tax on the Australian pension if you also get New Zealand Superannuation, whether it lands in an Australian or a New Zealand bank account. They suggest keeping your banking records, because those show the gross Australian payments the tax position depends on.

Under the Special Banking Option the tax is already paid before the money reaches you. Tax on anything you received before you switched may still be owing.

Work and Income also flag one difference for Supported Living Payment: paid by the Direct Payment Method, there is no tax to pay because the gross Australian payment is deducted directly from the net New Zealand entitlement, unless the Australian payment exceeds the maximum rate.

What this guide does not tell you

It does not tell you what Centrelink will pay. Australia works out its own rate, and Work and Income points people there rather than answering it.

It also leaves alone which overseas payments count as an overseas pension in the first place, since section 191 deals separately with overseas benefits that are not overseas pensions; what happens to your entitlement when you move between the two countries mid-claim; and the exchange rate and timing rules that decide what an Australian dollar amount counts as in New Zealand.

The exchange rate point is not a footnote. Your deduction is set in New Zealand dollars from a payment made in Australian ones, so the rate matters to what you end up with. It is worth asking Work and Income how and when they convert.