New Zealand and Australia
Does my NZ Super affect the Australian Age Pension?
Yes, and not through the income test. Under the Agreement, New Zealand Superannuation is left out of Australia's income test and then taken straight off the Age Pension you would otherwise be paid, dollar for dollar. That is deliberate. The Agreement is built so that the two payments together come to no more than the country you are living in would have paid on its own, so crossing the Tasman with a New Zealand pension changes where the money comes from rather than how much of it there is.
Yes, and the mechanism is the interesting part
Most foreign pensions are counted as income in Australia and chip away at the Age Pension at 50 cents in the dollar. New Zealand Superannuation is not one of them.
The Department of Social Services states the treatment plainly: "Under the New Zealand Agreement, the amount of New Zealand superannuation and New Zealand invalid benefit payable is always directly deducted from the rate of an Australian social security payment otherwise payable to a person who is in Australia."
Directly deducted, not income tested. Every dollar of New Zealand Superannuation removes a dollar of Age Pension.
Why it is built that way
The Agreement between the two countries is unlike Australia's other agreements, and the Department says why: Australia and New Zealand share "similar residence-based social security systems and unrestricted immigration movement".
That leads to one governing idea:
The most significant difference is that people paid under the Agreement generally cannot be better off by receiving a benefit from both countries. Under the Agreement, the amount of combined benefits (from both countries) cannot exceed the maximum benefit a person would receive from the country in which they are currently residing.
So a New Zealander who has moved to Australia is aimed at the same total as an Australian who never left, and the New Zealand payment is simply part of how that total is assembled. This is the same principle running in the other direction when New Zealand deducts an Australian Age Pension from NZ Super.
The order of the calculation, which is where the money is
Article 13(2) sets out three steps for someone living long term in Australia, and the order matters more than it looks.
The Department's wording for the first step is to "calculate the person's ordinary income in accordance with the SSAct but disregard any New Zealand benefit to which the person is entitled". Then the ordinary income test is run. Then the New Zealand benefit is deducted from the maximum rate.
Compare that with a pension from almost anywhere else, which goes into step one and is tested at 50 cents in the dollar. New Zealand Superannuation skips the test and comes off the answer at 100 cents. The Department says the point is to ensure a person "cannot receive more in total from Australia and New Zealand combined, than a person who has lived their whole life in Australia".
One definition worth holding on to. "Present long term" means physically in the country and either there for at least 26 weeks already, or intending to stay a year or more. It is the thing that decides which of the two rate calculations you fall under, and a short visit does not change it.
If you also have a pension from a third country
This is where it gets genuinely odd, and it catches New Zealanders in Australia more than anyone.
Article 13(7) treats a pension from a third country, meaning anywhere that is not Australia or New Zealand, in two different ways depending on your status:
- If you are a permanent resident of Australia, the third country pension is ordinary income. It goes into step one and is tested at 50 cents in the dollar.
- If you are not, it is disregarded as income and directly deducted at step three instead, dollar for dollar.
A permanent resident here means an Australian citizen, a permanent visa holder, or a protected Special Category visa holder. A New Zealander on a non-protected Special Category visa is not one, which means a United States Social Security payment in their hands is worth considerably less to them than to the person sitting next to them with the same payment and a different visa.
Do you have to claim your NZ Super?
The Agreement itself does not force it. The Department is careful about the distinction: "The Agreement does not contain special provisions that make it compulsory for people claiming an Australian benefit under the Agreement to also claim a benefit from New Zealand."
But Australian domestic law does its own work here. Claimants "can be required to take reasonable action to claim any comparable foreign pension entitlements". So the obligation exists, it simply comes from a different place than you might expect.
Note also that the deduction runs on the New Zealand benefit "to which the person is entitled", not on what has actually arrived in the account.
If you live in New Zealand and are claiming from Australia
Then a different calculation applies, and it is proportional rather than a deduction.
For someone present long term in New Zealand with less than ten years of New Zealand residence, the Australian rate is worked out from their months of working age residence in New Zealand, subtracted from 540, applied to the rate they would have received in Australia, and divided by 540 again. With more than ten years of New Zealand residence, it runs off their months of working age residence in Australia instead, over the same 540.
Five hundred and forty months is forty five years, which is the working life Australia measures a full pension against. The shape of it is simple even if the arithmetic is not: outside Australia, you get the share of an Australian pension that your Australian years earned.
What this guide does not tell you
It does not tell you whether you qualify for the Age Pension in the first place, which is a separate question about residence and visa status.
It leaves the assets test alone entirely. New Zealand Superannuation is income, but a KiwiSaver balance is an asset and is assessed under different rules again.
It does not cover tax in either country, and it does not cover Disability Support Pension or Carer Payment, both of which the Agreement covers on their own terms.
Grandfathering provisions apply to people granted a payment under earlier versions of the Agreement, the current one having started on 1 July 2017. If you were granted a payment before then, check whether you are on the older rules rather than assuming these apply.