Is my US Social Security deducted from my NZ Super?

Does a US payment even count as an overseas pension?

New Zealand publishes a two part test. An overseas pension is a benefit, pension or allowance that is "paid for the same types of circumstances as New Zealand benefits, pensions or allowances", and "administered by, or on behalf of, another country's government".

A United States Social Security retirement benefit is paid for reaching an age and having a work record, which is what New Zealand Superannuation is paid for. It is administered by a federal agency of the United States government. Both limbs are met, and nothing in the test turns on whether the two countries have an agreement with each other.

So it counts. Nothing about it being contributory, or about having paid into it out of your own American wages, takes it outside the rule.

How much comes off

All of it, and there is no threshold you keep underneath.

Work and Income states the rule in one line: "For every one dollar you get from an overseas pension, your New Zealand (NZ) payment is reduced by one dollar."

No Australian pension

NZ Super

With an Australian pension

NZ Super, reducedAustralian Age Pension

Two details in that arithmetic matter more than they look.

It is the gross amount. The deduction is worked out "using the gross (before tax) rate", not what actually lands in your account. If United States tax has been taken off before you see the money, the deduction is still calculated on the figure before that happened.

It is converted, at a rate you do not choose. Your US dollars are converted at an average exchange rate "from the 16th of one month to the 15th of the next". Your deduction therefore moves with the currency even when nothing about your situation has changed.

And if your US payment is the larger of the two:

If your overseas pension amount is more than your NZ payment, you will only get the overseas pension.

Section 189(1) of the Social Security Act 2018 is the provision behind all of this: the rate of the benefit "must be reduced by the amount of the overseas pension". Section 188 says who is caught, which is anyone qualified for a New Zealand benefit who is entitled to receive, or does receive, one.

You are required to apply for it

This surprises people who would rather keep the two things apart.

Work and Income's own wording: "If you or your partner qualify for an overseas pension, you must apply for that overseas pension."

Deciding not to claim your US Social Security is not a way to keep your New Zealand Superannuation whole. It is an obligation, not an option, and it applies to your partner's entitlement as well as your own.

The part that is specific to the United States

Here is where having no agreement actually costs you something concrete, rather than in the abstract.

There are two ways an overseas pension can reach you. Under the Direct Payment Option the overseas agency pays you directly and you get two payments, one from them and one from Work and Income. Under the Special Banking Option you get a single payment from Work and Income for the whole amount, the exchange rate stops mattering, and New Zealand tax on the overseas pension "is already deducted".

The Special Banking Option is not available everywhere.

Where is your overseas pension paid from?

Australia, Guernsey, Ireland, Jersey, the Netherlands or the United KingdomYou may choose the Special Banking OptionOne payment, a fixed rate, New Zealand tax already taken off

Anywhere else, the United States includedDirect Payment Option, with no alternativeTwo payments, a rate that moves, and the tax is yours to pay

Work and Income lists exactly six places it can be used: Australia, Guernsey, Ireland, Jersey, the Netherlands and the United Kingdom. The United States is not among them.

So an American payment arrives under the Direct Payment Option, and the consequences are spelled out: "your overseas pension payments will vary as the exchange rates change", and "you're responsible for paying New Zealand tax on your overseas pension if you're getting NZ Super or Veteran's Pension."

That last line is the one to sit with. Tax on your US Social Security, in New Zealand, is yours to handle. It is not withheld for you the way it would be for someone in the same position with a British pension.

One thing to raise rather than resolve. Work and Income's sentence is a general statement about the Direct Payment Option, and it sits awkwardly beside Article 18(1)(b) of the tax treaty between the two countries, which says that payments made under the social security legislation of one country to a resident of the other "shall be taxable only in the first-mentioned State". On the face of it, that points at the United States rather than New Zealand for a US Social Security payment. Two published sources, and they do not obviously agree. The treaty article, and the saving clause that surrounds it, are set out here.

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

If you are both on New Zealand Superannuation, no. Work and Income is direct about it: "Your payments will not be affected if you only get NZ Super or Veteran's Pension." Section 189(3) of the Act says the same thing, that your rate must not be reduced by an overseas pension your spouse or partner receives.

Three situations break that, and they are worth checking against your own:

• Either of you receives a benefit rather than New Zealand Superannuation, such as Jobseeker Support or Supported Living Payment. Then your partner's overseas pension affects your payments to the extent it exceeds their own rate of NZ Super.
• Your partner is included in your NZ Super as a non-qualified partner, which is only possible if you did it before 9 November 2020. Then "any overseas pension will be equally deducted from both your payments."
• You receive income tested help, such as a Disability Allowance. Your partner's overseas pension may affect that.

It only runs one way now

For years the traffic went in both directions. The United States cut a benefit for people who also drew a pension from work that had not paid into US Social Security, and New Zealand Superannuation counted.

That has gone. The Social Security Fairness Act repealed the Windfall Elimination Provision back to January 2024, and the Administration now says simply: "We no longer reduce your benefits because of pensions from jobs that didn't pay into Social Security." The detail is in our guide to the repeal.

New Zealand has made no equivalent change. So the position today is asymmetric: your New Zealand pension no longer touches your American one, and your American one still reduces your New Zealand one in full.

What this guide does not tell you

It does not cover New Zealand Superannuation paid to you while you live abroad. Section 189(2) takes that outside the deduction entirely, and it is worked out on a different basis.

It does not tell you how a US Social Security payment is taxed in New Zealand, only that the responsibility for that tax is yours under the Direct Payment Option.

It does not tell you whether you can get a US payment in the first place, or keep it once you have left the United States, which is a stricter question than most people expect.

If you are on an older grandparented rate of New Zealand Superannuation, section 189(4) points at clause 82 of Schedule 1 and your case may not follow the general rule described here.