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New Zealand’s financial landscape can be complex, especially for expats and those navigating life changes. Recent questions fielded by RNZ’s money correspondent, Susan Edmunds, highlight common concerns around eligibility for NZ Superannuation, the impact of changes to the KiwiSaver member tax credit, and accessing KiwiSaver funds during separation.RNZ continues to address public inquiries about money and the economy through “Money with Susan Edmunds,” with readers able to submit questions via email at [email protected], including voice memos for a more personal touch.
NZ Superannuation for Long-Term Expats
A common question revolves around eligibility for NZ Superannuation for individuals with extensive overseas work histories. One inquiry came from an expat who, along with thier wife, spent 32 years (1990-2022) working in the United States. The husband receives a pension and understands he is ineligible for NZ Super. However,his wife,an Australian citizen,has resided in New Zealand for 19 years,working for nine of those years,and receives US Social Security benefits.
Determining eligibility requires a detailed assessment, but generally, a citizen or permanent resident born before June 30, 1959, must have lived in New zealand for at least 10 years after the age of 20 to qualify. This timeframe increases for younger applicants, with a requirement of five years of residency after turning 50.
The existing social security agreement between New Zealand and Australia may allow the wife to leverage her Australian residency to meet the New Zealand criteria. Though,receiving US Social Security benefits can offset potential NZ Superannuation payments. Edmunds recommends contacting the Ministry of Social Progress for a personalized assessment of the specific circumstances.
KiwiSaver Tax Credit Cuts: A Growing Concern
Recent government decisions to reduce the member tax credit for KiwiSaver contributions are drawing criticism. The credit, which matches contributions up to $1,042 annually, has been halved twice, from a dollar-for-dollar match to the current level. “It makes a mockery of people struggling to contribute the $1020 a year to get the full allotment, only to have that halved,” one concerned individual stated.
according to analysis from Koura KiwiSaver founder Rupert Carlyon, someone earning $80,000 and contributing three percent of their salary, starting at age 30, would have seen a retirement balance of $594,000 at age 65 under the previous system. With the reduced credit, that projection drops to $572,000.
A key concern is whether the $180,000 cap on the credit will be indexed to inflation. Without indexing, more individuals will reach the cap sooner than anticipated, diminishing the benefit over time.
KiwiSaver Access for Homeowners Facing Separation
Navigating KiwiSaver access can be particularly challenging for individuals undergoing life transitions, such as separation.One recent inquiry involved a homeowner co-owning a property with their ex-partner, hoping to utilize KiwiSaver funds to reduce the mortgage burden now that the debt is possibly serviced by a single income.
While KiwiSaver is often associated with first-home purchases, accessing funds for existing homeowners is more complex. Individuals who have never previously used KiwiSaver to purchase a home may qualify as “second-chance buyers,” but must demonstrate a financial position comparable to a first-time buyer. Previous requirements involving asset limits have been removed,but a meaningful hurdle remains: applicants must no longer have any ownership interest in any property.
Edmunds advises consulting with a KiwiSaver provider to explore potential options, acknowledging the frustration many feel at being unable to leverage their KiwiSaver funds to reduce existing debt.She notes that the scheme operates on a trade-off – incentives from employers and the government in exchange for locking funds away for retirement – and allowing early access for debt reduction could encourage increased borrowing.
Ultimately, navigating new Zealand’s financial systems requires careful consideration and personalized advice. Resources like RNZ’s “No Stupid Questions” podcast and “Money with Susan Edmunds” newsletter, alongside direct consultation with relevant government agencies and financial advisors, are crucial for making informed decisions.
