Despite superannuation changes, New Zealand attracts migrants

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Clive Fernandes
Auckland, May 27, 2022

How will the changes to New Zealand Superannuation affect those migrating to New Zealand?

Superannuation in New Zealand has historically been accessible and convenient for residents of New Zealand, requiring a simple application either 12 weeks before 65 or anytime after.

This has made New Zealand an attractive destination for individuals and families looking for a fresh start in a new country. Residents are currently required to have lived in New Zealand for at least ten years since the age of 20, with five of those after the age of 50 to be eligible for the New Zealand Superannuation. Sadly, for many, this will be changing in July 2024 when the Fair Residency Amendment Act of 2018 comes into effect increasing this requirement.

Attractive destination

Before we delve deeper, we must address the fact New Zealand has become an incredibly culturally diverse country, with immigrant populations growing with every census.

This is especially true within the Auckland region, showing the greatest growth within Asian communities of 99.6% since 2006, Indian populations, in particular, have seen a 54.1% increase between the 2013 and 2018 censuses.

National Capital Founder Clive Fernandes (Picture Supplied)

This is all indicative that New Zealand has become an attractive destination for people across the globe, whether due to the safe environments to raise families, career opportunities or the excitement involved with exploring Aotearoa’s clean, green landscapes.

The quality of life that you find here in New Zealand is a big drawcard, and this can partially be attributed to the ease with which immigrants can become eligible for superannuation here (10 years is the lowest globally).

As the population of New Zealand grows, along with our tax paid towards superannuation, the issue with the New Zealand superannuation and its growing inability to provide for retirees has become more prevalent. This spurred parliament toward making changes to the superannuation qualifying period, increasing it from 10 to 20 years.

Small change brings a big difference

National Party’s Shadow Treasurer Andrew Bayly​ was quoted as saying “This bill presents a small but necessary change to how long it takes for an immigrant to become eligible for Superannuation in New Zealand, shifting from a globally low 10 years, up to 20 years.”

These changes will result in the cost of New Zealand Superannuation falling, with projections of savings of up to $162 million annually in 20 years’ time.

These changes were made under The New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill, which may sadly affect some of your friends and family planning to move to New Zealand from their home countries.

In order to lessen any impact these changes will have on existing residents, the Bill in question will be gradually introduced, thereby phasing in the new 20-year period whilst not negatively affecting residents who have planned for their retirement with superannuation in mind. The bill was supported by both Labour and National parties, with amendments championed by Labour MP Priyanca Radhakrishnan, Minister for Diversity, Inclusion and Ethnic Communities, who protested the original iteration of the bill, quoted as saying “This bill will disproportionately affect some people, and that is because immigrants from certain countries with whom we have social security agreements will not actually be affected by this, but immigrants from countries like China and India will be affected.”

Gradual effects

This bill, along with amendments, will be rolled out starting July 2024 and will be finalised in July 2042. These changes will affect many, as for every two complete years that a resident was born, after July the first 1959, will be required to live one additional year to qualify for New Zealand superannuation. What this means is that those born in July 1977, or after, will be required to see out the full 20-year residence to qualify.

Time spent in New Zealand territories and states, such as the Cook Islands, Niue, and Tokelau, will still contribute toward these changes and qualify for New Zealand Superannuation. In addition to this, those countries with social security arrangements such as Australia, Canada, Ireland, the UK, and the Netherlands will also be included in contributing toward these superannuation requirements.

New Zealand’s universal superannuation scheme has provided for generations of New Zealand residents over the years. But, with the ageing population and estimations that roughly 22% of people will be 65 or older by the 2030s, fewer working-age people will be around to fund the costs of retiree income. Despite these changes, New Zealand remains an amazing place to migrate, and if you plan ahead based on the requirement changes that I have discussed, then there is no reason you cannot enjoy the benefits of retirement in New Zealand.

Clive Fernandes is an Authorised Financial Adviser and the director of National Capital, a financial advisory firm that provides personalised investment advice, with a primary focus on KiwiSaver.
Disclaimer: The above article is not intended to be personalised advice. It is general in nature and may not be relevant to an individual’s circumstances. Before making any investment, insurance, or other financial decisions, you should consult a professional financial adviser. A copy of Clive Fernandes’ disclosure statement is available on request and free of charge.

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