NZ Superannuation since 1898

On 1 November 1898, New Zealand granted the elderly an old-age pension, nowadays called New Zealand Superannuation (NZ Super). This story tells the journey taken to receive the pension and the stringent criteria, including open court hearings to attest you were of 'good moral character'. Young looking women over the age of 65 were often a puzzlement for magistrates!

BACK THEN

AND NOW

The elderly - early forms of assistance

Prior to the Old-Age Pension being available in 1898, those aged over 65 were expected to provide for themselves or be supported by their families. However, many older, single workers, particularly single men, had no family connections in New Zealand. Friendly Societies provided financial support to members and their families if they became ill or died. (See Te Ara).  A small group of elderly received Imperial or New Zealand war pensions for military service, and some former public servants obtained government pensions on retirement. Those who could no longer work or live independently often became residents of benevolent institutions set up by provincial charitable aid boards from the 1860s (See Te Ara).

The long depression years: 1870s - 1890s

After the gold rush years, the NZ economy had slumped into the long depression during the late 1870s until the early 1890s: "There was much hardship, with ‘sweating’ (exploitative labour conditions) in the factories, a lack of jobs for rural workers, and farmers going bankrupt." (See Te Ara).  The really destitute elderly could receive assistance under the Hospitals and Charitable Aid Act 1885, which "regulated and managed the distribution of food rations, medicine, hospital out-patient medical treatment to the destitute, as well as the admission of the destitute sick, incurable, elderly, orphaned or neglected children, to various charitable institutions." (See Archives New Zealand). 

Forms of support for elderly debated

By 1881 people aged 65 comprised 1.3 percent of the census population, which increased to 2.1 percent in 1891. With the growing numbers of relatively poor elderly people, debate ensued on additional forms of support. Some proposed widening the scope of family responsibility or private charity, whilst others supported expanding the role of Friendly Societies. There was also debate as to whether to replicate the English Poor Law whereby parishes in England and Wales provided relief  paid for by levying rate payers.  Women’s organisations, such as the National Council of Women, the Women's Christian Temperance Union and the Mothers’ Union. urged governments to support families, women and children (See Te Ara).  Furthermore, the temperance movement campaigned against alcohol, arguing it was the cause of poverty, ill health, neglect and abuse of families, immorality, and social and economic instability (See NZHistory).  

Legislative journey for universal pension

Colonial Treasurer Sir Harry Atkinson had proposed a compulsory national insurance scheme in 1882, whereas others proposed a universal pension. The Registration of People‟s Claims Act was passed in 1896 to establish who might be entitled to claim the pension. The Old Age Pensions Bill was vigorously debated during its three readings in Parliament. A strong advocate for the pension scheme was Aucklander William Leys who had published a pamphlet which featured during Parliamentary debates. (See New Zealand Parliamentary Debates, vol. 100 1897, p. 644)

The birth of the old-age pension: 1 Nov 1898

Legislation passed by  Richard Seddon’s Liberal government on 1 Nov 1898 was based on the principle that the state had some responsibility for elderly citizens who were not able to provide for themselves. As stated by W.C. Walker during the Parliamentary debates, "The only necessity for a pension Bill is that fortune is so capricious, circumstances so various, family history is so extraordinary, [and] calamities sometimes come down up on people nobody knows how."  (See New Zealand Parliamentary Debates, vol.100, 1897, p. 698)

How much was the means-tested pension?

The pension was £18 per year which was about one third of the average wage. It was funded from general taxation and paid in monthly instalments beginning the first day of each month. It was means-tested whereby you could earn up to £34 and have property worth up to £15 to get the full amount. The amount was reduced by £1 for every £1 earned above £34 and for every £15 net capital value  of property above £15. Hence, if you earned £52 and above, or had £270 worth of property, you would not receive a pension. Māori were eligible to receive the pension but their shared ownership of land held under customary title meant that claimants had to rely on the Magistrate‟s discretion to grant a pension, until Māori land was excluded in the asset test in 1936.    

Who was eligible? 

Men and women had to meet certain criteria to qualify for the pension, including being over 65, earn below a certain income and be ‘of good moral character’ (see NZHistory).  However, some were specifically excluded under section 64 of the Act: (1) Māori (the actual words used were “aboriginal natives of New Zealand”) “…to whom moneys other than pensions are paid out of the sums appropriated for Native purposes by the Civil List Act, 1863”; (2) Aliens; (3) Naturalised subjects unless they had been naturalised for at least five years; (4) “Chinese or other Asiatics, whether naturalised."  

Claiming your pension 

Step 1: Fill out a pension-claim form which was filed with Deputy Registrar

A Registrar was appointed to administer the Act and the colony was divided into districts and District Registrars appointed. Each applicant had to fill out a pension-claim form which could be obtained from the Post Office. The form set out the eligibility criteria and each claimant had to make a statutory declaration before a Justice of the Peace, solicitor, Deputy Registrar, or Postmaster affirming the contents are "true and correct in every material point".  The form was then sent to the Deputy Registrar for filing and recording in "The District Old-age Pension-claim Register". 

Step 2: Attend an open court hearing

The Deputy Registrar notified the Stipendiary Magistrate who held an open court investigation as to whether the claimant was entitled to the pension, and, if so, for what amount for the first year.  Witnesses could be called to testify as to their knowledge of the claimant. The Court's investigations could include a check of the Land Transfer and Deeds Registration Offices registers; Supreme Court records for registrations under Chattels Transfer Act, 1889; the district valuation roll; and the registers and records of the Registrar-General's department.  

Step 3:  Details recorded on the District Old-age Pension Register 

For successful applicants, the Magistrate authorised a “pension-certificate” and the Deputy Registrar entered the pensioner's name and details on the District Old-age Pension Register. The pension-certificate specified the annual amount payable where that was less than the full amount. The Register was a public list and anyone could inspect it on paying a fee of one shilling.  

Step 4:  Applications renewed annually 

Applicants had to renew their "pension-certificates‟ each year to ensure the income and assets tests were still adhered to, as well as the conditions as to character and crime convictions. However,  a pensioner could lose entitlements at any time, "if any pensioner is convicted of drunkenness, or of any offence punishable by imprisonment for not less than one month and dishonouring him in the public estimation... could forfeit any one or more of the instalments falling due next after the date of conviction.” (Section 49 of the Act).  

Administration of old-age pensions: 1904 - 1930s 

In 1904, the  Old Age Pensions Department was established. From 1909-1912, pensions were administered as a division of the Post and Telegraph Department. Then in 1913 the  Pensions Department was established which managed pensions for the next two decades.

Local Authorities & private retirement schemes introduced: 1908 - 

With the old-age pension in place, New Zealand governments looked for ways to encourage people to provide for their retirement privately rather than expanding the scope of the tax-funded pension. The Local Authorities Superannuation for civil servants had been set up in 1908. Two years later, the National Provident Fund was established for the less well-off with pound-for-pound government subsidies and was administered in conjunction with the registration and supervision of Friendly Societies. Under the Finance Act 1915, individuals contributing to private superannuation funds received deductions from taxable income of up to £100 a year. In 1916 concessions were extended to the investment earnings of superannuation funds, and in 1921 employer contributions qualified for tax concessions.

The Great Depression years: 1930s

The Great Depression during the 1930s caused mass unemployment and families struggled to cope, relying on work-relief schemes and charity.  In 1934, the Pensions Department gave a five per cent increase in the old age pension, which increased the amount to £43 per annum, and back pay was given for the preceding six months.

Pensions Amendment Act, 1936

Following the election of the new Labour Government in 1935, Michael Joseph Savage led the introduction of a range of social reforms, the building of state houses and improved access to education and health -  the ‘cradle-to-grave’ welfare state took shape. Under the Pensions Amendment Act, 1936, the residency requirement to receive the old-age pension decreased from 25 years to 10 years in 1937. Previous restrictions that prohibited 'Asiatic' residents gaining the pension and assets-testing of Māori land were removed.  

Two-tier changes (60 & 65 years) under Social Security Act, 1938 

The 1938 Social Security Act overhauled the pension scheme and extended benefits for families, invalids and the unemployed. It introduced a two-tiered system for payment of the pension: the means-tested Age Benefit at age 60 years (£78 a year) and a small universal Superannuation Benefit at age 65  (£10 a year) effective from 1940. It was also promised that this universal benefit would gradually be increased to match the Age Benefit, but this did not eventuate until 1960. Both payments required 20 years residency with grandfathering of the 10 years for those living in NZ on 15 March 1938. A new Social Security tax of 5% of earnings (one shilling in the pound) was introduced to cover the increased costs of pensions, other social security payments and health.   

Social Social Department established, 1939

Under the Social Security Act, the Social Security Department  was established on 1 April 1939 under the control of Social Security Commission.  It replaced the former Pensions Department and absorbed the major portion of the Employment Division.   

Overseas portability with Australia, 1948

Commonwealth Government discussions on reciprocal pensions in 1938 led to the Social Security (Reciprocity with Australia) Act, 1948.  Since then, over the years, portability arrangements for residing overseas exist where reciprocal agreements have been negotiated. (See Work and Income).    

Benefit rate for single and married: 1950s - 1960s

Over the years, successive amendments raised the amount of the pension and liberalised the conditions for eligibility. During the 1950s and 1960s the Age Benefit for a couple varied between 50 - 60 % of the average gross wage, with a general downward trend. However,  the benefit rate for single people rose from 50 to 60 % of the married rate (recognising that single retirees often had higher living costs than couples who were sharing a household).  

Social Services: 1950s-60s

The range of social services available during the 1950s - 1960s included Meals on Wheels.  and residential housing, such as the Salvation Army Homes, pensioner flats and hospitals for the elderly.  

Department of Social Welfare formed 1972

On  1 April 1972, the Department of Social Welfare formed from the amalgamation of the Social Security Department and the Child Welfare Division of the Department of Education. That same year, the Royal Commission on Social Security recommended higher real pension levels, with parallel proposals for increased rates for other benefits. The Age Benefit for a couple increased to around 68 percent of net ordinary time wages.  By 1976 the Age Benefit for a couple had risen to over 72 percent of net ordinary time wages. The residence qualification for the Age Benefit (received at aged 60) was reduced to 10 years while Superannuation Benefit (received at age 65 if not eligible for an Age benefit) remained at 20 years.  

National Superannuation Scheme, 1977 -

In 1975 the third Labour Government set up a compulsory contributory superannuation scheme. Combined contribution rates for employees and employers were to be phased up to 8 percent of earnings, funding individual contributions-related pensions at retirement. The contributory scheme was short-lived and repealed by Rob Muldoon's newly elected National Government in 1976. In 1977, a universal scheme called National Superannuation was introduced to replace the means tested Age Pension and Universal Superannuation Benefit. Later in 1985 the Labour Government introduced a taxation surcharge on the other income of superannuitants. In the first year of the surcharge about 10 percent of superannuitants paid the equivalent of their full superannuation back in surcharge payments, and about 13 percent repaid a partial amount.

Cutting back superannuation, 1980s-90s

For details on the extent of the cut-back measures introduced, see Retirement income in New Zealand   

Surcharge: 1985-1998

In 1985 the Labour Government introduced a taxation surcharge on the other income of superannuitants. The surcharge rate was increased  in 1991 from 20 to 25 percent and the income exemption lowered so that more superannuitants were affected by the surcharge. The surcharge was removed in 1998 as part of the Coalition agreement of the National-New Zealand First Government. making the pension fully universal. As it is a taxable pension the tax system provides a small degree of claw back from a high income recipient.   

Tax Concessions: 1988

Tax concessions on contributions to private and occupational schemes were abolished in 1988, as were tax concessions to the superannuation funds. Furthermore, private superannuation paid out from fully taxed funds was tax-free for recipients. For surcharge purposes half of any private pension was counted as income.  

Net rate 

The net rate for gross pensions had been set at 80% of gross ordinary time wages. However, wage earners on average paid higher tax rates than superannuitants without other income. This meant that by 1978 the net rate for a couple was over 89 percent of net after-tax wages. In 1989 the Labour Government announced it was suspending the 80 percent link of superannuation to wages. The renamed "Guaranteed Retirement Income" was to be adjusted by the lower of price and wage movement, and intended to move in a band of between 65 and 72.5 percent of net wages.  

Eligibility age raised to 61 years (1992) & 65 years (2001)

In 1990 the new National Government  simplified the residency requirement to 10 years, with 5 after age 50. The age of eligibility increased to 61 in 1992, then gradually increased to 65 between 1993 and 2001 under the New Zealand Superannuation and Retirement Income Act 2001.  

Restructuring of NZ Super governance: 1992 - 

The Minister for Seniors position was established on 24 July 1990 as a post separate from Social Welfare. The Department of Social Welfare was restructured in 1992 to create business units. Later on, following the merger of business units, Work and Income (WINZ) was formed. Since 1 October 1998, the National Superannuation Scheme has been administered by WINZ.  The Ministry of Social Development (MSD) was established with the amalgamation of the Ministry of Social Policy and WINZ on 1 Oct 2001. The Office for the Seniors was established within MSD and has the role of being the primary advisor to the Government on issues affecting older people.  Senior services have been  administered by Work and Income (WINZ) since 1 March 2010. 

See: 

• Ministry of Social Development: Historical Timeline 
• Office for Seniors
• Work and Income (WINZ): Senior Services

Compulsory retirement at 65 illegal, 1999 -

Since 1 February 1999 it has been unlawful to discriminate on the ground of age in employment against people 16 years or over. Retirement at aged 65 was not longer compulsory, with some exceptions as set by by the Human Rights Commission.

Lobby Groups: Grey Power and Age Concern 

Groups representing the interests of older people include Grey Power New Zealand and Age Concern New Zealand.  

Grey Power:

Formerly known as the Auckland Superannuitants Association, Grey Power was started in February 1986 to campaign for the abolishment of the surtax introduced on superannuitants' other income. Following media attention, similar organisations formed elsewhere which led to the creation of the Grey Power New Zealand Federation Inc, which is a voluntary subscriptions-based organisation. It's brief has since widened to include the welfare and well-being of those in the 50 plus age group.   

Age Concern:

Age Concern is a community based not-for-profit organisation dedicated to enhancing quality of life for older people. It's earliest beginnings was in 1948 when the Otago Old People’s Welfare Council was set up to provide information, a drop-in centre, and home support services including one of the first Meals-on-Wheels services in NZ.  With other councils setting up similar services, the need for national coordination led to the National Old People's Welfare Council being formed in February 1972, which officially became Age Concern New Zealand in 1991.  

Nowadays: NZ Super

For current information on eligibility criteria and the amount received, check: 

Work and Income: Senior Services: https://www.workandincome.govt.nz/eligibility/seniors/index.htmls

KiwiSaver, 2006 - 

The KiwiSaver Bill (2006) established the KiwiSaver scheme which is a voluntary savings scheme to encourage long-term savings so as to increase financial independence, particularly in retirement. It was designed to complement New Zealand Superannuation.

Supergold Card: 2007 - 

People aged 65 and over automatically qualify for the SuperGold card, introduced in 2007 by Winston Peters. Cardholders are eligible for subsidised or free public transport, discounts at various businesses, and concessions on local and central government services.        

Residing in NZ - 'Aging in place' policy

The Government’s ‘Aging in place’ policy established in 2002 encourages older people to live in their own homes for as long as they can, by providing community support, including Meals on Wheels, winter energy payment towards heating costs, household help and small mobility aids. Increased demand for smaller houses and sections for senior citizens have seen others move into retirement villages, ‘granny flats’ on relatives’ property or kaumātua flats' on marae.  

Older people assessed by their local district health board as unable to look after themselves may need long-term residential care in a rest-home or hospital. This may be subsidised by the Ministry of Health following a financial means test. (See: Work and Income: Residential Care Subsidy) 

The debate continues on pensioner age: raise / lower / status quo

Further information: 

• New Zealand Superannuation: www.seniors.msd.govt.nz. 

• Te Ara Ahunga Ora Retirement Commission which helps New Zealanders prepare financially for their retirement: https://retirement.govt.nz/

• Government Superannuation Fund Authority: www.gsfa.govt.nz