Steve Maharey's comments on our meeting

Further to our discussion last week, I said I would write to you again about several issues arising from our meeting:

• how the legislation expresses the rates of New Zealand Superannuation (NZ Super) entitlements;
• the abatement regime applying to the nonqualified spouse rate;
• the Jobs Jolt initiative and discrimination against older people in the job market; and
• the take-up of home equity reverse mortgages by older people.

How the legislation expresses the rates of New Zealand Superannuation

The rates of NZ Super payable to an individual are already expressed as individual amounts in Schedule 1 of the Act.

Sections 15 and 16 of the Act contain the formula by which all rates (i.e. the married, non-qualifying spouse, and single rates) are adjusted each April.

Any adjustment formula must be simple, concrete and unambiguous and this is the case for the current formula.

The abatement regime applying to the non-qualified spouse rate of New Zealand Superannuation

The rationale for the abatement regime , and why it differs to that applying to other benefits such as the Domestic Purposes and Widows Benefits, is based around work expectations.
For people who are available for full-time employment, the 70% abatement once income exceeds the prescribed level sends a clear message that full-time employment is the expected outcome.
It also ensures that total income received from NZ Super and part-time work does not exceed that of a low wage full-time employee.

For other benefits, such as Domestic Purposes Benefit, the objective is to balance work expectations with other responsibilities such as parenting.
The two-tier abatement (30%/70%) seeks to encourage, where possible, participation in part-time work to supplement family income.

Receiving the non-qualified spouse rate of NZ Super is a choice. ,br> The spouse who qualifies does not have to `include' their spouse in their payments.
If they choose not to, they are not subject to the income test, and their younger spouse's income, however high it may be, will not affect their NZ Super payments.

While the abatement regime is similar to that used for Unemployment Benefit, there are two important differences that favour superannuitants.

First, the income test uses annual income (rather than the $80 per week you referred to in previous correspondence).
This can allow irregular weekly income to be spread over a year.
The advantage of this can be shown by an example. If a person earns $200 a week for four weeks, it would reduce the net amount of Unemployment Benefit payable by $84 in each of those four weeks.
However, for the non-qualified spouse rate this income ($800) would have no effect on the rate payable as it is less than $4,160.

Second, gross income affects the gross rate of NZ Super.
Again the advantage of this can be shown by an example. If an Unemployment Benefit recipient earns $200 gross each week, the net rate is reduced by $84 each week. While the equivalent weekly reduction in gross NZ Super is $84, the actual net reduction is approximately $70.40.

Finally, when compared to other countries, the provisions made for a non-qualified spouse are advantageous in many respects.
For example, in Australia the qualified spouse (for Age Pension) does not have the choice to receive payment themselves and disregard the circumstances of a non-qualified spouse. Any income received by the non-qualified spouse will always be considered.

The Jobs Jolt initiative and discrimination against older people in the job market