Kiwi retirees in Australia are getting a raw deal

We are at it again, New Zealand. How many times will we roll over and have our tummies tickled by those jammy Australians, before we say "enough is enough".

They went for the jugular on Kiwi students, tripling fees to $24,000 a year and assigning them the status of a foreigner. Would we tit-for-tat back?

Never, we're a nation of jelly backbones and we continue to let their millennials pay the same as ours.

Now it's our pensioners in the firing line. Kiwis living in Australia are losing their New Zealand Super, but we're paying wealthy Australians the full whack, even when they qualify for no payment at home.

Pension Cuts Bite Kiwis

The crocodile has donned a frilly granny bonnet and is taking chunks of meat out of the Australian Age Pension. To be fair, it's chomping away at all Aussies without discrimination.

Their state pension is means-tested and they've just tightened the jaws even more in 2017.

The new means-tested rules impact those with modest wealth the most.

The steepness of the tapering curve has doubled and the crafty crocs have saved themselves A$2.4 billion (NZ$2.5 billion).

The Australian government is ruthless with its citizens and the message is clear. Use your own money before you tap on the back of the taxpayer for any retirement benefits.

Means Testing Impacts New Zealand Super

I received a letter this week from a Kiwi caught by the new rules. She had monthly pension payments of A$870. Half of the income came from New Zealand Super and the other half from the Australian scheme.

She paid New Zealand taxes for 15 years. Under reciprocal agreements her means-tested Australian pension is reduced by the New Zealand entitlement. The law prevents you earning more than a citizen of that country and stops double-dipping.

She has assets totaling A$542,000 from compulsory superannuation in Australia, a term deposit, a few shares and a 17-year- old Ford Ka. Her income from these assets is just under A$10,000. Her state pensions from New Zealand and Australia gave her another A$11,000. This is a retiree living on A$21,000 a year with a modest but nice nest egg.

Zero Pension Sneaks Up

Under the new 2017 rules, allowable assets (on top of her own home) have been reduced from A$775,000 to A$547,000. She is now close to the limit and suffered a near wipeout. Payments have been cut to A$17 a week, making it necessary to eat her capital. Once she has halved her savings to A$250,000 the full Australian state pension will kick in again.

Tapered Payments Occur In Between

The New Zealand government is only liable for amounts up to the limit of her Aussie entitlement. If the Australians owe you nothing, we cut your New Zealand Super to zero. So 15 years of working in New Zealand counts for nothing and she gets what every other Aussie would get in her circumstances, $17 a week, but paid for by us.

I feel for her. Seeing your New Zealand Super disappear before your eyes thanks to means-testing in another country is awful. But it's the consequence of choosing to live in their snake pit. Stuff just bites over there. If she comes home it solves the problem and if she lives six months in each country it solves the problem. Shame life isn't that simple.

But We Won’t Bite Back…

Yet that's not my major gripe. Do you think we do the same to their citizens moving to New Zealand to retire? No of course we don't.

We get our tummies tickled. A wealthy Australian with zero pension entitlement in their own country can move here and claim the full Super payment.

We won't pay our Kiwis who earned it, but we'll give it to Aussies coming in the opposite direction. That just rattles my cage.

The reader who had her New Zealand Super slashed wrote to the Minister of Social Development, Anne Tolley. She confirmed that lifelong Australian residents could move here and their combined pensions would be the same as a lifelong New Zealander.

If it's zero across the ditch, we'll top it up to the full entitlement, as we have no means-testing. Aussie wins again.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.