10 November 2015

Pension: Latimer v. Ministry of Social Development

New Zealand residents holding Canadian occupational pensions continue to be penalised by the way Canada has structured management of its pension scheme.  Canadian pension payments are forfeited to the New Zealand government for those receiving national superannuation in New Zealand.
In a further test case, a member of the Canadian Pension Plan, now living in New Zealand has failed to stop the New Zealand government seizing his Canadian pension.
CPP in Canada is an occupational pension similar to the New Zealand Kiwisaver system, but with some important differences: CPP contributions are compulsory for all employees (while Kiwisaver is voluntary) and CPP contributions are paid into a central fund managed by a government-appointed board (while Kiwisaver funds are managed by the private sector and are not government guaranteed).
National superannuation in New Zealand is paid to all reaching entitlement age regardless of income or wealth.  Rules are imposed to prevent double-dipping.  Any person receiving national super in New Zealand, who is also entitled to a state pension from another country, must surrender that other country’s pension as a condition of getting national super.  The Social Security Act defines an overseas state pension not by how the overseas pension is funded but by how it is administered.  CPP pensions are funded by employees and employers but the pension fund is administered by the Canadian government.  The New Zealand courts have consistently ruled that this means CPP is to be treated as a state pension which must be surrendered.
In a further test case, it was argued administration of CPP in Canada is not run by the state, it is handled by an independent board (albeit a board appointed by the state) which acts on behalf of pension holders generally.  Justice Edwards ruled this does not change the fact that payment of benefits is managed by the Canadian government.
Latimer v. Ministry of Social Development – High Court (10.11.15)

16.003