Wednesday, 8 November 2017

New Zealand court: CPF payouts treated as pension in the country

By K.C. Vijayan, Senior Law Correspondent, The Straits Times, 7 Nov 2017

When a Singaporean living in New Zealand as a permanent resident had his pension benefits cut there, he took the case to court.

Mr Tan Kong Hwee, whose age was not stated, felt that New Zealand's Ministry of Social Development (MSD) should not have deducted S$668 per month from his pension, which is called superannuation.

MSD had done it because he had received NZ$2,219 (S$2,085) in total, in a series of payouts from the Central Provident Fund (CPF) in Singapore. The cuts in the superannuation payouts matched monies he had received from his CPF account. Earlier last month, a three-judge appeals court in New Zealand dismissed Mr Tan's claim that MSD should not have considered his CPF payouts in reducing his superannuation benefits.

The court ruled that CPF deposits are treated as a pension or periodic allowance under New Zealand law, and the CPF is a social security system for retirement needs, like a pension. The court also ruled it did not matter that monies are contributions from the wage earner and his employer, and not state-funded.

"The appeal raises an issue of some potential general or public importance to the extent that other Singaporean citizens who are entitled to receive New Zealand superannuation may also be affected by their entitlements under the (CPF) fund," wrote Justice Murray Gilbert on the court's behalf.

MSD figures show that as of March last year, there were 24 Singaporeans in New Zealand who received a total annualised value of NZ$296,825 in superannuation benefits. Also, a total of NZ$92,525 was deducted from their superannuation entitlements because of benefits they received from abroad.

Regular superannuation benefits of prescribed sums are payable to eligible New Zealand citizens or permanent residents over 65. They must have lived there for at least 10 years since they turned 20, five of which must be since they turned 50. The payout is modified according to conditions such as deductions from income earned abroad, including pensions.

Mr Tan, who lived in Singapore for 48 years, became a permanent resident of New Zealand in 2000 and was entitled to superannuation benefits in October 2014. But from November 2015, the MSD deducted S$668 per month from his superannuation payments to take into account the sum he had received from his CPF account. The appeals court noted that the sum was modest and Mr Tan had pursued the case in court on principle, having lost his case before two administrative panels and the country's High Court in April this year.

Mr Tan had argued that CPF monies, unlike superannuation funds, were his own monies. He said he would have received this in one lump sum if he had renounced his Singaporean nationality. He argued that this showed it was not a pension or periodical allowance as held under the relevant New Zealand law.

But the appeals court noted that the CPF showed the features of a pension or periodic allowance, and there was no error in the analysis based on the relevant New Zealand law. It added that the CPF was a mandatory social security savings scheme.

"Nor does it make any difference to the analysis that Mr Tan could have received his full entitlement in a lump sum if he had chosen to relinquish his Singaporean citizenship," said the court.

"He did not take that course and the funds remained subject to administration by the Singapore Government as part of its social security system to meet retirement and other needs."

As of March last year, superannuation payments amounting to some NZ$1.33 billion benefited 83,982 persons settled in New Zealand from more than 25 countries.

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