Pensions from back home.

[kokopeli]

The downside of the foreign-income tax exemption is that you aren't entitled to claim any NZ tax credits or family assistance while taking advantage of the exemption.

My accountant reckons that it's worth taking the exemption in the first year in NZ because you can't claim tax credits anyway. After that, you'll need to work out whether your Kiwi income + foreign income would push you over the tax credit threshold. If it does, it's probably worth keeping the exemption for the full four years. If it doesn't, it might be worth waiving the exemption. You're allowed to relinquish the exemption, but you can't opt back in. Once you're out, you're out.

From memory, I think there's a box to tick on the IRD number application form.

And the tax credit thresholds are quite low.

[MotherBear]

Originally Posted by MotherBear

While we're on the subject of pensions, if anyone would like to sign the on-going petition against discrimination of British State pensioners who retire in certain overseas countries (NZ in this case) and won't get any annual increases in their state pension, here's the link . Don't know if it'll do any good but has to be worth a try. We've faithfully paid our NI contributions and done everything else the same as those who live in countries who will get the annually uprated pensions, yet we're being penalised purely because of the country we've chosen to retire to.

British State pensions are paid out of the National Insurance Contribution fund which, the Government's own Actuary Department stated in early 2006, has a surplus exceeding current requirements of over £30 billion and growing.

Well, here's the response I got via email today. Just as I expected, but I still can't understand why they think it would cost them to pay us expats the same increases as UK residents (or anyone else living in the 'chosen' countries). If we still lived in the UK we'd be getting it anyway so why does it matter where we are in the world? They're just trying to pull the wool over our eyes.

Thank you for your e-petition about the annual uprating of State Pensions payable to British pensioners residing abroad.

As the petition correctly points out, State Pensions are paid out of the National Insurance Fund (NIF) rather than general taxation. The petition argues that the Government should use the current surplus in the Fund to meet the cost of uprating the State Pensions of all recipients living overseas.

The NIF is maintained under the control and management of Her Majesty's Revenue and Customs. It is run on a "pay-as-you-go" basis; current income, mainly from national insurance contributions, pays for current expenditure mostly on Contributory Benefits. There is a requirement for the NIF to have sufficient funds, together with a working balance, to meet benefits expenditure. The uses to which the NIF can be put are clearly specified in legislation, with the majority spent on state pensions.

National insurance contributions and the associated social security benefits operate within the Government's fiscal rules designed to ensure sound public finances. When there is a surplus it is invested. Without this the Government would need to raise the equivalent through other means to fund public services. The NIF surplus is not therefore an extra resource available to spend.

To fund annual pension increases for all recipients in countries where upratings are not currently payable, we would have to raise additional income from UK taxpayers. Our priority, given the limited resources available, is to ensure that pensioners resident in the UK continue to see an increase in their living standards commensurate with the growth of the economy as a whole.

[nickydwuk]

Thats about as clear as mud

Can we claim our UK pension and NZ pension (I know it's being greedy)? If not what happens to our contributions we made in the UK or NZ?

[MotherBear]

Originally Posted by nickydwuk

Thats about as clear as mud

Did you expect anything else from the government when it's trying to sidestep an important issue?

Originally Posted by nickydwuk

Can we claim our UK pension and NZ pension (I know it's being greedy)? If not what happens to our contributions we made in the UK or NZ?

You can only claim one and I get the impression they'd prefer you to claim the UK one unless you've been in NZ for some time and got your feet under the table. Reading through the links earlier in this thread might throw some light on the matter.

[MotherBear]

Originally Posted by MotherBear

Our priority, given the limited resources available, is to ensure that pensioners resident in the UK continue to see an increase in their living standards commensurate with the growth of the economy as a whole.

And yet they'll still pay the increase to anyone living in Spain or one of the other designated foreign countries. Restricting the increases to the UK alone is one thing, but distinguishing between one non-UK country and another doesn't sound right to me.

[nickydwuk]

Ah ... but Spain is part of the EU. Hence any EU citizen can claim full benefits from the UK .. at our expense.