Payment options for overseas pensions

Payment option for people who qualify for a pension from the United Kingdom, the Netherlands, Australia, Jersey, Guernsey, or the Republic of Ireland

Information

If you live in New Zealand and qualify for a pension from the United Kingdom, the Netherlands, Australia, Jersey, Guernsey, or the Republic of Ireland, there are two ways you can choose to be paid.

The two ways are:

  • the Special Banking Option, or
  • the Direct Payment Option.

People who qualify for a pension from any other country will be paid by the Direct Payment Option.

  • The Special Banking Option

    Your overseas pension is paid into a special bank account in New Zealand and we put this money towards paying you a New Zealand pension or benefit.

    When are payments made?

    New Zealand payments are made every two weeks for pensions, or every week for benefits.

    With this option, your payment isn't affected by exchange rates.

    If your pension is from the Netherlands your holiday pay and any part of your pension based on voluntary contributions will be paid directly to you.

    Holiday pay and/or any part of your pension based on voluntary contributions are treated as income. So if you get a benefit from us, or you're included in your partner's New Zealand Superannuation or Veteran's Pension, your New Zealand payments may be affected.

    Can my partner and I choose different options?

    If you qualify for a married or civil union rate from us and your partner also gets a pension from one of these countries you can only choose the Special Banking Option jointly (you and your partner can't choose different options).

    What if I get Residential Care Subsidy?

    People who get a Residential Care Subsidy in New Zealand can also choose this option.

    When is it not suitable?

    This option isn't suitable if your overseas pension is more than the New Zealand pension or benefit (or is likely to become more if the exchange rate changes). This is because with the Special Banking Option we can't pay more than the New Zealand benefit or pension rate.

    It also isn't suitable for people who are able to get the full rate of their New Zealand pension as well as their overseas pension.

    What if I change my mind?

    You can switch to the Direct Payment Option at any time, but generally if you do this you won't be able to take up the Special Banking Option again.

    If you want to stop the Special Banking Option you'll need to get in touch with us. We'll contact the overseas social security agency and tell them which account you want your overseas pension paid into.

    What happens if I go overseas?

    It's very important that you talk with us before you go overseas.

    We can't continue your payments if you're away for more than:

    • 26 weeks for:
      • New Zealand Superannuation
      • Veteran's Pension
    • Four weeks for:
      • Sole Parent Support
      • Supported Living Payment
      • Orphan's or Unsupported Child's Benefit.

    If you'll be away longer than this, you'll need to arrange for your overseas pension to be paid direct to you.

    You can reapply for the Special Banking Option when you get back.

    What about tax payments?

    With the Special Banking Option, we deduct tax before we pay you from the time your overseas pension starts going into the special bank account. You'll still need to pay tax for any overseas payments received before this date.

    If you get a pension from the Netherlands and you haven't paid tax in the Netherlands on your holiday pay or any part of your pension based on voluntary contributions, you may have to pay tax in New Zealand.

    You won't need a tailored tax code if you only use it to pay tax on your overseas pension. However, you may still need one for a while if you take up the Special Banking Option part way through the tax year.

    You may not need to pay provisional tax, although you may still need to make some provisional payments if you take up the Special Banking Option part way through the tax year.

    If you have any questions about tax, contact Inland Revenue on 0800 227 774 (please have your IRD number handy).

  • The Direct Payment Option

    With the Direct Payment Option you ask the overseas social security agency to pay your overseas pension direct to you.

    If your overseas pension is less than a New Zealand benefit or pension you'd otherwise qualify for, we'll deduct the amount of your overseas pension (excluding any portion from voluntary contributions) and pay you the difference. Your overseas pension will vary because of the exchange rate and you'll need to pay tax on the pension in New Zealand.

    When are payments made?

    United Kingdom - every four or 13 weeks, or once a year, depending on the amount and how often you've asked to be paid. If your partner also gets a pension from the United Kingdom, you may be paid at different times because the payment cycle in the United Kingdom is based on national insurance numbers.

    The Netherlands - once a month, generally on or about the 19th or 20th of each month.

    Australia, Jersey, Guernsey, or the Republic of Ireland - every four weeks.

    Can I still get a New Zealand pension or benefit?

    Yes. If you qualify for a New Zealand pension or benefit, and your overseas pension is less, we'll deduct the amount of your overseas pension and pay you the difference (excluding any portion from voluntary contributions).

    If your pension is from the Netherlands we won't count your holiday pay or any part of your pension based on voluntary contributions in our deductions. But if you get a benefit from us or are included in your partner's New Zealand Superannuation or Veteran's Pension you'll still need to tell us how much you get for your holiday pay and voluntary pensions. That's because these are treated as income, and could affect your New Zealand payments.

    New Zealand payments are made fortnightly for pensions or weekly for benefits. You won't get a payment from us if your overseas pension is more than the New Zealand pension or benefit.

    We work out the New Zealand value of your overseas pension each month. This means the amount we pay to you is likely to vary due to exchange rate fluctuations.

    Exchange rates

    For a majority of countries we use an average exchange rate between the overseas currency and the New Zealand dollar over a specific period (the 16th of one month to the 15th of the next).

    Some countries notify us of the actual exchange rate or sometimes they use more than one exchange rate to pay their pensions in New Zealand. With these countries we use either the actual exchange rate or the average of the exchange rates for the month, whichever is the most advantageous to you.

    What if I don't want my overseas pension?

    If you're able to get an overseas pension, we must deduct it from any New Zealand pension or benefit you get. This is required by law, even if you choose not to receive your overseas pension for some reason.

    What happens if I go overseas?

    It's very important that you talk with us before you go overseas because the New Zealand part of your payments could be affected.

    What about tax payments?

    Although we deduct tax from any New Zealand pension or benefit before we pay you, you'll have to pay New Zealand income tax on your overseas pension and fill in a tax return each year. It's a good idea to keep your bank statements so you can work out what your tax bill will be at the end of the year.

    You may qualify for a tax exemption on your overseas pension if it has an effect on your New Zealand benefit (not New Zealand Superannuation or Veteran's Pension). However, you'll still pay tax on your New Zealand benefit. You may also have to pay tax on holiday pay, bonus payments and any benefits based on voluntary contributions.

    Note: If you're a Netherlands citizen living in New Zealand, you may need to pay Netherlands and New Zealand tax on your Netherlands pension. You may be able to get a tax credit on the New Zealand tax.

    You can ask Inland Revenue for a tailored tax code so that your New Zealand pension is taxed at a higher rate to cover some of your tax liability on your overseas pension. You can also arrange to pay provisional tax on your overseas pension during the year.

    If you have any questions about tax, contact Inland Revenue on 0800 227 774 (please have your IRD number handy).

  • The options at a glance

    Special Banking Option Direct Payment Option
    Which option can I choose? If you qualify for a pension from the United Kingdom, the Netherlands, Australia, Jersey, Guernsey, or the Republic of Ireland and you live in New Zealand. If you qualify for a pension from the United Kingdom, the Netherlands, Australia, Jersey, Guernsey, or the Republic of Ireland and/or any other overseas pension and you live in New Zealand.
    How often will I be paid? You get a single payment. This is paid by us, every fortnight for pensions or every week for benefits. Your overseas pension and New Zealand payments are separate. The overseas social security agency pays you according to their payment cycle. Any money you get from us is paid every week or fortnight.
    How much will I get? You get the full rate of the New Zealand entitlement, regardless of how much your overseas pension is. You get your full overseas pension. If you qualify for a New Zealand pension or benefit, we'll deduct your overseas pension and pay you the difference (excluding any portion from voluntary contributions).
    How will exchange rates affect me? Your payments aren't affected by exchange rates so you know exactly how much you’ll get each pay day. Both your overseas and New Zealand payments will fluctuate due to the exchange rate applying to your overseas pension. We have a specific way to work out the exchange rate of your overseas pension.
    What about tax? We deduct tax before we pay you from the time your overseas pension starts going into the special bank account. You'll need to make arrangements with Inland Revenue to pay tax on any payments of your overseas pension that continue to be paid directly to you. For example Holiday Pay, private pensions or any portion of your pension based on voluntary contributions. You're responsible for paying tax in New Zealand on your overseas pension. You won't have to do this if you're getting a New Zealand benefit (other than New Zealand Superannuation or Veteran's Pension) as there's an exemption in the Income Tax Act.
  • How to apply

    Your overseas pension or benefit will be paid by the Direct Payment Option unless you tell us you want it to be paid through the Special Banking Option.

    To get your overseas pension through the Direct Payment Option, you'll need to supply your bank account details to the social security agency paying your pension.

    If you want to choose the Special Banking Option call our Senior Services International team free on 0800 777 227.

    We'll send you three forms to fill in:

    • a form to set up your special bank account
    • a Special Banking Option offer form with the terms and conditions of the option
    • an information release form so that we can share information with the overseas social security agency about your overseas pension.

    Once you've completed your forms, send them back to us at:

    Senior Services International
    PO Box 27 178
    Wellington 6140
    New Zealand

  • Who to contact overseas

linksContact us

Please call us to find out more about receiving your overseas pension in New Zealand. We're here to take your call from 8am to 5pm Monday to Friday.

Contact International Services