MSD to review all debt issued to overseas pensioners


The Ministry of Social Development has been told it is skating on thin legal ice when it comes to making hundreds of pensioners who were stuck overseas during the pandemic pay back their superannuation. The department is now reviewing every single case.

Retirement Commissioner Jane Wrightson sought legal advice in March after months of “numerous” approaches from pensioners who were unable to return to New Zealand within six months of leaving, and were being asked to pay back 26 weeks’ worth of superannuation.

Seven thousand, three hundred and two payments were suspended and canceled between April 2020 and March 2022. The Superannuation and Retirement Income Act states if a superannuitant does not return to New Zealand within 30 weeks of being overseas, their payments may cease.

The ministry could not say how many people it had asked to pay back the payment, but advocates estimate the number is in the hundreds. It did so on the basis that the difficulties in returning to New Zealand associated with the pandemic were “reasonably foreseeable”.

But the advice from law firm Dentons Kensington Swan did not agree.

“There are strong arguments that the ongoing application of the policy is unlawful in any event. It applies an overly broad interpretation of what could be reasonably foreseen based on general and unspecified risk. This wide interpretation is unlikely to be preferred by a court given the plain words, statutory context (which is fundamentally concerned with enabling the payment of pensions overseas) and the severity of the impact on those affected.

“It is also arguably not open to MSD on the facts, where the circumstances that seriously exacerbated MIQ difficulties were not reasonably knowable at the time of departure (as has been accepted for the purposes of the October 2021 policy).”

“My legal advice is that MSD’s applications of its policies would be vulnerable to challenge by way of judicial review.”
– Jane Wrightson, Retirement Commissioner

The October 2021 policy referred to the department’s decision to allow an exemption for those stuck in Australia who left New Zealand during the travel bubble, but could not return home because the bubble closed.

MSD said it did not stop payments for these people because their predicament could not have been foreseen.

However, the legal advice said the October exemption only added to MSD’s shaky legal footing because the department was now being inconsistent.

“There are strong arguments that the October 2021 policy should be similarly applied to other superannuitants that departed overseas during the relevant period. As a matter of administrative law, it is acceptable to develop a policy to guide the exercise of a discretion. However, it must be consistently and equally applied.

“Any distinction between those who traveled to Australia and those who traveled to other countries appears arbitrary and unreasonable on the facts and would be vulnerable to challenge in judicial review proceedings.

“There are good arguments that date range of 19 April 2021 to 23 July 2021 is unreasonably narrow and unsupported by the timeline of events. At the very least, an inability to secure a MIQ place for more than six months was arguably not reasonably foreseeable until at least late September 2021. ”

Jane Wrightson shared this advice with MSD chief executive Debbie Power and a month later sent her an email, asking her to help the superannuitants.

“Given the vulnerability of MSD’s legal position, I think the solution is to properly and lawfully extend the existing October 2021 approach to other pensioners who similarly could not have anticipated what was to come and the impact on MIQ … our lawyers note that the real unlawfulness arises not from applying the October 2021 policy, but from applying it inconsistently and unequally.

“The longer it drags on, the longer pensioners are being put under significant stress because of MSD demands for the return of pension money. Not only are the individual decisions vulnerable to review, but my legal advice is that MSD’s applications of its policies would be vulnerable. to challenge by way of judicial review. I continue to be contacted by a range of individuals adversely impacted by MSD’s decisions. It seems highly unreasonable to force them to go through a legal challenge in order to get a fair result when there is a clear and lawful pathway.

“In my view, the position laid out in the legal opinion is compelling. It makes it clear to me that this issue could and should be readily capable of resolution without requiring individual superannuitants to go through the additional stress and expense of challenging MSD’s policies or pursuing the matter through the BRC and Authority. ”

The BRC – Benefit Review Committee – has already heard a handful of cases from pensioners pushing back against the debt they have been asked to pay.

MSD confirmed about 300 clients had requested a review of the decision over the course of the pandemic.

“Pensioners are very stressed and their decisions are very emotional lot a lot of them will just walk away because it’s not easy. It’s not easy or gentle on them. ”
– Karen Pattie, beneficiary advocate

Beneficiary advocate Karen Pattie said no one had been successful in the BRC, but all those who had taken their cases to the Social Security Appeals Authority (SSAA) – a BRC appeals process – had the decision overturned in their favor.

“Which is very confusing… the BRC hearing should be consistent. The SSAA should not have to be looking at the paperwork and saying no, this is wrong, we’re going to have to overturn it, ”she said.

Pattie noted the BRC decisions mostly rode on MSD’s rationale that the difficulties getting home were foreseeable.

But she said the authority decisions were frustratingly closed doors, so neither herself as an advocate, nor the pensioner whose case was being considered, knew on what grounds the decision had been overturned.

“It’s not transparent and I can’t use that information at my next BRC hearing because I don’t know why they’ve decided to just overturn it.”

She said the situation had become unnecessarily messy.

“Pensioners are very stressed and their decisions are very emotional lot a lot of them will just walk away because it’s not easy. It’s not easy or gentle on them. ”

She urged anyone who had been asked to repay their debt to file with the BRC.

“It’s really simple… and if they lose, they need to take it through the SSAA. Again, that paperwork is really simple but they all need to do it because they just don’t need to accept it.

“All the debt should be re-looked at because it’s not making sense.”

Debbie Power wrote back to Jane Wrightson at the end of May to acknowledge the legal advice and her requests, but maintained MSD’s actions had – for the most part – been correct.

“You have requested that we extend the October 2021 policy to a wider group and timeframe. We disagree the timeframe should be extended back to January 2021, however, we do agree with your advice that superannuitants who traveled to other countries during the [travel bubble] period should benefit from the same underlying factual consideration. “

MSD Client Service Support general manager George van Ooyen confirmed the exemption would be widened.

“After careful consideration, and taking into account the evolving global circumstances, MSD has decided that the October 2021 policy should be extended to superannuitants who traveled to other countries during the Australia-New Zealand travel bubble period.

He also said that at other times during the pandemic, the delays may not have been reasonably foreseeable and MSD would now review all instances where a pensioners payment had been stopped and all cases where the person had been asked to pay back the debt.

“We are committed to making sure everyone receives their correct entitlements, and are doing this to ensure the unique circumstances of those who were stuck overseas during the pandemic have been properly taken into account.”

He said decisions currently going through the review process would be checked with priority.

“We appreciate the difficult circumstances many superannuitants faced in trying to return home during a disruptive period for international travel, and we’ve been doing everything we can to help those affected.”

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