Voluntary portion of overseas pension

Voluntary contributions are additional payments people make into a country's social insurance scheme, which are over and above the regular compulsory contributions which everyone makes. Voluntary contributions can also occur where a person is working overseas, and they decide to make voluntary contributions to their home country's state pensions scheme. Not all countries have a voluntary contribution option.

Voluntary contributions can result in people getting a retirement pension from their home country which includes compulsory and voluntary contributions. The portion of their state pension which represents their voluntary contributions is not deducted from their New Zealand benefit, but the voluntary portion is treated as income for any income tested assistance.

Hans receives New Zealand Superannuation and an overseas pension from Germany of $NZ476.00 every four weeks. 60% of the client's overseas pension is attributed to voluntary contributions the client continued make to their German state pension scheme while working in Germany for 28 years.

• 60% of the four weekly pension is $285.60 or $71.40 a week
• the $71.40 is not deducted from their New Zealand Superannuation but is treated as income for their Disability Allowance
• the remainder of their German pension is deducted from their New Zealand Superannuation