Swiss perspectives in 10 languages

‘New Zealand is robbing us of our Swiss pensions’

hügellige Agrarlandschaft mit weidenden Kühen
At the end of 2016, almost 7,000 Swiss citizens were living in New Zealand. Around 1,000 of them were over the age of 65. Tim Graham/Getty Images

Swiss expats living in New Zealand want to use Automatic Exchange of Information (AIE) to get a fair distribution of pensions in their adopted country, and they’ve persuaded one chamber of Swiss parliament to take up their cause.

For many people who have spent their lives grinding away at a job in Switzerland, the idea of retiring at 65 and heading for an island where the cost of living is low and a Swiss pension goes far is highly appealing.

But in some parts of the world, the reality is less than rosy.

In New Zealand, for example, foreign retirement income is deducted from the local pension that a retiree receives. 

“If you’ve lived here [in New Zealand] for at least ten years, you automatically have the right to receive a federal pension,” explains Peter Ehler, a dual citizen of New Zealand and Switzerland. “Whether you’ve ever worked even a single day or paid a single dollar in taxes is irrelevant.”  

But the system works against many foreigners on the island – particularly the hardworking Swiss.

+ Where do the Swiss abroad live?

“The result is that many of us Swiss don’t even receive a New Zealand pension, although we have the right to one,” says Ehler.

That’s because in 2016, New Zealand collected Swiss pension payouts worth more than 1.8 million New Zealand dollars (CHF1.07 million) or – as Ehrler puts it – “stole them from us Swiss”. 
 
As a member of the Swiss Society of New Zealand and a delegate to the Council of the Swiss Abroad, Ehler has been campaigning – unsuccessfully – for years against what he perceives as the New Zealand government’s plundering of money belonging to Swiss residing in the country. The government refuses to negotiate social insurance treaties with Switzerland, among other countries.

Revealing hidden funds

But now that New Zealand is in the process of negotiating the automatic exchange of information with Switzerland, which would lead to bank data (such as account balances and interest earned) being transferred between the countries, the Swiss in New Zealand see an opportunity – or a threat, depending on their circumstances.

That’s because AIE is likely to uncover Swiss pension money being hidden from the New Zealand authorities in Swiss bank accounts by Swiss residents of the Pacific island. And if this money is identified, it could be accompanied not only by hefty additional payments, but also by penalties for tax evasion. 

The honest expats, on the other hand, are looking forward to fairer regulation of pension payments in their adoptive country. They have called on the Swiss parliament and federal government to use AIE as a bargaining tool to persuade New Zealand to draw up a social security treaty with Switzerland.

The lobby of the Swiss Abroad has already claimed partial victory. In September, the Swiss House of Representatives approved the extension of AIE to 39 of 41 countries proposed. The exceptions: Saudi Arabia and New Zealand.

More
ueli maurer speaking in the swiss senate

More

Swiss Senate rejects New Zealand exception

This content was published on The Senate voted on Tuesday to keep New Zealand on a list of countries with which Switzerland will practice the Automatic Exchange of Information.

Read more: Swiss Senate rejects New Zealand exception

In the case of New Zealand, it’s a matter of protecting the interests of Swiss citizens, according to the new party leader of the Swiss People’s Party, Thomas Aeschi. The House of Representatives was given the task of negotiating a social insurance treaty with New Zealand as a prerequisite to the automatic exchange of information.  

‘No protection for law breakers’

But convincing the second house of parliament – the Swiss Senate – to negotiate a special deal for New Zealand is proving more difficult. In November, a clear majority of the members of the Senate’s Economic Affairs and Taxation Committee were in favour of expanding AIE to all 41 countries, including New Zealand. According to the committee’s president, centre-right Radical Party parliamentarian Martin Schmid, a special agreement with New Zealand would also give protection to Swiss citizens who break the laws of the Pacific island nation.

And on December 5, the Senate followed the recommendation of the committee, passing the AIE for New Zealand without a special deal and thus sending the issue back to the House for further discussion.


New Zealands position

Kati Fréchelin, a lawyer with the Swiss Federal Social Insurance Office, confirms that in New Zealand, pensions that residents receive from another country are deducted from the amount received from the New Zealand government. Negotiating a social insurance treaty would require a change to New Zealand’s laws, Fréchelin said.   

“In the case of receipt of distributions from a foreign pension, we would expect that New Zealand not reduce the local pension by the amount received from abroad, or that the deductions it makes would be smaller,” she said. 

Many other European countries as well as the European Union have already tried to persuade New Zealand to change its practices, without success. Fréchelin is skeptical that the Swiss abroad in New Zealand will be successful: “Linking automatic exchange of information to the drafting of a social insurance treaty would likely result in New Zealand not signing an AIE agreement.”  

Translated from German by Jeannie Wurz

In compliance with the JTI standards

More: SWI swissinfo.ch certified by the Journalism Trust Initiative

You can find an overview of ongoing debates with our journalists here. Please join us!

If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.

SWI swissinfo.ch - a branch of Swiss Broadcasting Corporation SRG SSR

SWI swissinfo.ch - a branch of Swiss Broadcasting Corporation SRG SSR