New Zealand Superannuation and Veterans' Pensions (Entitlements of Spouses and Partners of People in Long-term Residential Care and Remedial Matters) Bill Government Bill Explanatory Note General policy statement This Bill amends the New Zealand Superannuation and Retirement Income Act 2001 and the War Pensions Act 1954. The purpose of the Bill is to make changes: o extending eligibility for the single or single living alone rate of New Zealand superannuation or veteran's pension to all New Zealand superannuitants and veterans pensioners living in the community who have a spouse or partner in long-term residential care in a hospital or rest home: o removing the "sharing expenses rule" for the living alone payment, so that entitlement to the living alone payment for New Zealand superannuitants and veterans pensioners is based solely on actual living arrangements: o increasing the period of time a person can continue to receive New Zealand superannuation or the veteran's pension while overseas and working voluntarily for an aid agency from 52 weeks to 156 weeks: o allowing additional increases in rates of the veteran's pension by Order in Council. Summary of key measures Eligibility for single rates of New Zealand superannuation and veteran's pension The Bill provides that, from 1 July 2006, all New Zealand superannuitants and veterans pensioners living in the community with a spouse or partner [1] [1] "partner" means a civil union partner (see the definition of "partner" in section 3(1) of the Social Security Act 1964). From 1 April 2007, it will also include a de facto partner (as defined in the Interpretation Act 1999). in long-term residential care in a hospital or rest home are entitled to receive the single or single living alone rate of New Zealand superannuation or veteran's pension. These single rates are higher than the rates of New Zealand superannuation and veteran's pension payable to a person who is married [2] [2] "married" includes a person in a relationship in the nature of marriage who is regarded as married under section 63(b) of the Social Security Act 1964. >From 1 April 2007, a person in a de facto relationship within the >meaning of the Interpretation Act 1999 will also be able to receive these rates. or in a civil union. The main rates for New Zealand superannuation and the veteran's pension are outlined below--- Status Per person weekly rate of New Zealand superannuation/veteran's pension (before deduction of income tax)* ($) Married or in a civil union 235.16 Single sharing 285.02 Single living alone 309.73 * Main rates of New Zealand superannuation and the veteran's pension on and after 1 April 2005. Under current legislation, a person with a spouse or partner in long-term residential care can only receive the single or single living alone rate of New Zealand superannuation or veteran's pension in 2 narrowly defined circumstances, ie, if their spouse or partner is--- o receiving the residential care subsidy [3] [3] ie, a funder under the New Zealand Public Health and Disability Act 2000 is paying for some or all of the contracted care services provided to a person who is a resident assessed as requiring care. See Part 4 of the Social Security Act 1964. (RCS), which is means tested; or o suffering the effects of a stroke and/or dementia and, as a result, is no longer able to affirm their marriage or civil union and should be regarded as single for this purpose. This exception arises from a Social Security Appeal Authority decision. The broadening of the eligibility criteria introduced in this Bill was recommended by the Social Services Committee in a report it presented to Parliament on 12 May 2005 [4] [4] Report on Petition of Barbara White 2002/135 and 1519 others. . The change will address the 2 main issues with the existing eligibility rules identified in the Committee's report--- o the current linking of access to the single rates of New Zealand superannuation and the veteran's pension with meeting the RCS means test is inconsistent with the overall non-means-tested approach for New Zealand superannuation and the veteran's pension: o the Social Security Appeal Authority decision regarding eligibility for the single rates of New Zealand superannuation and veteran's pension has proved to be difficult to administer, as it requires officials to ask intrusive questions and make complex decisions regarding sensitive issues. It also appears unfair to married couples living apart for other health reasons, such as severe physical disability, but mentally competent to affirm their marriage. Eligibility for living alone payment The Bill removes, from 1 July 2006, the "sharing expenses rule" which has prevented some New Zealand superannuitants and veterans pensioners from receiving the living alone payment. The living alone payment represents the difference between the lower single sharing rate, and the higher single living alone rate of New Zealand superannuation and veteran's pension. Current legislation limits eligibility for the living alone payment to superannuitants or veterans pensioners who are single, living alone in their principal place of residence, and not sharing their household expenses (including accommodation expenses) with any other person. The sharing expenses rule has been the subject of adverse public comment, as it operates as a somewhat strict and arbitrary form of income testing for the living alone payment. It is strict in that any contribution to household expenses denies eligibility completely. It is arbitrary in that only a particular form of income (ie that directly related to household or accommodation expenses) is counted. In some cases, New Zealand superannuitants and veterans pensioners living alone are denied eligibility because they receive modest contributions to their household expenses from others, such as family members. The amendments in this Bill will mean that eligibility for the living alone payment will be based on actual living arrangements, rather than being influenced by whether or not another party is making a contribution to household expenses. New Zealand superannuation or veterans' pensions for volunteers working for aid agencies overseas This Bill provides that, from 1 July 2006, a person will be able to be paid New Zealand superannuation or the veteran's pension for up to 156 weeks while undertaking voluntary work for an aid agency, such as Volunteer Service Abroad (VSA). Currently the maximum payment period is 52 weeks. The standard VSA assignment period, however, is two years. VSA has advised that some older New Zealand volunteers have requested a shorter assignment than the standard 2-year period, in order not to be financially penalised for taking part in volunteer work overseas. Shorter-term assignments, however, significantly increase costs for VSA. The extension to the payment period to 156 weeks provided by the Bill will allow for a typical 2-year assignment, and a potential extension of the assignment for up to a further year. Adjustments to rates of veterans' pensions The Bill amends the War Pensions Act 1954 to allow the rates of veterans' pensions to be increased to a particular level by Order in Council. This change will align the provisions for the adjustment of rates of veterans' pensions with those for New Zealand superannuation under the Social Security Act 1964. It will allow rates of veterans' pensions to be increased by a greater amount than the current limitation of either the Consumers Price Index adjustment or the adjustment linking rates of veterans' pensions to at least 65% of the net average wage. Clause by clause analysis The Bill consists of 2 parts. Part 1 amends the New Zealand Superannuation and Retirement Income Act 2001. Part 2 amends the War Pensions Act 1954 and makes some consequential amendments to other enactments. It is intended that, at the Committee of the whole House stage, Parts 1 and 2 will be divided into the following Bills: o New Zealand Superannuation and Retirement Income Amendment Bill o War Pensions Amendment Bill. Clause 1 is the Title clause. Clause 2 provides that, except for clause 14, the Bill comes into force on 1 July 2006. Clause 14 comes into force on the day after the date on which the Bill receives the Royal assent. Clause 3 sets out the purpose of the Bill. Part 1 Amendments to New Zealand Superannuation and Retirement Income Act 2001 Clause 4 provides that in Part 1, the New Zealand Superannuation and Retirement Income Act 2001 is called "the principal Act". Clause 5 amends section 13 of the principal Act, which relates to eligibility for living alone payments. At present under section 13 a person is not considered to be living alone if he or she shares household expenses with another person (even if he or she does not share a residence). The amendment to section 13 omits the reference to sharing expenses. Therefore, sharing household expenses will not of itself mean that a person is not living alone within the meaning of section 13. Clause 6 amends section 17 of the principal Act. This section provides that certain persons who have a spouse or partner in residential care in a hospital or rest home are to be treated as single for the purposes of calculating New Zealand superannuation. At present, to be eligible under section 17 a person must not be a resident assessed as requiring care (as defined in section 136 of the Social Security Act 1964) and the person's spouse or partner must be a resident assessed as requiring care. Also, at present eligibility depends on whether the care is provided by way of contracted care services (as defined in section 136) and on whether the costs of that care are partly or wholly paid for by a funder (also as defined in section 136). The amendment to section 17 provides that a person will be entitled to New Zealand superannuation at the single rate as currently set out in section 17(2) if he or she is not in long-term residential care and his or her spouse or partner is in long-term residential care in a hospital or rest home. It will not matter whether or not the spouse or partner is a resident assessed as requiring care. Clause 7 amends the heading to section 18 of the principal Act. Section 18 deals with living alone payments for persons referred to in section 17. The change to the heading is to reflect the changes made to section 17. Clause 8 amends section 24 of the principal Act, which relates to entitlement to New Zealand superannuation for persons who are absent from New Zealand on aid agency work. At present, a person's entitlement is preserved if the absence does not exceed 52 weeks. The amendment extends this to 156 weeks. Part 2 Amendments to War Pensions Act 1954, and consequential amendments Clause 9 provides that in Part 2, the War Pensions Act 1954 is called "the principal Act". Clause 10 inserts a definition of partner into Part 6 of the principal Act. This amendment is to correct a drafting error and clarify that the term has the same meaning as in the Social Security Act 1964. Clause 11 inserts new section 74BA into the principal Act. The inserted section deals with the entitlement to the veteran's pension for spouses or partners of persons in long-term residential care in a hospital or rest home. The new section 74BA will replace regulation 4 of the Social Security (Long-term Residential Care) Regulations 2005. At present, regulation 4 provides that certain persons who have a spouse or partner in residential care are to be treated as single for the purposes of calculating the veteran's pension. To be eligible for a veteran's pension at the single rate, a person must not be a resident assessed as requiring care (as defined in section 136 of the Social Security Act 1964) and the person's spouse or partner must be a resident assessed as requiring care. Also, at present eligibility depends on whether the care is provided by way of contracted care services (as defined in section 136) and on whether the costs of that care are partly or wholly paid for by a funder (also as defined in section 136). Proposed new section 74BA will provide that a person will be entitled to a veteran's pension at the single rate as set out in new section 74BA(2) (which is equivalent to regulation 4(2) of the above regulations) if he or she is not in long-term residential care and his or her spouse or partner is in long-term residential care in a hospital or rest home. It will not matter whether or not the spouse or partner is a resident assessed as requiring care. Clause 12 amends section 74H of the principal Act, which relates to entitlement to the veteran's pension for persons who are absent from New Zealand on aid agency work. At present, a person's entitlement is preserved if the absence does not exceed 52 weeks. The amendment extends this to 156 weeks. Clause 13 amends section 74U of the principal Act, which relates to eligibility for living alone payments. At present under section 74U, a person is not considered to be living alone if he or she shares household expenses with another person (even if he or she does not share a residence). The amendment to section 74U omits the reference to sharing expenses. Therefore, sharing household expenses will not of itself mean that a person is not living alone within the meaning of section 74U. Clause 14 amends section 75C of the principal Act, which relates to increasing rates of pensions, lump sum payments, and allowances by Order in Council. The amendment is intended to enable all rates of veterans' pensions to be increased by Order in Council by any amount. At present, only one rate of the veteran's pension can be increased under this section. Clause 15 repeals section 155(1)(a) of the Social Security Act 1964. The repealed provision is a regulation-making power. As a consequence of new section 74BA of the War Pensions Act 1954 (see clause 11) the regulation-making power is no longer required. Clause 16 consequentially revokes regulation 4 of the Social Security (Long-term Residential Care) Regulations 2005. Clause 17 is a savings provision. This clause is intended to make the position clear regarding any person who, immediately before clause 16 comes into force, is entitled to receive, and is receiving, a veteran's pension at the appropriate single rate under regulation 4 of the Social Security (Long-term Residential Care) Regulations 2005. The clause provides that such a person will be treated as a person to whom new section 74BA of the War Pensions Act 1954 applies. Minister of Finance's Statement on the consultation process followed in the formulation of the amendments to the New Zealand Superannuation and Retirement Income Act 2001 in the New Zealand Superannuation and Veterans' Pensions (Entitlements of Spouses and Partners of People in Long-term Residential Care and Remedial Matters) Bill Introduction Section 73 of the New Zealand Superannuation and Retirement Income Act 2001 provides that the Minister must, on the introduction into the House of Representatives of a government Bill that proposes an amendment to the Act, bring to the attention of the House the consultation process that was followed in the formulation of the proposed amendment. The term "Minister", for the purposes of section 73, is defined in section 5 of the Act as the Minister of Finance. That statement must include (without limitation)--- (a) whether consultation has taken place with the parties that are in agreement with the Part proposed to be amended (as listed in Schedule 4 of the Act) (b) whether consultation has taken place with the Guardians (to the extent that the amendment relates to Part 2 of the Act) (c) the results of the consultation. The New Zealand Superannuation and Veterans' Pensions (Entitlements of Spouses and Partners of People in Long-term Residential Care and Remedial Matters) Bill proposes to amend Part 1 of the Act. It does not propose to amend Part 2, Part 3, Part 4 or any of the schedules of the Act. The Bill also proposes to amend the War Pensions Act 1954. Consultation process On 2 August 2005, the Minister for Social Development and Employment wrote to the leaders of ACT New Zealand, the Green Party, the Maori Party, the National Party, New Zealand First, the Progressive Party, and United Future New Zealand advising them of the government's intention to introduce a Bill to amend the eligibility rules for New Zealand superannuation under the New Zealand Superannuation and Retirement Income Act 2001---that is, amendments to the eligibility rules for New Zealand superannuation in relation to persons with partners or spouses in long-term residential care, persons living alone who are sharing their household expenses, and persons working voluntarily overseas for aid agencies. It was also noted that the same eligibility changes would apply to veterans' pensions, under the War Pensions Act 1954, as many veteran's pension provisions mirror the provisions for New Zealand superannuation. The 2 August 2005 letters offered parties the option of a briefing by officials on the amendments to be included in the Bill. One party---New Zealand First---replied to the 2 August 2005 letter. On 14 November 2005 the Minister for Social Development and Employment sent follow-up letters to the parties that had not responded to the 2 August 2005 letter. All of these parties responded in writing to the 14 November 2005 letter. No briefings on the proposed amendments by government officials were requested by any of the Parliamentary parties. Veterans' Affairs New Zealand, Treasury, the Ministry of Health, the Ministry of Justice, the New Zealand Agency for International Development, and the Office for Senior Citizens were consulted in the preparation of the Bill. No consultation was undertaken with the Guardians of New Zealand Superannuation as the Bill does not propose to amend Part 2 of the New Zealand Superannuation and Retirement Income Act 2001. Results of the consultation The Green Party, the Maori Party, the National Party, New Zealand First, the Progressive Party, and United Future New Zealand have indicated in writing that they will support the proposed amendments to the New Zealand Superannuation and Retirement Income Act 2001 in the Bill. ACT New Zealand indicated in writing that it would support these amendments up to the Select Committee stage. The government departments and Office consulted also support the proposed amendments to the New Zealand Superannuation and Retirement Income Act 2001. Hon Dr Michael Cullen Minister of Finance Hon David Benson-Pope New Zealand Superannuation and Veterans' Pensions (Entitlements of Spouses and Partners of People in Long-term Residential Care and Remedial Matters) Bill Government Bill Contents 1 Title 2 Commencement 3 Purpose Part 1 Amendments to New Zealand Superannuation and Retirement Income Act 2001 4 New Zealand Superannuation and Retirement Income Act 2001 called principal Act in this Part 5 Living alone payments 6 Entitlement to benefits for spouses or partners of persons receiving means-tested residential disability services 7 Living alone rate of payment for spouses or partners of persons receiving means-tested residential disability services 8 Absences up to 52 weeks with aid agencies Part 2 Amendments to War Pensions Act 1954, and consequential amendments 9 War Pensions Act 1954 called principal Act in this Part 10 Interpretation 11 New section 74BA inserted 74BA Entitlement to veteran's pension for spouses or partners of persons in long-term residential care in hospital or rest home 12 Absences up to 52 weeks with aid agencies 13 Living alone payments 14 Rates of pensions, lump sum payments, and allowances may be increased by Order in Council 15 Amendment to Social Security Act 1964 16 Amendment to Social Security (Long-term Residential Care) Regulations 2005 17 Savings provision The Parliament of New Zealand enacts as follows: 1 Title This Act is the New Zealand Superannuation and Veterans' Pensions (Entitlements of Spouses and Partners of People in Long-term Residential Care and Remedial Matters) Act 2006. 2 Commencement (1) Except as provided in subsection (2), this Act comes into force on 1 July 2006. (2) Section 14 comes into force on the day after the date on which this Act receives the Royal assent. 3 Purpose The purpose of this Act is to--- (a) extend eligibility for the higher single rate of New Zealand superannuation, living alone payments, or veteran's pension to superannuitants or persons entitled to the veteran's pension whose spouse or partner is in long-term residential care in a hospital or rest home: (b) make other minor remedial amendments to the New Zealand Superannuation and Retirement Income Act 2001 and the War Pensions Act 1954. Act 2001 principal Act in this Part Part 1 Amendments to New Zealand Superannuation and Retirement Income Act 2001 4 New Zealand Superannuation and Retirement Income Act 2001 called principal Act in this Part In this Part, the New Zealand Superannuation and Retirement Income Act 2001 is called "the principal Act". Act 2001 5 Living alone payments Section 13(3)(b) of the principal Act is amended by omitting the words "or household expenses (including accommodation expenses)". Act 2001 receiving means-tested residential disability services 6 Entitlement to benefits for spouses or partners of persons receiving means-tested residential disability services (1) The heading to section 17 of the principal Act is amended by omitting the words "receiving means-tested residential disability services", and substituting the words "in long-term residential care in hospital or rest home". (2) Section 17 of the principal Act is amended by repealing subsection (1), and substituting the following subsection: "(1) This section applies to any person who is not in long-term residential care and whose spouse or partner is in long-term residential care in a hospital or rest home, whether or not the spouse or partner is a resident assessed as requiring care (within the meaning of section 136 of the Social Security Act 1964)." Act 2001 receiving means-tested residential disability services 7 Living alone rate of payment for spouses or partners of persons receiving means-tested residential disability services The heading to section 18 of the principal Act is amended by omitting the words "receiving means-tested residential disability services", and substituting the words "in long-term residential care in hospital or rest home". Act 2001 8 Absences up to 52 weeks with aid agencies (1) The heading to section 24 of the principal Act is amended by omitting the expression "52", and substituting the expression "156". (2) Section 24(1)(b) of the principal Act is amended by omitting the expression "52", and substituting the expression "156". amendments Part 2 Amendments to War Pensions Act 1954, and consequential amendments 9 War Pensions Act 1954 called principal Act in this Part In this Part, the War Pensions Act 1954 is called "the principal Act". amendments 10 Interpretation Section 67(1) of the principal Act is amended by inserting, in its appropriate alphabetical order, the following definition: "partner has the same meaning as in section 3(1) of the Social Security Act 1964". amendments 11 New section 74BA inserted The principal Act is amended by inserting, after section 74B, the following section: "74BA Entitlement to veteran's pension for spouses or partners of persons in long-term residential care in hospital or rest home "(1) This section applies to any person--- "(a) who is not in long-term residential care and whose spouse or partner is in long-term residential care in a hospital or rest home, whether or not the spouse or partner is a resident assessed as requiring care (within the meaning of section 136 of the Social Security Act 1964); and "(b) who is in receipt of a veteran's pension, or whose spouse or partner is in receipt of a veteran's pension. "(2) A person to whom this section applies is entitled to receive a veteran's pension at the rate payable to a person who is single--- "(a) stated in clause 1(a) of Schedule 11, if the person has been granted a living alone payment under section 74U; or "(b) stated in clause 1(b) of Schedule 11, if the person has not been granted a living alone payment under section 74U. "(3) Any benefit payable to a person to whom this section applies is not subject to abatement in respect of any income of the person that has been included in a means assessment of the person's spouse or partner under Part 4 of the Social Security Act 1964." amendments 12 Absences up to 52 weeks with aid agencies (1) The heading to section 74H of the principal Act is amended by omitting the expression "52", and substituting the expression "156". (2) Section 74H(1)(b) of the principal Act is amended by omitting the expression "52", and substituting the expression "156". amendments 13 Living alone payments Section 74U(3)(b) of the principal Act is amended by omitting the words "or household expenses (including accommodation expenses)". amendments increased by Order in Council 14 Rates of pensions, lump sum payments, and allowances may be increased by Order in Council Section 75C(1)(ab) of the principal Act is amended by omitting the words "clause 2(a) of". amendments 15 Amendment to Social Security Act 1964 Section 155(1) of the Social Security Act 1964 is amended by repealing paragraph (a). amendments Regulations 2005 16 Amendment to Social Security (Long-term Residential Care) Regulations 2005 The Social Security (Long-term Residential Care) Regulations 2005 are amended by revoking regulation 4. amendments 17 Savings provision (1) This section applies to a person who, immediately before section 16 comes into force, is entitled under regulation 4 of the Social Security (Long-term Residential Care) Regulations 2005 to receive, and who is receiving, a veteran's pension at the appropriate single rate as provided for by that regulation. (2) A person to whom this section applies is to be treated as a person to whom section 74BA of the War Pensions Act 1954 (as inserted by section 11 of this Act) applies for so long as--- (a) the person's spouse or partner continues to be in long-term residential care in a hospital or rest home; and (b) the person is not himself or herself in long-term residential care.