Section 70 NZ Super and an Overseas Pension: How the Deduction Works (NZ)

If you hold an overseas state pension, Section 70 means it is deducted dollar-for-dollar from your NZ Super. Here is which pensions count, how the deduction works, what changed in 2020, and a worked example.

About one in four New Zealanders aged 65 and over were born overseas, and many of them have built up a state pension somewhere else along the way ⁸. If that is you, there is a rule worth understanding well before you apply for NZ Super, because it can change your income materially.

That rule is the "direct deduction" of an overseas pension, still widely known by its old name, Section 70. In plain terms, a qualifying overseas state pension is subtracted from your NZ Super rather than paid on top of it. This guide explains why that happens, which pensions are caught, how the dollar-for-dollar maths works, and what changed in 2020.

TL;DR: Under what was Section 70 (now section 187 of the Social Security Act 2018), a qualifying overseas state pension is deducted from your NZ Super dollar-for-dollar — for every NZ$1 of overseas pension you receive, your NZ Super drops by NZ$1, down to nil if the overseas pension is large enough ³⁴. NZ Super for a single person living alone is $1,076.84 per fortnight after tax as at 3 March 2026 ¹.

What is Section 70, and why does it reduce NZ Super?

Section 70 was a provision of the old Social Security Act 1964. The rules have since been rewritten into the Social Security Act 2018, where the core overseas-pension deduction now sits at section 187, with the wider direct-deduction regime running across sections 187 to 191 ³. Most people, and Work and Income's own older guidance, still call it Section 70, so we use both names here.

The logic behind it is that NZ Super and an overseas state pension are treated as serving the same purpose: a government-provided retirement income. The policy intent is that a person should not receive two full state pensions for the same period of life. So instead of paying NZ Super in full and letting you keep the overseas pension on top, the law deducts the overseas pension from your NZ Super.

It only applies to pensions that are broadly equivalent to NZ Super — government-administered schemes that pay a state retirement benefit. It does not reach into every retirement asset you hold overseas. That distinction is the next thing to get straight.

Which overseas pensions are deducted, and which are not?

The deduction targets government-administered state pensions that form part of another country's public retirement system, or that you qualified for on a basis similar to NZ Super (age, residence, or contributions). Common examples that are generally deducted include the UK State Pension, and the public/social-security retirement pensions of countries such as Australia, the Netherlands, Canada and many European nations.

What is generally not deducted is private, work-based or personal retirement savings — the kind of money you built up yourself rather than a state pension. Broadly, the following sit outside the direct deduction:

This is general guidance, not a ruling on any particular scheme. The line between a "state pension" and a "private pension" can be genuinely hard to draw — some overseas schemes mix a government-administered base with a contributory top-up, and the classification turns on the scheme's structure. Work and Income makes the final determination on each pension, so if your situation is not clear-cut, it is worth checking the specifics rather than assuming.

One important carve-out: since 9 November 2020, the portion of a government-administered overseas pension that is attributable to voluntary contributions you chose to make is exempt from the deduction and must not be subtracted from your NZ Super ⁶. We come back to this below.

How does the dollar-for-dollar 'direct deduction' actually work?

The mechanism is straightforward to state, even if the paperwork is not. Work and Income reduces your NZ Super by NZ$1 for every NZ$1 you receive from the qualifying overseas pension ⁴. If the overseas pension is larger than your NZ Super entitlement, your NZ Super is reduced to nil — you do not receive a top-up, and you do not get to keep the excess as extra NZ Super ⁴.

A worked example makes it concrete. Take a single person living alone, whose full NZ Super on the M tax code is $1,076.84 per fortnight after tax as at 3 March 2026 ¹. Suppose they also receive a UK State Pension worth roughly $400 per fortnight once converted to New Zealand dollars.

The key point that surprises people: the overseas pension does not lift their total state-pension income above what NZ Super would have paid anyway. In this example, the person ends up with the same $1,076.84 they would have received on NZ Super alone — the overseas pension has simply replaced part of it, not added to it ³⁴. The mix of where the money comes from changes; the headline total from the two state pensions does not.

Figure (described): a waterfall/stacked bar for the worked example above. The first bar shows the full NZ Super entitlement of $1,076.84 per fortnight. A downward step of −$400 represents the deducted overseas pension. The remaining bar of $676.84 is the NZ Super actually paid, which sits beneath a restored $400 overseas-pension block so the combined column returns to $1,076.84. Source: modelled on MSD direct-deduction policy and the 2025/26 NZ Super single-living-alone rate ¹⁴.

Because the deduction is in New Zealand dollars, the converted value of your overseas pension matters, and that brings exchange rates into the picture (covered further down).

Why can my overseas pension also reduce my partner's NZ Super?

This is the part that has caused the most confusion and, historically, the most grievance. Under the old rules, if your overseas pension was larger than your own NZ Super, the leftover excess could be deducted from your partner's NZ Super as well. So one person's overseas pension could reduce two NZ Super payments — their own to nil, and then their partner's on top.

That "spousal deduction" was widely seen as unfair, because it effectively used one person's foreign pension to cut a benefit paid to someone who may have had no overseas pension of their own.

The good news is that this rule has changed. Read the next section before assuming your partner is affected, because for most couples this no longer applies.

What happened to the spousal deduction after the 2020 law change?

The spousal (partner) deduction was abolished from 9 November 2020 ⁵. From that date, the excess of one partner's overseas pension above their own NZ Super is no longer deducted from the other partner's NZ Super. Affected people were told their partner's overseas pension would stop being deducted from their payment after that date ⁵.

Two things changed together on 9 November 2020:

• The spousal deduction ended. Your overseas pension is now deducted only from your own NZ Super, not your partner's ⁵.
• Voluntary contributions became exempt. The portion of a government-administered overseas pension that reflects contributions you voluntarily chose to make is no longer deducted ⁶. This recognises that voluntary contributions are closer to private savings than to a standard state entitlement.

If you are part of a couple and your NZ Super was reduced before November 2020 because of your partner's overseas pension, the current position is that this no longer happens ⁵. If you are unsure whether your payments correctly reflect these changes, it is worth raising directly with Work and Income.

How do exchange rates and pension increases affect the deduction?

Because the deduction is dollar-for-dollar in New Zealand dollars, the converted value of your overseas pension drives the size of the deduction — and that value moves.

• Exchange rates. Your overseas pension is paid in a foreign currency, then converted to NZD to calculate the deduction. When the NZ dollar weakens against that currency, the converted pension is worth more, so the deduction grows and your NZ Super top-up shrinks. When the NZ dollar strengthens, the reverse happens. Work and Income revalues periodically rather than every payday, so there can be a lag between a currency move and the change showing up in your payment.
• Overseas pension increases. If your overseas pension is indexed and goes up, the larger amount is deducted, which can offset some or all of the increase as far as your combined income is concerned.
• NZ Super increases. NZ Super itself is adjusted each 1 April. A rise in NZ Super lifts the entitlement the deduction is applied against, which is one reason your net position can shift across a year even if your overseas pension is unchanged.

The practical takeaway is that your fortnightly NZ Super figure can vary over time through no decision of your own, simply because currencies and indexation move. It is sensible to expect some variability rather than a fixed number.

What should I do before I apply for NZ Super if I have an overseas pension?

A few things are worth knowing before you apply, so there are fewer surprises.

First, you may be required to apply for an overseas pension you could be entitled to. Work and Income can direct a person applying for or receiving NZ Super to claim any overseas pension they may qualify for, so it can then be deducted — these are the "duty to obtain an overseas pension" provisions at sections 173 to 174 of the Social Security Act 2018 (formerly section 69G) ⁷. You generally cannot decline to claim an entitled overseas pension in order to keep your NZ Super in full.

Second, gather your overseas pension paperwork early. Statements showing the pension type, the amount, and — importantly — any portion attributable to your own voluntary contributions can matter for the voluntary-contribution exemption ⁶.

Third, map your expected income honestly. Because the two state pensions broadly net out to the higher of the two, the overseas pension usually does not add to your combined state-pension income the way people hope. Knowing that in advance helps you plan around the real number, and to see where the gap to a comfortable retirement might sit — our guide on the retirement income gap walks through that.

Finally, think about timing and location. If you are weighing up where to base your retirement, or moving savings between countries, the interaction between an overseas pension, NZ Super and schemes like KiwiSaver can be involved — for instance when moving KiwiSaver to Australia. The wider rates and eligibility picture is in our NZ Super rates and eligibility guide, and our when can I retire article covers the timing question.

When is it worth getting financial advice on an overseas pension?

Most people can manage a straightforward UK or Australian state pension with Work and Income directly. Advice tends to earn its keep when the situation is more layered: a scheme that mixes government and private elements, a meaningful voluntary-contribution component, a transferable overseas pot you could move into a NZ or Australian arrangement, or a couple trying to work out their combined after-tax income across two systems.

In those cases, the value is in seeing the whole picture — NZ Super after the deduction, any KiwiSaver or other savings, tax codes, and the gap to the lifestyle you want — rather than each piece in isolation. We do not make the deduction decision (Work and Income does), but we can help you understand the likely effect and plan around it.

Frequently asked questions

Is Section 70 still in force in 2026? The principle is, but the law has been renumbered. The overseas-pension direct deduction that used to sit at Section 70 of the Social Security Act 1964 is now section 187 of the Social Security Act 2018, with the wider regime at sections 187 to 191 ³. People and older guidance still refer to it as Section 70.

How much of my NZ Super is deducted if I have a UK State Pension? The deduction is dollar-for-dollar: for every NZ$1 of qualifying overseas pension, your NZ Super reduces by NZ$1 ⁴. If the converted UK State Pension is larger than your NZ Super entitlement, your NZ Super reduces to nil and you keep only the overseas pension ⁴.

Will my overseas pension reduce my partner's NZ Super? Not since 9 November 2020. The old spousal deduction — where one partner's excess overseas pension cut the other partner's NZ Super — was abolished from that date. Your overseas pension is now deducted only from your own NZ Super ⁵.

Are voluntary contributions I made overseas still deducted? No. Since 9 November 2020, the portion of a government-administered overseas pension attributable to contributions you voluntarily chose to make is exempt and must not be deducted from your NZ Super ⁶. Keep paperwork that identifies that portion.

Can I just not claim my overseas pension to keep my full NZ Super? Generally no. Work and Income can require you to apply for an overseas pension you may be entitled to, under sections 173 to 174 of the Social Security Act 2018 (formerly section 69G), so it can then be deducted ⁷.

Does my private or workplace overseas pension get deducted too? Usually not — the deduction targets government-administered state pensions broadly equivalent to NZ Super, not private or employer savings you funded yourself. The classification can be complex, so Work and Income makes the final call on each scheme.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. NZ Super rates, the direct-deduction rules and overseas pension treatment are set by the Government and can change; figures are correct as at 3 March 2026. Check current rules at workandincome.govt.nz and legislation.govt.nz. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 3 March 2026.