The rules for combining the New Zealand Super and UK State Pension
If you retire in New Zealand and you also (plan to) get a UK State Pension, you need to know one rule before you do anything else. New Zealand can treat your UK State Pension as an overseas pension for its own payments.
When that happens, every New Zealand dollar you receive from the UK side cuts your New Zealand payment by the same amount. People often expect two full pensions. Most do not get that.
This catches people out because it feels backwards. You pay into one system for decades, then a second system says, “Fine, but we will pay you less because you already have support from elsewhere.”
It also means you cannot plan based on the headline NZ Super rate alone. The number that matters is your combined total after the deduction. For many people, that combined total ends up close to the NZ Super level, not the UK level plus NZ Super.
If your UK State Pension is high enough, your NZ payment may drop and you must essentially live off the UK pension.
Deductions and Payments
New Zealand works out the deduction using the gross value of the overseas pension, not what lands in your account after tax. It converts the overseas amount into New Zealand dollars, then takes that off your New Zealand payment. Exchange rates move, so the New Zealand value of a pension paid in pounds can shift. That can make your New Zealand payment wobble too, depending on how your payments are set up.
Many people get two separate payments on two different cycles. There is another option for a small group of countries, including the UK, where Work and Income can pay you a single combined amount instead. That choice can make cash flow steadier and take some of the exchange rate noise out of day to day life. It can also change who deals with tax on the overseas side. Do not assume you can pick this in every case. Ask early, before you lock in your expectations.
Couples need to be careful. Many people assume one partner’s overseas pension only affects that partner. Sometimes it does. Sometimes it touches both payments, especially where one partner does not meet the qualifying rules and gets included on the other partner’s entitlement under older arrangements. If you and your spouse or partner have different ages, different work histories, or different residency records, treat the setup as something that needs checking, not guessing.
One line in the official guidance often gives Brits false hope.:
‘Voluntary contributions are not counted as part of an overseas pension‘, in relation to “the voluntary amount”. That sounds like voluntary National Insurance years should be ignored for the deduction.
Actually, the UK State Pension is paid as one amount and it does not label parts of that payment as “voluntary” versus “not voluntary”. So you should not bank on that sentence saving you money without confirmation for your case. Raise it directly when you speak to the team that handles overseas pensions and keep a record of the answer.
What to do before you move or claim the Super and UK State Pension
If you are still planning the move, act like this is a budgeting problem, not a political argument. Write down every pension you might be entitled to, including the UK State Pension and any public sector scheme. Work out whether you will meet New Zealand’s requirements for NZ Super and when. Then assume the deduction will apply unless you are told otherwise. This avoids the worst shock: building your whole retirement plan on money you will not actually receive.
If you already live in New Zealand and you plan to apply for NZ Super, prepare for the process to be detail heavy. New Zealand expects you to apply for overseas pensions you are eligible for. That includes the UK State Pension if you are entitled. You will need to share dates, countries, and pension details. Get your UK numbers in order first, including your pension forecast and payment schedule, so you can answer questions without delay.
The best move is to ask one blunt question and keep pushing until you get a clear response:
“Will my UK State Pension reduce my New Zealand payment, and if so, how will you calculate it?” Then ask a second question if you have ever paid voluntary National Insurance:
“Do you treat any part of my UK pension as voluntary contributions that you do not count?”
Finally, plan around the fact that your retirement might not stay in one country. If you think you may leave New Zealand later, the UK pension may matter more than it appears while you are in New Zealand. If you might return to the UK, or move to another country, topping up NI can still be valuable. If you are certain you will retire in New Zealand for good, the extra UK pension often does not increase your total income once the deduction bites.
The right answer lies with good, personal advice about where and how you will spend your later years.