Special Banking Option

There are 2 methods of payment for overseas pensions:

• Direct Payment Option, and
• Special Banking Option.

Your overseas pension will be paid using the Direct Payment Option unless you tell us you want the Special Banking Option.

Comparing methods of payment

Direct Payment Option

Usually when you get an overseas pension, the overseas agency pays this directly into your bank account.

This means:

• you'll get separate payments:
  • your overseas pension from the overseas agency and
  • your NZ payment from us
• your NZ payment will be reduced dollar-for-dollar by the amount of your overseas pension
• your NZ payment and overseas pension payments will vary as the exchange rates go up and down
• you're responsible for paying tax on your overseas pension.

Special Banking Option

In some cases, you can choose to have the overseas agency pay your overseas pension into a Special Banking Option bank account in NZ. This bank account is in your name but can only be accessed by Work and Income. The account doesn't incur bank fees and it doesn't earn any interest.

Using the Special Banking Option (SBO) means:

• you'll get a payment from Work and Income that is your NZ payment
• any payments paid into the SBO account will not be passed on to you, except in specific circumstances.
  • If the payment is passed on to you, it may affect your NZ payment amount.
  • If the payment is not passed on to you, your NZ payment won't be affected (including when the exchange rate for the overseas payment changes)
• you don't need to pay NZ tax on payments that are in the SBO account, unless they are passed onto you. 

If the payment in the SBO account is passed on to you, we'll let you know.

If the total amount of your overseas pensions is more than your NZ payment, you may be better off using the Direct Payment Option.

If you get a Netherlands pension

If your Netherlands pension is paid into the SBO account, we'll pay your holiday pay to you shortly after it's received.

You may have paid voluntary contributions towards your Netherlands pension. If you did, and your pension is paid into the SBO account, we'll pay the voluntary portion to you shortly after it's received.

This means you'll get an extra:

• monthly payment from us with your voluntary portion of your Netherlands payment
• yearly payment (in June) from us with your holiday pay portion. 

You may have to pay tax on these payments.

Who can use the Special Banking Option

You can choose to use the Special Banking Option if:

• you get an overseas pension from either:
  • Australia
  • Guernsey
  • Ireland
  • Jersey
  • the Netherlands, or
  • United Kingdom, and
• you don't have a non-deductible component in your pension (e.g. voluntary contributions), except if it's a Netherlands pension.

If you choose to use the Special Banking Option and have a partner who also gets an overseas pension from the same country, they must choose the Special Banking Option as well.

Once you've chosen the Special Banking Option, you can switch to the Direct Payment Option. But you can't switch back to the Special Banking Option again.

When you can't use it

You can't use the Special Banking Option when:

• you're going overseas for more than 26 weeks
• you're un-discharged bankrupt
• you have an overseas pension debt with the overseas agency
• you have more than one overseas pension and you can't get a NZ payment because one of your pensions is too much
• you have a voluntary or non-deductible component to your overseas pension (except if it's a Netherlands pension).

Apply for Special Banking Option

To apply for the Special Banking Option, you need to complete 3 forms:

• Information release form
• Bank account application form, and
• Special Banking Option Offer form.

To find the forms you need, select the country you get your overseas pensions from below.

Once you've filled the forms out, you can either:

• scan and email them to us at international_services@msd.govt.nz 
• drop them off to one of our service centres or
• post them to our International Services team.