Special Banking Option

Why use the Special Banking Option

Usually when you get an overseas pension, the overseas agency pays this directly into your bank account. This is called the 'Direct Payment Option' and it means:

• you'll get 2 separate payments:
  • your overseas pension from the overseas agency and
  • your NZ payment from us
• your overseas pension payments will vary as the exchange rates go up and down
• you're responsible for paying New Zealand tax on your overseas pension.

The Special Banking Option is when the overseas agency pays your overseas pension into a Work and Income bank account. Then Work and Income pay this to you, along with your NZ payment.

Using the Special Banking Option means:

• you receive 1 payment from Work and Income that is the total amount you’re entitled to
• changes in the exchange rate will not affect your overseas pension payments
• New Zealand tax on your overseas pension is already deducted.

When you can use it

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 have a partner who also gets an overseas pension from one of these countries, 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).

How it works

The overseas agency pays your overseas pension into a special Westpac bank account in New Zealand. 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.

• Once your overseas pension is paid into the special bank account, you don't need to pay tax on it.
• Changes to the exchange rate won't affect your overseas pension payments. This is because you're not receiving the overseas pension directly from the overseas agency. 

Work and Income then pay your overseas pension and your NZ payment together into your own bank account. This payment is made to you weekly or fortnightly, depending on the pay cycle for the NZ payment you receive.

If you get a Netherlands pension

If you pay voluntary contributions or holiday pay into a Netherlands pension, we will pay these to you separately.

This means you'll get an extra:

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

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.

If you can't print the forms out, you can call International Services on 0800 777 227 to get an application form sent to you.

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.