Tax I paid in 1962 was meant to give me a pension. Where did that go? Ask Susan

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I was born in New Zealand and still have a valid NZ passport, started work in 1962 at the age of 15, and one shilling and sixpence of the tax I paid went into social security for my age pension. Where is it?

What happened to it? When did it stop?

After paying taxes for 33 years in NZ, why will the NZ system not pay me an age pension, if I live overseas in southeast Asia. That's where all my family and friends are?

After working another 17 years in Australia, I retired at age 65, after paying taxes for 50 years, and I do collect the OAP in Australia, but only for 26 weeks and then it stops, which means I have to return to Australia every 26 weeks.

When you are near 80 years of age and have health problems, it is not easy to do.

I'll take your questions in order.

University of Auckland associate professor Susan St John tells me that, in 1939, a social security tax of one shilling in the pound was imposed on all income. Later, it was increased to one shilling and six pence.

This was paid into a separate fund, but it was not intended to be regarded as a contributory insurance scheme. Revenue from the tax was only expected to cover about half the cost of the social security system.

She said the fund was abolished in 1964 and, in 1969, the social security tax was absorbed into the income tax scales. That money isn't somewhere you can access now.

"It was not a fund like the NZ Super Fund, with actual invested assets."

In terms of travelling around the world and receiving a pension, people can sometimes receive a New Zealand pension in another country, depending on what social security agreements are in place between the countries.

It sounds like your entitlement is now coming from Australia, so you probably need to discuss this with that country's government to determine your path forward.

My wife and I are separated. I live in Tauranga and she in our home in Wellington.

Can you please advise which pension rate I will be entitled to when I reach 65 at the end of the year.

If you're separated and living separately, you should be entitled to the single rate.

You'll be asked for details of your living situation when you apply for NZ Super.

I am wanting to find out whom to advise when someone is about to turn 65 please. I understand we need to inform a Government department?

Also, does that mean employer automatically stops contributing to KiwiSaver? Can we still contribute to KiwiSaver and continue to work as per normal?

What is the amount a single person receive after tax? Is there a disadvantage, if you keep working, even if your income is quite low, for example $66,000?

How do we maximize the best bang for the buck, without paying too much tax, or how to navigate paying the correct amount of tax to avoid tax payment at the end of year.

Also, is it good to talk to a financial adviser and what is the best way to find out the right adviser for you? Without all the fluff?

I'll answer these questions in order too.

You do need to apply to Work and Income to receive NZ Super. You can do this online and the process steps you through it.

If you don't already have a client number, you'll need to apply for one, and that can take a day or two.

Your employer does not have to continue to contribute to KiwiSaver once you're 65, but some do. You can continue working and contributing as normal for as long as you want to.

The after-tax rate will depend on whether you're working or not. If you're on the M tax rate and NZ Super is your main income source, the single rate is $1110.30 a fortnight.

If you keep working, you may pay a higher rate of tax on your NZ Super.

As you are probably aware, New Zealand has a marginal tax system. If you earn $66,000 a year, your first $15,600 is taxed at 10.5 percent, then your income between $15,601-53,500 is taxed at 17.5 percent, and your income above that is taxed at 30 percent.

If you earn another $33,600 a year from NZ Super, that means you're earning a total $99,600 before tax. The amount up to $78,100 will be taxed at 30 percent, but the amount over $78,101 will be taxed at 33 percent.

If you weren't working, all your pension would be taxed at the 10.5 percent and 17.5 percent rates.

You still end up better off overall for working, but make sure you have the right tax code applied to all your income streams, so you don't end up being taxed too much or left with a bill.

It's a great idea to get advice on your finances when you're approaching a change like this. An accountant can help with the tax stuff or a financial adviser, such as members of Financial Advice New Zealand, could be a good option.

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