A Far North pensioner says he has been left out of pocket by the way New Zealand Superannuation interacts with foreign schemes.

People who qualify for a pension from another country are often required to offset that against their New Zealand pension so that the full amount they receive is the same as someone who had stayed in New Zealand their whole working life.

If the amount coming from overseas is more than the New Zealand pension, only the overseas pension is paid.

To affect the rate of NZ Super, the foreign pension must cover at least one of the circumstances that New Zealand pensions cover and has to be administered by or on behalf of another country's Government.

Peter Benson, who lives in Awanui, Far North, said he had been receiving the New Zealand pension since 2005.

In 2016, he was told to apply for the Australian pension because he had worked there for two years.

He said he was told, if he did not, it could affect his superannuation. He made the application and was given NZ$85 a month.

"At about the same time, I was directed to apply for the Canadian Old Age Benefit - as a born Canadian I apparently was eligible as I not only was still a citizen but had also worked over there - which I duly did and was granted originally NZ$245 per month.

"Australian Centrelink sent me a request demanding the date my Canadian application was received, the amount I received and if I received a back pay or lump sum and how much it was. I did not reply, so they cut my Aussie pension off.

"I then received a cheque for NZ$23,000 from Canada as back pay. The following year I received a cheque for NZ$40,000."

This was what he would have received up to that point, had he applied for the Canadian pension when he turned 65.

Benson said he told Work and Income about the first $23,000 and received no reply. But he had since been told that Canada had reported the full amounts he received. It was calculated that he had been overpaid $79,000 in New Zealand Superannuation as a result.

"Work and Income have deducted $80 per week from my super, so by 2038, the full amount I owe will be paid off. In the meantime, my New Zealand Super is $386 per fortnight, not over $800 as expected. I also receive NZ$560 per month from a Canadian account at BNZ."

He said he felt it was unfair.

"In a sense, the New Zealand Super is means-tested and the whole exercise is designed for the NZ Government to reap the funds I had worked my ass off for and make me apply for overseas funds with absolutely no benefit to me whatsoever."

But Kay Read, Ministry of Social Development general manager client service delivery, said she could understand Benson might be frustrated.

"Mr Benson applied for his New Zealand pension in 2005. At the time we gave him forms to also apply for Canadian Pension, and spoke with him about his obligations and options. Our records show he never returned these forms and for the next couple of years was in and out of the country. If Mr Benson had completed his forms in 2005, the deduction would have been correctly applied and his overpayment amount would have likely have been nominal to non-existent.

"Mr Benson applied for the Canadian pension in 2016 – 11 years after he began receiving New Zealand Superannuation. When the Canadian authorities granted his Canadian pension, they paid arrears dating back to Mr Benson's 65th birthday. As the amount of any overseas pension should be deducted from New Zealand Superannuation, an overpayment was established.

"With any overpayments we talk with people to see what they can reasonably afford to pay back without causing them any undue hardship. If Mr Benson has concerns or is worried about this, we would encourage him to talk with us further, so we can work through the best option for him them. He has always had the option to pay the Canadian arrears amount, which would reduce his overpayment considerably."

She said the ministry wanted to achieve fairness between people who had lived and worked outside New Zealand and those who had not.

"New Zealanders who qualify for overseas pensions can live outside New Zealand for many years and while they live overseas, they do not pay New Zealand tax or contribute in other ways to New Zealand."