Going overseas and your Age Pension
Going overseas and Age Pension, explanation of this topic has been requested by many, as after covid people started travelling overseas in big numbers.
Others might be even thinking of moving overseas permanently as a lifestyle change or to be closer to other family members that reside in another country.
I have already created a couple of articles on overseas travel: Age Pension and travel overseas, Retirement and Living overseas.
Whatever your reason for travel overseas, you need to understand rules around the Age Pension payments and how they could be affected well before you leave Australia.
Therefore, we will go over the following issues:
- Residency requirements
- Portability of Age Pension
- Issues for former residents
- How is your family home assessed when overseas
- Receiving Age Pension payments overseas.
When preparing for overseas travel or permanently moving overseas, before you leave Australia, you really need to understand the Age Pension rules and how you might be affected.
1. Residency requirements
In order to qualify for the age pension, you have to be an Australian resident who is in Australia when applying.
An Australian resident needs to reside in Australia and be one of the following:
- Australian citizen, or
- holder of a permanent visa, or
- holder of a Protected Special Category Visa.
To qualify for the Age Pension, the person must generally have 10 years of qualifying residence (unless exempt).
Where a person is a refugee or former refugee, they may qualify for an exemption from the requirement to have 10 years qualifying residence.
Alternatively, they may qualify under an International Agreement.
Currently Australia ha an agreement with 32 countries with the most recent agreement with Republic of Serbia that commenced in February 2024. Please check my video Retirement and Living overseas. Although it is 3 years old, rules have not changed, and the video explains those rules in detail.
It is important to remember that agreement with each country might be different, therefore please check for more information or contact the Centrelink International Services section.
2. Portability of Age Pension
The Age Pension is one of the few support payments that has an indefinite portability period. That means it can be paid to you indefinitely while you are overseas, but the level of pension payment might depend on the length of your overseas stay, whether it is temporary or is it permanent.
If you made your claim in Australia and you met the 10-year qualifying residence in Australia, then the general proportional portability rules apply. Keep in mind that special rules apply to former residents, which I will explain in a minute.
If you are paid the Age Pension under an international Agreement, the portability rules might differ depending on the terms of the agreement between your country and Australia, so please contact the Centrelink International Services for more information.
So what re the Age Pension portability rules?
The general rule is that Age Pension could be paid to you indefinitely while you are overseas, however after the period of 26 weeks the rate of payment may become proportional depending on your working life residence in Australia.
‘Working life residence’ in Australia refers to all periods from the age of 16 to age pension age when a person is an Australian resident. It is a measure of a person’s potential working life and does not require that the person was working and paying taxes.
From 1st July 2014, the number of years of “working life in Australia” to receive the maximum payment of Age pension is 35 years (420 months).
Therefore, if your “working life in Australia is less than 420 months, your payment while overseas after the period of the first 26 weeks will reduce based on months of your working life in Australia.
Let’s meet Steve, who receives $10,000pa of Age Pension when in Australia. Steve decided to go overseas for a period of 2 years.
- For the first 6 weeks he will be receiving his full entitlement
- After 6 weeks his pension supplement will drip to the basic rate and the energy supplement will stop
- After reaching 26 weeks his Age Pension will drop to the proportional calculations, based on the number of years of his working life in Australia, which is 18, meaning that his Age pension rate will be reduced down to $5,166
Pensioner Concession Card
If a person temporarily leaves Australia, their Pensioner Concession Card will remain valid for up to 6 weeks. The card will then be reinstated when they return to Australia.
However, if they leave Australia permanently, the Pensioner Concession Card will be immediately cancelled upon leaving Australia.
3. Issues for former residents
Where a former resident returns to Australia and is granted an Age Pension, a two-year waiting period applies before their pension is portable outside Australia.
The intention of this legislation is to discourage people from returning to Australia, claiming Age Pension and returning to live permanently overseas.
4. How is your family home assessed when overseas
As you know when applying for the Age Pension, Centrelink will determine your level of payment based on the outcome of Income and Assets Test. In most cases the family home is exempt from both tests.
However, you should pay attention as to how your home is viewed by the department of Centrelink if you travel overseas for a longer period. Generally, the rule is that your home will continue to be exempt from means testing for a period of 12 months, therefore for this time you are regarded as a homeowner.
However, if you stay overseas longer than 12 months, or in the situation of moving overseas permanently, you will be considered as a non-homeowner and your former family home in Australia will be counted as an asset under the means testing, which often might cause loss of the Age Pension for many.
5. Receiving Age Pension payments overseas
If you stay overseas for less than 12 months, your Age Pension will be paid as usual on fortnightly basis to your Australian bank account.
However, if you intend to be away for more than 12 months, you will receive the Age Pension every four weeks into either your Australian or foreign bank account that you nominate.
And please remember that under the notification provisions, you must notify Centrelink about both overseas departures and arrivals in Australia.
I do hope this explanation provided you with further details about the impact of your overseas travel on your Age Pension.
If you have any questions, you need to check if you are receiving a correct Age Pension payment, or how to maximise it, just book a meeting with a financial planner from About Retirement, to receive all those important answers.
This is even more essential if you require a full financial plan or a strategy to maximise and improve your savings, the level of income or minimise your taxes. Please also book a meeting, this could be invaluable for your financial future.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
