Age Pensioners permanently departing Australia
Age Pensioners permanently departing Australia do not all continue to receive their pensions. Some Age Pensions are cancelled and others are reduced after six months absence from Australia.
Remember that Age Pensions are provided to Australian residents who are in constrained financial circumstances. You must be a long term resident of Australia to claim an Age Pension under the Australian Social Security laws.
The residency rules for Australian residents allow for the full rate of Age Pension to be paid once you have attained your Age Pension Age and completed 10 years of Australian residency. But if you depart from Australia within two years of commencing an Age Pension, Centrelink could cancel your Age Pension because you are not a long term Australian resident.
If you are absent from Australia for six months then you are considered to have permanently departed Australia and your Age Pension amount could be reviewed.
Age Pensioners permanently departing Australia without a full working life in Australia
Age Pensioners who leave Australia to live permanently overseas, could have the amount of Age Pension reduced if they had not lived their full working life in Australia.
The definition of a ‘full working life’ is changing from 25 years to 35 years as an Australian resident between your sixteenth birthday and attaining your Age Pension Age, effective from 1 July 2014.
Hence the rules regarding the reduction of the amount of Age Pension are changing for Pensioners who permanently depart Australia on or after 1 July 2014.
Therefore, if you depart from Australia permanently after June 2014 then your Age Pension could be reduced further by the new rules than under the pre-July 2014 rules.
Consider Michael who arrived in Australia permanently on his fortieth birthday in 1970. Michael had not left Australia before claiming a full Age Pension at his Age Pension Age of 65 years in 1995. Thus Michael had completed 25 years of Australian residency before he attained his Age Pension Age.
Michael is now considering moving back to his former homeland. If Michael departs in June 2014, his Age Pension adjustment would be assessed against the 25 years of Australian residency before his Age Pension Age. Michael had completed the 25 years of Australian residency before his Age Pension Age so he satisfies this test and his means tested Age Pension would not be reduced if he stays away for more than 26 weeks.
But if Michael defers his departure until July 2014 his Age Pension would be assessed against the requirement for 35 years of Australian working life residency before his Age Pension Age. Michael had only 25 years as an Australian resident before he reached age 65 years. Therefore his Age Pension would be reduced to 71.4% (25/35) of his means tested Age Pension on account of his period of working life residence in Australia.
Age Pensioners permanently departing Australia
Please remember that ‘departing Australia permanently’ includes both people who intended to settle overseas and those who are just travelling the world but have not returned to Australia within 26 weeks of departure.
Some Age Pensioners might choose a new lifestyle as settled residents in a tropical country whilst other might choose to move around and not be ‘permanent residents’ of any country.
Some Age Pensioners might choose to return to the country from which they emigrated long as young adults. These returning emigrants might be entitled to some social security benefits in that country.
The rules are that if you are out of Australia for more than 26 weeks then your Age Pension would be reviewed and possibly reduced as for a permanently departed Australian.
Read more about Centrelink benefits when you are going overseas.
Help is available
Christine Hopper at Financial Care Services is experienced with Centrelink Pensions and Health Care Card Applications. If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues contact Christine Hopper on 03 9808 0338.
Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations. © 2014 Financial Care Services Pty Ltd. All rights reserved.
To make an appointment for professional advice, call Financial Care Services 03 9808 0338