Age Pension and the question of residency

As readers of the blog will know that to qualify for an age pension, you first need to reach the necessary qualifying age – which now can depend on the year you were born.

You also need to be an Australian resident. According to the Social Security Act, this requires you reside in Australia and be either an Australian citizen or the holder of a permanent visa.

In addition to residing in Australia when you apply, you also need to have resided in Australia for a continuous period of 10 years or have resided in Australia for several periods that total more than 10 years with at least one of these times for a continuous period of 5 years.

All very straightforward!

However, for those people who may not necessarily have the required period of Australian residency, there is one further avenue available to assist you in qualifying.

Again, this will depend on whether you previously resided in a country with that Australia has an International Social Security Agreement.

What is an International Social Security Agreement?

They are international treaties which modify the social security law of the countries which have entered into the Agreement, enabling the special provisions of the Agreement to override the social security legislation in certain situations. For example, the residence requirements to enable a person to qualify for an Australian age pension.

Australia’s Agreements are based on the principle of shared responsibility. That is, each country pays a benefit which reflects the person’s association with that country’s social security system.

These Agreements improve social security for people who move between countries, particularly the following groups of people:

  • those in Australia and the Agreement country who do not otherwise meet minimum residence and/or contribution requirement for pension from either or both social security schemes;
  • those in the Agreement country who are qualified for an Australian pension but cannot claim one because they are not an Australian resident.

Australia has Social Security Agreements with 16 countries. 13 of these Agreements are with European countries.  The interesting point is that we no longer have an agreement with the United Kingdom, this agreement ceased in 2001.

What does this all mean?

For example, if an individual has lived in Australia for a period of seven years and has reached the appropriate qualifying age pension age, they would not be entitled to the age pension because they haven’t met the necessary residence requirements.  However, if they also have five years of contributing to (say) the Italian social security system, these two periods can be combined, and they would meet the residence qualification for an Australian age pension under the Social Security Agreement that Australia has with Italy.

However, be careful – not all Agreements are the same and years of residence in another country, even if Australia has an Agreement with the country, may not count in the same way as the Italian Agreement used in this example.

The Agreements don’t allow someone who has lived overseas for many years to return to Australia and claim an Australian age pension, and then return to their actual place of residence overseas and continue to receive the Australian age pension, regardless of how long they may have lived and worked in Australia before moving overseas.

The Act still requires a person to be an Australian resident.  If, as in the previous scenario, an individual returned to Australia from overseas to claim the age pension, they need to remain in Australia for at least 2 years to ensure their entitlement to the pension is not cancelled.

For the person who is genuinely residing overseas and is looking to apply for the Australian age pension, this is still possible provided they reside in a country that Australia has an International Social Security Agreement with.

The countries Australia has a current Agreement with include; Austria, Belgium, Canada, Chile, Croatia, Cyprus, Germany, Ireland, Italy, Korea, Malta, Netherlands, Norway, Portugal, Slovenia and Spain.

As a footnote, I should mention the Agreement we do have with New Zealand is different again and a lot closer because of a shared responsibility approach, but an overview of this Agreement will be left for another time.

The issue of residency for some will be complex, and the ability to retire overseas is still a possibility provided you chose a country with which Australia has an Agreement.

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