Minister clarifies impact of proposed Australian pension changes on travelling pensioners

In its latest issue published today, The Voice of the Maltese reported on the outcome of its investigation of the issue relating to the payment of the Australian age pension overseas and the international social security agreement between Australia and Malta. The paper sought and received clarification of this issue from the Minister for Social Services and member for Pearce in Western Australia, the Hon Christian Porter MP.

In his reply, the Minister pointed out that the proposed change does not affect pensioners paid under the Agreement on Social Security between Australia and Malta.
He said that people in Malta who claim an Australian pension under the Agreement are paid a proportional rate from the date they claim or become eligible, whichever is later. People in Australia who are paid under the Agreement will continue to be paid the same rate if they depart Australia temporarily for up to 26 weeks (their pensions are calculated differently in that the pension they receive from Malta is directly deducted from their Australian pension entitlement).
Australia currently has social security agreements with 30 countries, including Malta. The change to the rate of pension paid overseas will apply to all pensioners who leave Australia who have unlimited portability and are paid under the portability provisions of the Social Security Act 1991.
If the legislation is passed, it will affect all such pensioners whether they are going to Malta or any other country.
The Minister continues to say that Australia’s social security system differs markedly from the pension contributory systems that operate overseas.
The Australian Age Pension is a payment made from general tax revenue and is based on the concepts of residence and need. Having worked and paid tax in Australia does not automatically entitle a person to receive an Australian Age Pension.
Age Pension recipients who travel overseas have indefinite portability of their pension. Under current social security law a person who travels overseas must have 35 years Australian Working Life Residence (AWLR) to retain their basic (means-tested) rate of pension for longer than 26 weeks. AWLR is the number of years a person has lived in Australia between the age of 16 and Age Pension age.
From January 1, 2017, subject to the passage of legislation, the period that Age Pension, and a small number of other payments with indefinite portability, can be paid outside Australia at the basic (means-tested) rate will reduce from 26 weeks to six weeks.
After six weeks overseas a pensioner, with less than 35 years AWLR, will have their rate of pension adjusted according to their AWLR. For example, a person with 17 years of AWLR would receive 17/35ths of the pension they would receive if they stayed in Australia.
Pensioners who depart Australia before January 1, 2017 will continue to have their pension rate adjusted after 26 weeks based on their AWLR. Subsequent travel to overseas will have the new six-week rule applied.
This change only affects the rate a pensioner receives after six weeks overseas. The Age Pension, and a small number of other payments, will continue to be payable overseas indefinitely.
The Minister adds that it is reasonable to expect that people who receive an Australian pension, while they are overseas, have spent a large portion of their working life in Australia and contributed to the Australia economy and community. The retirement costs of a person should be fairly distributed between where a person has lived or worked during their working life.
This change, according to the Minister for Social Services will reinforce and strengthen the residence based nature of Australia’s social security system.
The Government believes it is unreasonable for Australian taxpayers to pay pensions to people outside Australia without regard to their period of residence in Australia, for anything other than short absences.
For further information on the 2015-16 Budget measure go to the Department of Human Service Internet site: www.humanservices.gov.au/corporate/publications-and-resources/budget/1516/measures
 
[Source:  The Voice of the Maltese No 124 – Tuesday March 29, 2016]