Australia's pension rules on extended periods outside Australia

[Michael Skully]

I was interested to learn that Australia has penalties for its aged pension when someone receiving one moves overseas for an extended period.

An article that discusses these matters, see link below, appeared in The Seniors newspaper 4 July 2025.

See: 

Government penalises woman's age pension for travelling more than six weeks | The Senior | Senior

Mike Skully

[mary barber]

Australians pension is worked out by their assets.It is not money they have paid in to a fund as with UK ,where everyone gets a pension   here it not those who don't need it.So I can see why they think you don't need so much when on holiday.  

 Cheers Andra Barber

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Subject: [bapanews] Australia's pension rules on extended periods outside Australia

 

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[bcbarber42]

This is news to me as well as to many other people I suspect.  The difference is that these rules appear to be related to travel for Aussie Pensioners world wide who are simply travelling and not to specific countries and to Pensioners who are residing in that country.  The Frozen 
Pension is discriminatory in that it applies only is some countries and not in others.  It seems that this is a different and unfair battle that needs to be taken up with the Australian Government.

Cheers Bridget Barber

[Steve Symmons]

Half right:

The Australian pension is determined by TWO tests: Assets and Income.

The outcome is decided by whichever of them gives a claimant the LEAST amount of pension payment.

If you are under the Assets test then any additional income you may earn will not affect your payments.

Under the Income Test your assets are converted to a nominal income figure using Centrelink “Deeming Rates” (which have recently changed). Additional income above “free” thresholds reduces your payments 50% (or 25% per person if in a couple), which when income tax is added to the equation creates effective taxation rates 70-122% (yes, at some points you lose 22 cents more than you actually earn!)

What does happen when you travel overseas is a bit complicated:

Basically nothing, initially, if your journey is six weeks, or less.

Then if gets messy.

You must inform Centrelink if your travel will be longer than six weeks.

They then remove and/or minimise certain of the pensions components - the Energy Supplement goes entirely and the Pension Supplement reduces to the minimum amount.

That situation continues until a pensioner is overseas for 26 weeks, at which point how long a person had been in Australia during their “Working Life” comes into play. Australian Working Life Residency is how many years you were resident in Australia between 16 and your pension qualification age. Thirty-five years is required to retain the full pension (or pension component of age pension payment). Anything less will reduce the amount proportionately (20 years relevant residency will deliver 20/35 of the pension payment). Both Pension Supplement and Energy Supplement are completely removed (roughly $75 a fortnight).

There are a number of countries with reciprocal social security agreements where things can become more complicated. The UK agreement is even more complex because Australia walked away from it about 20 years ago in frustration with the UK refusal to index UK age pensions for Australian residents.

A permanent return to UK can result in certain years in Australia being treated as full years of NI contributions if prior to the relevant date. And therefore fill in NI payment gaps up to the 35 years required for a full UK pension. 

Which, of course, would be at the current - triple-lock rate - not the frozen rate.

And, of course, even temporary returns to UK entitle you to uplifting for the time of your visit. You should inform DWP of the dates you will be in UK in advance by letter or phone call. Flight details can be helpful.

I generally ring DWP on my arrival to let them know that I have arrived (I have an old mobile phone with a Tesco GBP10/month prepaid SIM card that I reactivate on arrival (I purchase a new GBP 10 prepayment voucher before I leave so I have one on hand for my next trip before I leave).

The Australian Age Pension payment has three (or four if you rent) components:

Age Pension 

Pension Supplement

Energy Supplement 

Rent Assistance (Renters only)

I hope this makes the situation a little easier to understand.

Regards

Steve Symmons 

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[Michael Goodall]

Hi Steve,

Thank you for this summary which is most helpful.

You mention about the agreement between the UK and Australia which was terminated by Australia in 2001 when the UK refused to enter negotiations about unfreezing the UK State Pension for expats living in Australia.

While the years worked in Australia counted towards a UK State Pension up to 2001 if a UK expat pensioner is now living in Australia and in receipt of an Australian pension do the years that they were in the UK between the age of 16 and retirement age (now age 67)  count as well as the Australian years between 16 and 67 towards the 35 years required to retain their full Age Pension if they are in the UK for greater than 26 weeks?

if the answer is 'Yes' what proof is required by Centrelink please?

Best regards,

Mike Goodall

Tel:-     +61 8 6364 0859

Mob:- +61 403 909 865

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[Steve Symmons]

I’m not sure what the answer is 

It would be part of the small print contained in the 01/03/2001 agreement.

I did - once - read through it all; but that was a long time ago and I was focused on my personal circumstances.

In my case I had over 35 working life years in Australia, so that wasn’t relevant to me. 

From the Brit end I had 23 years contributions - but would walk in past 35 years were Australian years prior to 31 March 2001 included.

But if you do you only qualify for one pension rather than both.

Centrelink should be able to provide a definitive answer.

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