I love the internet and I can’t imagine living without it. But it has got a downside—not all the information you find on it is correct or up to date.
If you’re an Australian age pensioner and you’re reading this postcard, chances are you daydream about spending some of your retirement years in another country. But there’s a lot of uncertainty as to whether you can go with your Age Pension intact. And if you can’t, for most people that’s a deal-breaker meaning a more exciting, lower-cost life overseas remains a daydream.
The internet isn’t a great place to clear the uncertainty. Try Googling “Can I take my Age Pension overseas?” and you’ll read about time limits and varying rates and cut off points and often you’ll wind up more confused than when you started.
So, let’s clear the air on this. You can take your age pension overseas indefinitely. It will not be cut off unless there is a change in your circumstances (such as a change in your income and/or assets) that disqualifies you for the pension. Same as if you were in Australia.
There are some things you need to be aware of though. One is that after six weeks overseas your Age Pension will switch to the “outside Australia rate”. All this means is that your Pension Supplement stops. The Pension Supplement is a combined payment of Pharmaceutical Allowance, Utilities Allowance, GST Supplement and Telephone Allowance. It’s around $80 per fortnight for a couple and is designed to help Age Pensioners living in Australia cope with the high cost of these services. So fair enough that you don’t continue to get the Supplement if you’re not living in Australia. Keep in mind though that in many of the low-cost retirement destinations featured every month in International Living Australia magazine, you can pay your utilities, phone and pharmaceuticals with your spare change.
You’ll also need to be aware of the Australian Working Life Residency rule or AWLR. If you’ve lived most of your life in Australia, the AWLR will probably not affect you. If, however, you migrated to Australia during your adult life, a move overseas may mean that your Age Pension amount is reduced after you’ve been gone for 26 weeks.
Here’s how it works. The AWLR measures the number of years you’ve lived in Australia between the ages of 16 and 65. Note that you do not have to have worked any or all of this time; simply living in Australia is enough. If you have 35 years or more living in Australia between the ages of 16 and 65, you are entitled to the full amount of Age Pension as determined by the income and asset tests. And if you haven’t, then after 26 weeks overseas, your pension amount will be proportional to the number of years of your working life you lived in Australia. For example, if you have, say 20 years of Working Life Residency, then you’ll be entitled to 20/35ths of your current Age Pension after 26 weeks.
Confusion over the AWLR was fuelled in 2016 when the government threatened to reduce the 26-week period to just six weeks. That would have meant that any Age Pensioner with an AWLR of less than 35 years would receive only a pro-rata amount of Age Pension after just six weeks overseas. Fortunately, this change didn’t make it through the Senate.
So the good news is that all Australian Age Pensioners can go overseas for 26 weeks and still receive their regular age pension (less the Supplement as discussed above). And the majority of Aussie pensioners can stay overseas indefinitely and continue receiving their current Age Pension every fortnight into either an Australian bank account or foreign bank account.
But who knows when the government will change the rules? Change is a given. And as more baby boomers apply for the Age Pension, it’s inevitable that eligibility will tighten up. But for now, the going is good.
But before you pack your bags…make sure you understand the current rules as they apply to your own situation and seek financial advice from a qualified financial advisor and take advantage of the free information services offered by Centrelink. Once that’s handled the only question left is, “Where to?”