Retiring Overseas on an Australian Age Pension
We very much support the idea of Australians spending all or
part of their retirement offshore – cost of living differences mean
that they can potentially have a much more relaxed and enjoyable
lifestyle. It’s not for everyone – you need to factor in the impact
of prolonged absences from family and lifelong friends – but it is
certainly an option that is worthwhile considering. One significant
factor for many people considering the possibility however is
whether the Australian Age pension would be payable to them
offshore.
The Australian Age Pension can be paid overseas permanently,
with some estimates suggesting that more than 60,000 Australians
are currently receiving their Age pension overseas. However, the
rules in this area are both complicated and unclear in certain
areas – particularly for current expatriates – and it is suggested
you seek advice from both Centrelink and financial advisors
regarding your entitlements. Much depends upon the detail of your
situation, and we have just tried to present a short summary
below:
1. Entitlement to an Australian age pension is dependent upon
applicants meeting both income and asset tests – with pension
entitlements progressively reducing if an applicant’s assets or
income exceed specific levels. Obviously, there are no issues about
self-funded individuals or couples retiring overseas – just make
sure to check out how your income is assessed in your new home.
Happily, most Asian countries do not (yet) tax income generated
outside the country.
2. To qualify for an Age pension you must also have been an
Australian resident for a total of 10 years, at least five of these
in one continuous period. You must also be an Australian resident
and in Australia on the day your claim is lodged, unless you are
claiming under an International Social Security Agreement (see
below).
3. As mentioned, you need to be a resident of Australia at the
time the first claim for the age pension. Note that if you have
been an expatriate (former resident) and have been living overseas,
the restriction for former residents means that you need to remain
in Australia for two years before you can leave and be paid
overseas. In practice, many Australian expatriates return home two
years prior to becoming eligible for an age pension – this ensures
eligibility from a residency point of view and “should” mean the
two-year restriction does not apply – although this needs to be
confirmed.
4. When a person goes overseas their rate of Age Pension is paid
according to their Australian Working Life Residence (AWLR) or
years in Australia between the ages of 16 and Age Pension age. A
person who has resided in Australia for 25 years between the ages
of 16 and Age Pension will get the full means tested rate, less any
add-ons; while a person with less than 25 years will get a
proportionate rate. For example, if you have lived in Australia for
10 years between the ages of 16 and age pension age, your
proportion would be 10/25 multiplied by the normal income and asset
tested rate of Age Pension. This rate change, however, does not
occur until a person has been outside Australia for 26 weeks. This
is because all Age pensioners can go overseas temporarily for 26
weeks regardless of their AWLR.
Alternatively, you can make a claim for a pension without
returning to Australia, if you are living in a country with which
Australia has an International Social Security Agreement.
Finally, one issue that many people overlook when considering
retiring overseas is access to health care – international health
insurance, particularly in retiree age groups, can be very
expensive. And you cannot just rely upon going home to Australia
when the need arises – if an emergency develops and you need to be
evacuated to Australia at short notice it may cost $100,000 from
some destinations.
http://www.ozexpats.com/content/australian-pens…