We all know someone who has decided to retire (at least in part) overseas. It might be Bangkok, Manila or Bali, but the reasons are usually the same - $814 p/f [the single max rate of the age pension as of Dec 2017] goes a lot further in South East Asia than it does in Melbourne, Sydney or Perth.
Of late, I have had a number of requests for Financial Advice from older individuals wondering how the age pension would work if they move overseas. The Federal government made a number changes in the assets test back in January and earmarked changes to the portability of the Age Pension with the announcement in 2016 to slash the amount of time Aussie retirees could spend outside Australia without having their Age Pension payments cut down to 6 weeks.
Fortunately, the change was abandoned and you can still spend 26 weeks overseas without your Age Pension payments reducing.
What Happens after 26 weeks?
After 26 weeks overseas, the majority of people will continue to receive their regular Age Pension payment minus the supplement payments. However, for those who migrated to Australia in their later years, or for those citizens who departed Australia and worked abroad, the amount they receive may be less. The formula Centrelink use in determining how much you will receive is based on the number of years you have lived in Australia, as an Australian resident, between the age of 16 and Age Pension eligibility age. This is known as the Australian Working Life Residency or AWLR.
Essentially you must have resided in Australian for at least 35 years between the age of 16 and Age pension qualification age to receive the full age pension. Note that the requirement is for you have to have resided in Australia, not worked.
If you have resided in Australia for less than 35 years since age 16, then you will receive a proportionate amount. Lets say for example you migrated to Australia at the age of 41 and your age pension qualification age is 66. After 26 weeks abroad, you will receive 5/7ths (25/35) of the full aged pension (which is roughly $581 pf).
For more information, check out the DSS guide or get in touch with our office today.