How foreign pensions can affect the age pension
This page explains how foreign pensions affect age pension. Age pensioners and their partners are required to take reasonable action to obtain a foreign pension - that is, a payment similar to an age pension, from a foreign country.
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If you are travelling to a country where you may have an entitlement to claim a foreign pension you are required to make a claim for that foreign pension whilst in the paying country.
If you have previously applied and been rejected because of location restrictions you are also required to apply whilst in the paying country.Back to top
How are foreign pensions assessed?
The assessment of foreign pensions for age pension purposes differs, depending on whether the age pension received by you is an autonomous or an agreement pension.Back to top
How are foreign pensions assessed for an autonomous age pension?
An autonomous age pension means that the age pensioner meets the required residency criteria for age pension purposes.
Foreign pensions received by a person paid an autonomous age pension, are normally assessed under the ordinary income test – i.e. they reduce pension by 50 cents for every $1 of comparable foreign pension received, over the income free limit.
*Note: - Pensions received from New Zealand are always treated like agreement pensions (see next section).
Example 1: John is a single age pensioner who receives a foreign pension of $280.00 per fortnight. He is paid an autonomous age pension, has no other income, and his assets are below the assets value limit.
The daily amount of age pension that John will receive is calculated as follows:
|1. Total income (foreign pension)||$280.00|
|2. Less ordinary income free area||-||$180.00|
|3. Multiply by 0.50||x||0.50|
|Total amount to be deducted||=||$50.00|
|Maximum rate of pension||$987.60|
|4. Less total amount to be deducted||-||$50.00|
|5. Divide by 14||÷||14|
|Daily entitlement rounded to 4 decimal places||$66.97|
How are foreign pensions assessed for an agreement age pension?
An agreement age pension means that the age pension is paid under an international agreement because the person does not meet the residency criteria for age pension purposes.
Assessment of a foreign pension received by a person paid an agreement age pension, vary, depending on the foreign country making the payments.
Foreign pensions received by agreement pensioners in Australia normally reduce age pension by a dollar, for every dollar of foreign pension received.
Example 2: John is a single agreement age pensioner, in Australia, who receives a foreign pension of $200 per fortnight from Portugal. He has no other income, and his assets are below the assets value limit.
The amount of age pension that John will receive is calculated as follows:
|Maximum singles rate||$987.60|
|less foreign pension||$200.00|
|Equals: Amount of fortnightly pension||$787.60|