June is preparing for retirement and wants to know how her UK pension will affect her application for the Age Pension in Australia.
My husband and I are looking to retire when we are 66. We are 64 now. We are from England but have been working here for more than 14 years. We have an English pension of £160 a week. We will have a small amount of super, maybe $40,000, about $20,000 in shares and $50,000 in the bank. Do you think we will get a part Australian pension?
A. Centrelink will assess your UK pension as income and if this takes you over the income limit, your pension will be reduced by 50 cents for every dollar you exceed the limit.
The income from your combined UK pension will be roughly $1200 per fortnight – assuming both of you receive £160 each, but the first $336 will not be assessed.
Currently, the Australian government has increased the Work Bonus level, which is the amount you can earn on the Age Pension without impacting on your payments.
However Work Bonus only covers ‘busy work’ such as working in a cafe, childcare or picking fruit. A foreign pension is considered passive income, and does not come under the scheme.
So it is likely your Australian Age Pension payments will be cut, but it’s best to contact Centrelink for advice on your personal situation. This is because it’s not just your financial assets Centrelink will take into account when assessing your claim, but also your assets such as cars and furniture.
When you advise Centrelink of your income and assets from overseas, it will convert the value into Australian dollars.
Once you have been granted a UK pension, the amount will stay the same – it is not indexed. This means that the only fluctuation in the value of your payment will be due to the exchange rate.
Centrelink currently uses the Commonwealth Bank buy rates that apply on the fifth business day before the first of each month.
Centrelink will update your income details on the first of each month and apply this rate of income to your Age Pension payment.
This is only a guide to what you may be entitled to. You can make an appointment to speak to a Centrelink Financial Information Services Officer on 132300. This is a free service, which you can access at any time, whether a customer of Centrelink or not. It will help you to better understand your entitlements based on your individual financial position.
Do you have a UK pension? Do you think it should be indexed? Why not share your thoughts in the comments section below?
Also read: Will my furniture affect the Age Pension?
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