Centrelink Q&A: Is there a better way to decide on pensions?

Len details how Danes handle the pension and asks whether Australia should do the same.

Is there a better way to do pensions?

Len details how the Danes handle pension payments and asks whether Australia should do the same.

•••

Q. Len
I read with interest (dismay!) your article on superannuation versus pensions. My wife and I are fully dependant on the pension, as whatever superannuation we had was used to purchase/build our retirement home here in the NT. We have both arrived in Australia from overseas, my wife from the UK (1976) and me from Denmark (1963).

When my wife retired, she approached the social services in the UK and was told that although she was entitled to a UK pension, it amounted to less than a dollar a month! So, they gave her a princely one-off payment of $150. Big deal.

When I retired in 2013, Centrelink asked me to ascertain if I was entitled to a pension from Denmark. While visiting the country I attempted to contact their social security department, but it was too difficult as this department has been devolved to several provincial towns. This works very efficiently, due to a high speed and secure internet system. When I returned to Australia, I contacted the local Centrelink department and told them of the difficulties I had experienced, asking if they could please contact their counterparts in Denmark. That ended up with me receiving a peculiar letter from Centrelink stating: “As I had not resided in Denmark before my 15th birthday, I was not entitled to a Danish pension.” Go figure! I emigrated at age 23.

A couple of years later, while talking to my daughter who lives in Canberra, she told me that my Danish ex-wife, who had just taken up residence with her, was receiving a pension from Denmark. WHAT? How come? I got some details from her and contacted the relevant department in Denmark by telephone. Knowing how long it takes for Centrelink to answer a phone call, I expected to be put on hold. I was shocked when the phone was answered promptly, and as I still talk the lingo, the lady at the other end soon found me on their computer system and, yes, of course, I was entitled to a pension, the amount depending on the time I had earned an income in Denmark.

Subsequent telephone calls to various departments in Denmark were usually answered immediately or within a few minutes.

Then began the exchange of letters and forms. Such correspondence could not be done by email unless I had an NEM account, and I had to jump through hoops to obtain one, even to find out! To simplify matters, all residents of Denmark are given a CPR (Citizen Personal Registration) number at birth; the number is your date of birth followed by a serial number, even numbers for females and odd for males! Simple.

I had to satisfy the department that I had indeed earned a living and paid taxes in Denmark, so I was asked to supply copies of work contracts, pay slips, etc. Who keeps such papers for 56 years and moving umpteen times? Statutory declarations solved a lot of problems. It all got sorted after a few years. The Danish social security department would backdate payment from the date I applied, and when I told them about the ‘stuff-up’ with Centrelink here, they backdated the payments to April 2013.

I am now in receipt of a Danish old age pension, to which all citizens are entitled regardless of where you live, or of income. It is simply part of your daily/weekly/monthly income and you pay tax on your combined income. In my case, my pension is 6/40ths (40 years is considered a working life) of a full pension, so I receive each month about $206, clear of a tax deduction of 37 per cent. I got a pleasant surprise last June when the Danish tax department advised me that I had a refund coming. Wow!

One curiosity is that each year in June I have to fill out a ‘living certificate’ to prove that I’m still breathing. Another curiosity is that my wife has now also been given a Danish CPR number – just to keep their computers happy.

In Denmark, pensions are considered income on which you pay tax, there are no ‘freebies’. If you decide to continue working after retirement age, the pension is added onto your taxable income. You are not treated as a second-class citizen, relying on ‘welfare’. A pension is never welfare, it is a right that all working Australians are entitled to and have worked for. Set the Australian pension to whatever is deemed sufficient, and let folks decide for themselves what they want to do when they reach their retirement age. If you have superannuation, or whatever, it’s yours and should not affect your entitlements from the Commonwealth. What do you think?

A. It sounds like a very fair system to us and one that quite a few countries use to determine their pension payments. We would be interested to hear what else the YourLifeChoices community thinks about adapting the Danish retirement income system in Australia. Over to you folks, what do you think of Len’s idea?

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    Star Trekker
    17th Feb 2020
    10:32am
    I think it would be a great solution to Australia's haphazard system. Just pay tax on all your income. The Government gets back what it pays out.
    SuziJ
    17th Feb 2020
    11:21am
    I'd never agree to a tax levied on our pensions. Where would you be if you're solely reliant on the pension of $933.40 per fortnight (single homeowner) if you have to pay 30% tax? You'd lose $280 per fortnight and could you live on $653.40 per fortnight? Certainly not!
    Star Trekker
    17th Feb 2020
    11:24am
    You'd have $18,600 tax-free threshold & Seniors Tax-offset. You probably would not pay anything anyway.
    Star Trekker
    17th Feb 2020
    11:44am
    https://www.ato.gov.au/individuals/income-and-deductions/offsets-and-rebates/senior-australians/

    https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Low-and-middle-income-earners/
    Sundays
    17th Feb 2020
    4:59pm
    Yes, the people who would pay tax would have other income above the full age pension. It’s a good idea and would simplify dealings with Centrelink
    Franky
    17th Feb 2020
    11:18am
    Yes, that's how most developed countries deal with their age pension. It's about time Australia caught up with the rest of the developed world.
    almost midnight
    17th Feb 2020
    11:18am
    oh yes...love the bit - 40 year working life - so your pension depends on how long you worked..and happy to pay tax on combined income without all the continous, somewhat confusing, and degrading centrelink current system
    Rae
    18th Feb 2020
    8:51am
    Yes I'd love it too. I worked from 14 and 9 months until aged 68 full time and I get nothing from the government for all those taxes. No aged pension and no concessions either. It's because I saved for myself and apparently that is a punishable offence in Australia.
    almost midnight
    17th Feb 2020
    11:18am
    oh yes...love the bit - 40 year working life - so your pension depends on how long you worked..and happy to pay tax on combined income without all the continous, somewhat confusing, and degrading centrelink current system
    bluebottle
    17th Feb 2020
    11:42am
    Like the UK pension. I get 3/30 of the full pension as I only worked for 3 years (I think). My wife gets 80% of what I get, even though she's never left Australia.
    Unlike Poms in other countries, in Australia the UK pension rate is fixed at the amount first paid; other countries it's indexed.
    East of Toowoomba
    17th Feb 2020
    11:49am
    sounds like a very practical way to go about it. Love the fact you could call and speak to a staff member right away. Just doing that would make Centrelink a great deal better for everyone who has the pleasure of dealing with them.
    caporal
    17th Feb 2020
    12:37pm
    great story re the pension from Denmark . I also receive a small amount from my Belgium pension , the system there is very similar to the Danish system !!maybe its an European system .
    Mariner
    17th Feb 2020
    4:14pm
    same here, caporal. Get about $120 from Europe every month. But then we all paid in for that privilege. Hawke/Keating declared us as welfare recipients instead of old age pensioners. Nothing you can do about that as this is the way forward. So we all put our money into real estate, into the mattress or into expensive holidays (I am for the latter, do like my days on Tahiti). Punish the savers and indulge the pisspots and gamblers and that is what you end up with. I have no problems with that as I can shift my sails to the wind.
    Lescol
    17th Feb 2020
    12:55pm
    its the just & moral method but sadly the Oz government continues to display it's ignorance. cheers
    Lescol
    17th Feb 2020
    7:20pm
    SO WHY DONT THE PEOPLE OF OZ SAY 'ENOUGH' - A UNIVERSAL, TAXABLE, PENSION IS THE BIRTHRIGHT OF ALL?? i'm saddened to see this rot remain.... cheers once again

    17th Feb 2020
    1:19pm
    Great story, with many good points, including about the humans who deal with people there, unlike Centrelink here. It shows insights into how life is in the civilised world, something our Labor and Liberal Govts continue to deny our seniors in Australia.
    Universal Age Pension is a must now after the Retirement Income Review - no excuses.

    17th Feb 2020
    1:28pm
    Well I would like to ask why some people think they are entitled to a full or part time pension from 2 Countries. Myself for example I am at least 6th generation Australian (1843 vintage). As a side point, I arm a self funded retiree, still NOT entitled to an overseas pension top up to my SFR. like immigrant beneficiaries are entitled to do.

    If all Countries went the same, as in dreamland, each person should be entitled to one pension only.

    But please, the self interest approach of this article is gross inequity.

    Meanwhile I'll never get aq pension.I will also never be classed as coming to a Country and wishing to double up on a pension or any other concessions.

    Although the one concession I would like, is to be treated the same as women in this Country. Sorry that is asking far too much.
    Gilbert
    17th Feb 2020
    1:44pm
    From NZ, I do not get 2 pensions and AU does not pay, NZ pay into AU and they then pay me.
    AutumnOz
    17th Feb 2020
    2:46pm
    Olde, you do not get two full pensions. My partner came from the UK and received a pension calculated on how many years worked in the UK before emigrating. In Australia the Age Pension was paid MINUS the amount of the UK Pension.
    Triss
    17th Feb 2020
    2:49pm
    "Although the one concession I would like, is to be treated the same as women in this Country."

    That's a generalisation, Olde, give us a few specifics.
    Anonymous
    17th Feb 2020
    3:27pm
    Well Triss the a few indicitive examples are education, Family Court, quotas for job recruitment, TV presentation roles, are evident and crucial examples . As any victim mentality female would admit, no sorry about that blasphemy on the 'I admit' particulars.

    The Education framework in the 1980s was significantly changed to improve female, fictitious interpretation, that boys did better than girls in education. This has resulted in University entrance and graduation being totally in favour of females to the extent of 62% for females and 38% for males. To top that off we as a Society STILL under identify of the STEM subjects for increased support for females. ie Science, Technology, Engineering and
    Mathematics. ie to increase the 62% dominance that females already enjoy. We can then top that off, or magnify that consternation, by legislating quotas for females for apprentice appointments. ie the appointments in the avenue that negative education bias and subsequent job prospect outcomes, remains for the University entrance outsiders, boys, have available.

    We even strive for quotas under some misnomer like politicians and Governance. Why is every day there particular reference to 'women' initiatives by the Government and Opposition Party's. There is never, repeat, NEVER any references to male based initiatives and advancement.

    Anyhow Triss that will do for now. But hey we could also raise the matter of sentencing before the general courts and High Court. Women receive 1/3 to 2/3 the sentences that men relieve for li9ke crimes. And take a jail occurrence head count. Criminal offences by females has increased, particular serious offences, because of the likely indemnity. And hold on, that raises the matter of sexual harassment. Men guilty until proven innocent. So how does a woman eliminate any male challenges for appointment or advancement in the workforce environment, particularly internal company or Government appointments. Well any fabricated accusation claim will do. Penalty for false claims is non existent.

    So the protected species marches on.
    Anonymous
    17th Feb 2020
    3:29pm
    And hey fellas the double up is exampled in the article.
    Mariner
    17th Feb 2020
    4:19pm
    Treated as women are in this country - they are there I think. In Switzerland they still retire on full pension at 64 instead of 65 as blokes have to contend with. Women are treated well in this country.
    Star Trekker
    17th Feb 2020
    4:52pm
    Women in Australia have to retire at the same age as men.

    Has been for a long time.
    Loza
    17th Feb 2020
    8:14pm
    Well Olde there is one way of fixing that if you think that women have it better is while shaving...…….
    Gilbert
    17th Feb 2020
    1:38pm
    NZ have good system at 65 all get the full pension even if you are still working, but you pay income tax on all income. It is a very simple system without the hassle of listing all your assets Etc.
    Triss
    17th Feb 2020
    2:50pm
    That's such a common sense way of going about it.
    Mariner
    17th Feb 2020
    4:06pm
    Only works for the people who actually wanted to work and did during their working years. If you have nothing you just get the full pension and complain that is never enough. Hear enough about it around here, especially from folks coming out from the pokies room. Get rid of those damn machines and we would all have more money.
    Spondonian
    17th Feb 2020
    2:53pm
    Same in UK , lot better system than here . Also because of the way Australia treats your UK pension the UK wont increase your pension payment yearly . Also to get the Superanuation tax breaks in UK the scheme has to guarantee a pension at least equal to the government pension , not like here where you can loose the lot .
    GrayComputing
    17th Feb 2020
    3:18pm
    NO ASSET TEST FOR A PENSION EVER AGAIN!
    What our founding fathers said in parliament in 1908:
    Quote:_____

    We wish to honour the sentiments of the legislators who introduced the Age Pension in Parliament in 1908. When it became law, it was commended with the following words: “… it removes the idea of old-age pensions from any suggestion of a charitable allowance. An old man, who has done his duty as a citizen for 25 years (is) as much entitled to a pension as a commander-in-chief or a chief justice.”
    End Quote: _____

    The pension was a reward for service. It should still be considered in this light. It is not a handout.

    Therefore, a pension is not welfare.

    But modern politicians have stuffed it up completely

    It is time to kill off this insane hugely expensive pensioner whacking bureaucracy.

    It is time for all of us (yes that means you) to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules.

    Hiring more Centrelink staff will only increase taxpayer’s costs for processing the creeping insane red tape monster system politicians and well paid bureaucrats have created.

    Help scrap it now. Become a hero.

    Even the UK and poorer New Zealand has a NO ASSET pension, so it is cheaper and user friendly.

    Why worry that few million$ earners get it too. That is peanuts to them, not enough for a good vintage champagne.

    Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be hassled by their crazed robo-debt scam and then waste even more time in the 3 million people waiting queues and more lost calls?

    We all (that means you) need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.

    Ask your MP do they really like being part of the system that allows this indirect abuse of the elderly?

    This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

    Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?
    Loza
    17th Feb 2020
    8:21pm
    There is one thing I find very amusing is in Centrelink there are signs everywhere saying do not abuse the staff. The amusing part is not to many other businesses have these signs and if a private business had to put up signs like this then they would certainly think what they are doing wrong to make people angry and try to adjust their demeanour to their clients.
    Rae
    18th Feb 2020
    8:57am
    Yes Loza. Perhaps slyly adding a sign saying Also Do Not Abuse The client nor Lose their Documents. It would make a point.

    It certainly indicates a failed system.
    Annick
    17th Feb 2020
    3:49pm
    Australia should evolve out of the dark ages and treat their aged residents with respect and adopt the same system as Denmark. After all 7% of our income of the years was supposed to be paid into a special treasury account to fund our pensions, until greedy politicians stole from this accounts and then closed it all together. Funny thing though they still collect the 7% tax.
    Mariner
    17th Feb 2020
    5:01pm
    Annick - our politicians do want to be reminded of that bit, sooner or later most of us remembering that item will pass on and then we shall have the 'fait accompli' of today and the future. But it should be "Lest We Forget".
    Triss
    17th Feb 2020
    5:04pm
    Not only that, Annick, don't I remember the Queensland government selling off $10 billion of assets, that's our money, and popping it into the defined benefits scheme? QIC manages the state government's $30 billion defined benefits scheme for 50,000 public servants.
    Rae
    18th Feb 2020
    9:19am
    Seems like the defined benefit scheme where super contributions were paid after full tax by the worker would be better. The Government could then save all the tax concession money of around $43 billion every year.

    The employer portion is taxed when received. Avoiding tax concessions for saving for retirement would allow everyone perhaps to get the concession card. At the moment only non savers get it and that is very unfair to those forced to save for themselves in these compulsory defined benefit schemes.

    The employer should also have to pay in their contribution promptly instead of avoiding it and then needing to sell assets to catch up on the contributions. Just being a State Government should not allow the employer to avoid paying the worker super contribution that are part of their employment contract.

    Only problem would be the screaming of young and middle age workers when a couple of hundred dollars or more a fortnight was taken out of the pay after they paid full tax on it.
    Jtee
    17th Feb 2020
    7:41pm
    Sounds logical to me and Australians would be better off with a similar system that will benefit the savers and forward-planners rather than penalising them for putting money aside and planning for their retirement. Just think of the staff savings for Centrelink.
    Aquarian
    18th Feb 2020
    1:35pm
    Looks to me like some on this post beleive that immigrants get an Oz Pension plus a Foreign Pension. That may be correct but the Oz Pension is adjusted downwards so that the two always equal the normal Oz Pension. So nobody gets more than they are entitled to. Unless this has changed in the last 5 years.
    Aquarian
    18th Feb 2020
    1:35pm
    Looks to me like some on this post beleive that immigrants get an Oz Pension plus a Foreign Pension. That may be correct but the Oz Pension is adjusted downwards so that the two always equal the normal Oz Pension. So nobody gets more than they are entitled to. Unless this has changed in the last 5 years.
    Mariner
    19th Feb 2020
    3:56pm
    It is still the rules, for a $1 in foreign pension you might lose 50c in Oz pension depending how much the foreign pension is. Mine is $115 a month so it makes no difference it seems but then I am not on the full age pension.


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