Why is there a residence rule for the Age Pension?

John wants to know why he needs to move back to Australia to claim the Age Pension.

Why is there a residence rule for the Age Pension?

John is living in Vietnam and wants to know why he needs to move back to Australia to claim the Age Pension.

•••

Q. John
I have been working out of Australia for the past 22 years. I am 76. Before I permanently left Australia in 1997, I had worked the required 35 years. I am now ready to request an Australian Age Pension. Can you explain why I have to spend two years qualifying time in Australia before I can have the pension paid in Vietnam? 

A. The Australian income support system differs from those of most other developed countries, in that it is funded from general revenue, rather than from direct contributions by individuals and employers. Instead of reflecting the level and duration of contributions into a social insurance fund, Australian income support is based on residence and need.

In general, a person must be an ‘Australian resident’, as defined in the Social Security Act 1991, in order to qualify for Australian social security payments. An Australian resident is a person who resides in Australia and has permission to remain permanently.

In deciding whether a person is residing in Australia, factors such as the person's domestic, financial and family ties to Australia are taken into account, as well as the frequency and duration of any absences from Australia and the reasons for such absences.

If you are residing in a country that has a social security agreement with Australia, then you can apply for the Age Pension in that country, but at the moment there is no such agreement with Vietnam.

Are you eligible for an Age Pension? Do you know your rights? The PensionChecker™ tool has all the information you need.

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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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    31st May 2019
    11:07am
    Cannot see anything wrong with that rule. We have all kinds of restrictions here as well and we follow the rules here. So if someone wants a pension from here he/she might as well turn up to claim it here. Biggest problem, I suppose, would be the requirement to remain living here for 2 years after being granted the age pension.
    Tom Tank
    31st May 2019
    11:56am
    As I understood the article they would have to live in Australia for 2 years before claiming the pension.
    I do agree with the rule and too many people try to compare our aged pension system with the UK's but that is not comparing apples with apples.
    Given the growth in aged population there are changes on the way with retirement incomes and how they are to be funded. Essentially a retirement income is to fund a reasonable comfortable retirement it is NOT to build further wealth. The ideal scenario would be that all accumulated retirement funding is spent as you pop your clogs. Brutal perhaps but realistic.
    Tom Tank
    31st May 2019
    11:56am
    As I understood the article they would have to live in Australia for 2 years before claiming the pension.
    I do agree with the rule and too many people try to compare our aged pension system with the UK's but that is not comparing apples with apples.
    Given the growth in aged population there are changes on the way with retirement incomes and how they are to be funded. Essentially a retirement income is to fund a reasonable comfortable retirement it is NOT to build further wealth. The ideal scenario would be that all accumulated retirement funding is spent as you pop your clogs. Brutal perhaps but realistic.
    KB
    31st May 2019
    12:32pm
    People should live in the country where they want to receive the pension. A fair rule
    jackie
    31st May 2019
    12:59pm
    KB, I agree because Australian Centrelink is receiving so many requests from overseas and many of them are fraudulent. This costs us more money.

    Don't live in countries that don't have a pension agreement with Australia.
    Karl Marx
    31st May 2019
    1:00pm
    And once they have the OAP they are free to live anywhere in the world & still get the base pension & rightly so
    KB
    31st May 2019
    12:32pm
    People should live in the country where they want to receive the pension. A fair rule
    mogo51
    31st May 2019
    3:30pm
    I think it is fair that there is some residence requirements for pension receipt. I had to do it, as did all other Aussies, why should you be different?
    mogo51
    31st May 2019
    3:31pm
    I agree Cowbot Jin, it is a fair expectation.
    mogo51
    31st May 2019
    3:31pm
    I agree Cowbot Jin, it is a fair expectation.
    On the Ball
    31st May 2019
    4:06pm
    I do agree with the responses so far.
    Why should we prop up the economies of countries that dont have a pension agreement with Australia?
    Anonymous
    1st Jun 2019
    7:50am
    The countries without an agreement with Australia have no pension system so there cannot be an agreement with those. Most of them are the very places where Aussies would like to retire for the cheaper life style, i.e. Indonesia, Thailand, Viet Nam, Cambodia. Most European places have agreements but the cost of living is higher than here so are not very attractive for resettlement.
    Tood
    31st May 2019
    4:44pm
    "funded from general revenue" which is so wrong. This pension money was in a separate fund until Malcolm Fraser? rolled it into general revenue, the bloody govt at the time couldn't keep their hands off it! If this man has qualified by working the number of required years he should be granted a pension as an Australian citizen and should not have to return to Australia for 2 years to get it. Where he chooses to live is his business and we all know there are plenty of places that are cheaper to live in than Australia considering the paltry amount the pension and the cost of living here and someone living overseas doesn't get the supplements nor are they a drain on Medicare Typically mean minded govt the same one who cut overseas travel time down to 6 weeks before trying to get their grubby hands on part of the pension. I have worked and paid taxes in this country for 50 years and my pension is an ENTITLEMENT, not WELFARE!!! Shame on those people here that are so bloody minded to demand that a recipient stay here 2 years. Its up to Centre link to get off its arse and sort out fraudulent claims which should not impact on the rightlful recipients.
    marls
    31st May 2019
    4:54pm
    Tood

    So true
    Google who stole the workers compulsory pension fund by Australian morning mail that 7.5% on our taxes towards our aged pension has never been removed
    OnlyDaughter
    31st May 2019
    8:18pm
    Tood and Maris you are both one hundred percent correct in stating that a Coalition government led by Malcolm Fraser stoke the Australian Pension Fund and rolled it into Consolidated Revenue and spent it. As pointed out, all working Australians paid a percentage of their income into this fund and so, despite what the Grumpies on this site,say, the Aged Pension in Australia is an entitlement and not welfare.
    Dyadco
    31st May 2019
    10:35pm
    ABSOLUTELY agree Todd.

    Its an entitlement.
    Dyadco
    31st May 2019
    10:33pm
    I find the reason given a bit of a cop-out.
    Lets look at a scenario: A person, an Australian citizen, having worked in Australia for the specified 35 years, paying tax the whole time and not on benefits, decides for whatever reason to relocate overseas. This person has clearly met the qualifications of having paid taxes and working in Australia for their working life. As you may or may not be aware, a person leaving Australia cannot retain a SMSF. If they do it is taxed at 50% pa. Not the income, but the fund. So that has to be liquidated before leaving. So lets use the example of John (above): an Australian citizen who has worked in Australia but simply doesn't live there now, nor has the financial resources to do so. I cannot see how a residency rule is in any way fair or justified. How too can he, if he is looking at the pension, afford to move back to Australia, fund rent and living expenses and then have to stay for 2 years? He cant. So lets face facts here, the Government dont care. Its an administrative decision and in my opinion, an ill-conceived one as the state has to then pay medical, additional housing benefits and whatever else in order for John to simply qualify. I am 100% certain it doesn't apply to parliamentary pensions which are also funded out of general revenue to an excessive level....let alone the added benefits.
    Anonymous
    1st Jun 2019
    8:03am
    The wait of 2 years is probably excessive, however to be present in this country for the application of the age pension is fair. John will have to get all the forms together anyway and that alone would be much easier in the country than from abroad. I had a lot of hassle filling in the forms of my former residence just to claim a part pension (C/Link was helpful in that). Having to stay away from your usual place of residence for 2 years is over the top.
    Dyadco
    2nd Jun 2019
    4:12pm
    Cowboy Jim, thanks for your reply.
    I suppose I look at it a little like applying for a Passport. Its your right as a citizen to have one and you dont need to be in Oz to apply.
    The example given in the article, "Jim", is I believe based on an actual person who Centrelink have used as an example on their site. The issue for Jim, like many others, was that he was/is broke. He was living in Vietnam and was just surviving. He couldn't afford to fly back to Oz, let alone rent a room to just fulfil the residency requirement. My question is "why this residency requirement?" The article DOESN'T answer that, nor will Centrelink apart from saying its a requirement. The "general revenue" reason is irrelevant.
    There are possibly tens of thousands of citizens living abroad and likely thousands in a similar situation to "Jim". A government's priority is to look after its citizens. This requirement negates that.
    GrayComputing
    1st Jun 2019
    7:39pm
    NO ASSET TEST FOR A PENSION EVER AGAIN!
    A pension is not welfare.

    Now is the season for discontent, so do something about it!
    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

    NO ASSET TEST FOR A PENSION EVER AGAIN!
    A pension is not welfare.

    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 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 part of 3 million waiting queues and 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.


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