Proposed legislation to change the portability of the Age Pension for those travelling overseas will be discussed in Parliament this week, when the Senate committee examining the change delivers its report.
The change will reduce from 26 weeks to six weeks, the period that an Age Pension recipient can be outside Australia before their payment is affected.
Currently, an Age Pension recipient can be out of Australia for 26 weeks before their payment is subjected to a working life residency test. This test requires the recipient to have lived in Australia for 35 years after the age of 16 before they can receive the full amount of their Age Pension. Any less than this and the payment is pro rata.
Age Pension recipients who travel overseas to a country with which Australia has an International Social Security Agreement should be able to retain their full payment under such agreements.
For those who have lived in Australia for the required time, or who do not travel overseas, the proposed change will not be relevant. But for those who plan to retire overseas or visit family living in another country, the financial penalty could be prohibitive.
The legislation, which is part of the 2015/16 Federal Budget measures, is expected to save the Government $168 million over four years and is due to commence from 1 January 2017, the same date that sees sweeping changes to the asset thresholds and taper rates for Age Pensions. However, migrant and refugee groups, along with the Australian Council of Social Services are urging the Government to consider the effect it will have on those who still have family living overseas. It is estimated that 40 per cent of those on the Age Pension were born overseas.
A spokesperson for Social Services Minister Christian Porter said that all countries in which a person has lived should meet the costs of retirement. “It is the expectation that where a person has spent a proportion of their working life overseas, they will be eligible to receive a pension from that country.”
The Refugee Council of Australia has made a submission to the Senate inquiry into the change and notes that any such measure will greatly affect the refugee community as they often flee from countries because of “persecution at the hands of the government”, do not have the necessary paperwork to prove their eligibility or come from a country that does not have a stable social security system.
Shadow Minister for Families and Payments, Jenny Macklin, said Labor would oppose this measure, as it will affect “thousands of migrant pensioners.” “These pensioners have worked hard their whole lives. They deserve our support in retirement,” Mrs Macklin commented.
Read more at TheAge.com.au
Perhaps with good reason, there has been little comment about the Government’s proposed changes to Age Pension portability for those planning to head overseas.
Whenever a change to the Age Pension that will financially affect recipients is proposed, the argument that the payment is one that Australians are entitled to given the years they have worked and paid taxes is often used to attack such measures. This is exactly what the working life residency rule does; it ensures that those who have fully contributed to the social security system get the full benefit, and those who partly contribute, get paid accordingly.
And no one is essentially griping about such a rule, just the timeframe at which it will be applied. While reducing the time a person can be absent from Australia from 26 weeks to six weeks seems extreme, it’s worth remembering that the payment being made is an Australian Age Pension. It’s not a payment meant to fund lifestyles overseas or extended travel, but rather support those who do not have the savings to fund their own retirement.
While I can see an argument for extending the period in certain circumstances, such as a sick relative overseas or an extended illness of the person travelling, a reduction in the time one can spend outside Australia before their Age Pension is recalculated is warranted. If you have moved to Australia for a better life, but decide that life no longer suits and you wish to be somewhere else, then you simply can’t expect the Australian Government to continue paying you regardless.
Do you agree with the change? Or will you be adversely affected by the changed timeframe for applying the working life residency? If six weeks is not long enough, how many weeks would you recommend?