How do Centrelink assess my foreign pension?

Age Pension for foreign applicants

Many Australians were born overseas or have lived and worked overseas for extensive periods.  This can have important implications if and when the time comes to apply for the Age Pension. 

Upon meeting the age requirement, applicants must also meet residency criteria to be eligible for the Age Pension.  Centrelink generally require Age Pension applicants to have been an Australian resident for at least 10 years. 

If you do not meet this requirement you may still be eligible for the Age Pension if you have lived and worked in a country Australia has a social security agreement with.  Australia currently has 31 bilateral international social security agreements. Further details of these agreements can be found here. For example, Joe lived and worked in Canada for most of his life.  He moved to Australia 5 years ago and became a resident.  Whilst he doesn’t meet the initial 10 year residency requirement to be eligible for the Age Pension, his time in Canada, with which Australia has an agreement, contributes towards his eligibility.  

In these circumstances, if applying for the Age Pension, Centrelink also require applicants to claim the equivalent pension in the foreign country they lived and worked – if they have not already.  

Centrelink will generally have access to the appropriate paperwork to apply for the foreign pension and, if you are eligible, Centrelink will generally receive confirmation directly from the foreign body.

To determine the impact of your foreign pension, Centrelink will first calculate your maximum benefit without including your foreign pension. Once they have determined the maximum Age Pension you are eligible for, they will reduce your payment by whatever you are receiving from the foreign agreement pension.

For example, consider Joe who is single and in receipt of a $850 pf foreign agreement pension from Canada.  When applying for the Age Pension, based on having very little other income or assets, Joe is assessed as being eligible for the maximum single Age Pension of $944.30 pf. 

Given Joe also receives the Canadian Pension, Centrelink will reduce his Australian Age Pension payment dollar for dollar to $94.30 pf. In total he still receives the equivalent maximum Australian Age Pension rate which is partly made up of his Canadian Pension.

Centrelink assessment – Maximum Age Pension payment $944.30
Less Foreign Agreement Pension from Canada $850.00
Age Pension payable by Centrelink $94.30

These rules do not apply to all foreign pensions.  You may be eligible for a foreign pension with which Australia does not have a social security agreement.  These are known as Autonomous Foreign Pensions.  These foreign pension payments are assessed as regular income when determining your rate of payment under the income test.

If you would like to understand your eligibility for Age Pension please call or email our office to have us assess your circumstances.

Photo by Ethan Wilkinson on Unsplash

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