How It Works
This information is intended as a guide only. If you think you may be entitled to a benefit you should lodge a claim.
- When did the Agreement start?
- What does the Agreement do?
- What payments are covered by the Agreement?
- Why do we have a social security agreement?
- What does Australia do under the Agreement?
- What does Finland do under the Agreement?
- What are the most important things to know about the Australian social security system?
- How are pensions calculated under the Agreement?
- Where and how can people lodge claims for social security pensions?
- When does payment start?
- How do seconded workers benefit under the Agreement?
- How do I find out more?
When did the Agreement start?
The Agreement started on 1 July 2009.
What does the Agreement do?
Under the Agreement, Australia and Finland share the responsibility for paying pensions to people who would not otherwise be entitled because they do not have enough residence in Australia or sufficient periods of coverage in Finland. It also helps people who could not otherwise claim because they are living abroad.
The Agreement also reduces costs for businesses operating in both countries through provisions regulating compulsory contributions in respect of seconded workers.
What payments are covered by the Agreement?
The Agreement covers Australian and Finnish age pensions. The Finnish age pensions fall under the National Pension Scheme or the Earnings-related Pension Scheme. In addition, the Agreement also covers some other pensions under the Finnish Earnings-related Pension Scheme.
Why do we have a social security agreement?
The Social Security Agreement between Australia and Finland coordinates the two countries' social security schemes to provide better retirement income coverage for people who have moved between the two countries.
People who have lived in more than one country often find that, when they claim a pension, they do not have enough residence or contributions under a social security scheme to qualify for payment or have insufficient support.
To help overcome this problem, a network of social security agreements has been set up within the international community.
One of the key elements in these agreements is that the partner countries broadly share the responsibility for social security coverage and related costs. If a person has lived and worked in more than one country, then it is fair that those countries share the responsibility for supporting that person when he/she claims a pension.
Agreements help many people to receive a part pension from one or both countries, which they would not otherwise get. It is an important principle that Agreements do not take away existing entitlements.
What does Australia do under the Agreement?
To qualify for an Australian age pension, people normally have to be Australian residents and in Australia on the day a claim for pension is lodged, and they usually must also have at least 10 years Australian residence.
The Agreement modifies these rules so that:
- Australia will treat someone who is resident in Finland as being a resident of Australia and present in Australia, so that the person can lodge a claim for Australian pension;
- Australia will add the person's periods of insurance in Finland to his or her Australian residence so that the person can meet the minimum residence qualifications to get an Australian age pension;
- Australia guarantees to pay age pension indefinitely in Finland, as long as the person otherwise remains entitled.
What does Finland do under the Agreement?
Finland guarantees to pay its National Pension into Australia indefinitely. Generally, without the use of an Agreement, the Finnish National Pension is payable outside Finland for only one year. To qualify for a Finnish National Pension people have to be resident in Finland and have at least three years of residence in Finland.
Under the Agreement, Australian and Finnish citizens in Australia can claim and be granted the National Pension. In addition, under the Agreement the payment of the National Pension may continue when a pensioner, who is an Australian or Finnish citizen, moves from Finland to Australia for longer than one year.
In the Earnings-related Pension Scheme, some pensions require completion of periods of insurance immediately prior to claiming. Under the Agreement, people may be able to add their periods of employment in Australia to their periods of employment in Finland in order to meet these certain periods of insurance.
What are the most important things to know about the Australian social security system?
All claimants for Australian pensions need to meet all qualifications (e.g. age and residence) required for that pension under Australia's social security laws. Australian pensions are also means tested, that is, an income and assets test is applied, and whichever produces the lower rate is used for assessment. Centrelink has information about the current income and assets test limits.
How are pensions calculated under the Agreement?
People who live in Australia but do not have ten years' residence in Australia can count their Finnish periods of insurance or residence to qualify for an Australian pension, subject to the means test. During this time (until they have ten years residence in Australia) they will be paid the normal income and asset tested pension rate less the amount of any Finnish pension - ie, the Finnish pension would be 'topped-up' to the rate of Australian pension they would receive if they had no Finnish pension.
Australian pensions in Finland will be based on the person's period of 'Australian Working Life Residence' [this is the period between age 16 and Age Pension age]. A full pension, subject to the means test, is payable to a person with 25 years 'Australian Working Life Residence'. For example, under the Agreement, a man who has lived in Australia from age 30 to age 50 (ie 20 years) may, at age 65, be paid 20/25ths of a means-tested Australian age pension in Finland. No pension is paid overseas if a person has less than 12 months Australian Working Life Residence.
Finnish pensions are based on periods of employment for Earning-related pensions or residence for National Pension the person has completed in Finland.
Under Finnish legislation, Finnish National Pension will be calculated on the basis of the length of residence in Finland between the age of 16 and 65.
Finnish Earnings-related pensions are also calculated according to Finnish national legislation however, when the Agreement is applied, periods of employment completed in Australia can also be taken into account to meet certain entitlement period requirements.
Where and how can people lodge claims for social security pensions?
People living in Australia can lodge claims for Australian and Finnish pension with any Centrelink office.
People living in Finland can lodge claims for Finnish and Australian pension at their local Finnish social insurance office.
When does payment start?
In Australia's case, payment starts from the date the claim is lodged, or if the claim is lodged early, the date the person qualifies for payment. Age pension claims can be lodged up to three months in advance of qualification.
How do seconded workers benefit under the Agreement?
The Agreement between Australia and Finland also includes provisions that address the problem of double coverage. Double coverage can arise where an employee is sent temporarily from one country to another to work and compulsory superannuation (or equivalent) contributions are required under the laws of both countries for the same work.
The Agreement provides that, in these situations, the employer/employee will generally only be subject to the legislation of their home country. For example, where an employer sends an employee from Australia to work temporarily in Finland, and double coverage would arise, the Agreement provides that the employer will instead only be required to make Australian Superannuation Guarantee contributions and will be exempted from making contributions under Finnish law. Equivalent provisions apply for a Finnish employee seconded to work in Australia.
How do I find out more?
For more information, please contact FaHCSIA International Branch.
For information on claim procedures and payments, please contact Centrelink International Services or call Centrelink International Services on 13 1673. You can write to:
Centrelink International Services
GPO Box 273
HOBART TAS 7001
For more information on how the Agreement will assist seconded workers, contact the Australian Taxation Office.