- D1. New and revised international social security agreements
- D2. Further simplification of international payments
- D3. New social security arrangements between Australia and New Zealand
D1. New and revised international social security agreements
1 January 2002 – revised Agreements with Austria, Canada, the Netherlands, Portugal and Spain
1 July 2002 – new Agreement with the USA
Australia's social security agreements with Austria, Canada, the Netherlands, Portugal and Spain are to be revised to take account of policy and legislative changes in Australia and the respective countries since the Agreements were originally signed. The major change common to all Agreements is to limit future grants of Disability Support Pension to the severely disabled. The new Agreement with the Netherlands will be upgraded to include payments other than Age Pension in line with other existing agreements.
A new Agreement with the USA will enable many people in both countries to receive a part-pension from the other country for the first time.
The Agreements with the Netherlands, Portugal and the USA also include provisions regulating social security and superannuation contributions for Australian employees working temporarily in those countries and for foreign workers from those countries in Australia. These will remove the burden of double contributions that currently apply to these workers. These will be the first Agreements to include such provisions for Australia.
All the Agreements are expected to be signed in June or July (the texts of the Agreements are confidential until they are signed).
Australia has 10 'shared-responsibility' international social security agreements, most of which were signed in the late 1980s and early 1990s. These bilateral agreements enhance social security protection for people who move between Australia and those countries. They do this by overcoming restrictions on the export of pensions and by allowing people to add periods of residence or contributions in both countries to meet any minimum periods required to qualify for a pension.
Agreement countries* currently pay about $385m pa in foreign pensions into Australia in respect of 85,342 people. Australia pays about $140m into those Agreement countries in respect of 33,293 people.
Funding: $12.6 million
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D2. Further simplification of international payments
1 April 2002
The changes will address inequities in payments made to Australian pensioners under international social security agreements and under domestic law. They will further reward people who defer their Age Pension under the Pension Bonus Scheme. There are three elements:
- Pensioners leaving Australia for longer than 26 weeks will, after 26 weeks overseas, receive less than the full rate of Australian pension if they did not have at least 30 years of Australian Working Life Residence (AWLR).
- People who defer their Age Pension and register with the Pension Bonus Scheme will be able to continue accumulating Australian Working Life Residence after their Age Pension age, up until they are granted Age Pension.
- Clients granted a foreign pension from a country with which Australia does not have a social security agreement (a 'non-agreement country') who receive a lump sum payment for past periods will have their rate of Australian pension adjusted. It will be adjusted to recover the overpayment of their Australian pension in respect of these past periods. This will treat payments from 'non agreement' countries the same as those from countries with which Australia has an agreement.
(a) Extending the AWLR period for those leaving Australia from 1 April 2002.
The required period was formerly 25 years' Australian residence. This is generous when compared to international practice. Under Australia's international social security agreements the AWLR period for a full rate of pension will remain at 25 years. This therefore provides an incentive for other countries to enter into reciprocal social security agreements with Australia in order for their former citizens to have access to a better rate of Australian pensions.
(b) Extending the AWLR accrual period.
People who are registered with the Pension Bonus Scheme will be able to accumulate their AWLR period up until the day they start receiving Age Pension. This measure recognises the contribution made by those who extend their workforce participation and provides a further incentive for clients to defer their retirement.
(c) Comparable Foreign Payment Debt Recovery
Lump sum payments from non-agreement countries were previously treated differently to payments from agreement countries. Only customers who received lump sums from agreement countries had overpayments for past periods recovered. This was inequitable and this measure ensures the consistent treatment of all customers in receipt of foreign pensions – whether received from agreement or non-agreement countries (for lump sum arrears received after 1 April 2002).
Funding: Net savings of $20.2 million over four years
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D3. New social security arrangements between Australia and New Zealand
26 February 2001 - Changed arrangements
1 July 2002 - New Social Security Agreement
From 26 February 2001 changed arrangements apply to New Zealand citizens seeking to claim certain social security payments in Australia. Most New Zealanders who moved to Australia after that date, or move in the future, will only be able to access the full range of income support payments and employment assistance if they have permanent resident status in Australia.
A new social security Agreement between Australia and New Zealand will commence from 1 July 2002. The new Agreement will cover Age Pension, Disability Support Pension and Carer Payment.
New Zealand citizens already residing in Australia on 26 February will continue to be considered as permanent residents of Australia and have the same rights as other Australian residents.
Australia and New Zealand will share financial responsibility for pensions paid under the new Agreement.
Until the new Agreement commences, New Zealanders will be able to apply for any payment that they are eligible for under the current Agreement (Age Pension, Disability Support Pension, Parenting Payment and Partner Allowance).
Funding: Net savings of $416.4 million over four years