The Federal Government has tightened age pension portability rules. From January 2017, pensioners will only be able to remain absent from Australia for six weeks before facing possible cuts to their age pension.
Legislation recently passed by the House of Representatives has reduced the amount of time that an Australia receiving the age pension can be absent from Australia befor facing a reduction in benefit. The new time period is six weeks (down from 26 weeks) and the legislation is estimated to affect approximately 190,000 pensioners.
Under current legislation, pensioners can be absent from Australia for 26 weeks before pension benefits are affected. After this amount of time, thepension is reduced to a rate that depends on the number of years they have worked in Australia. The Social Services Legislation Amendment (Budget Repair) Bill 2015 reduces this length of time to six weeks. The exception is residents who have lived in Australia longer than 35 years, who will continue to receive the pension even if they are away for longer than 26 weeks.
An income support payment is ‘portable’ when a recipient can continue to receive the payment when they are overseas. Portability varies by payment type and the recipient’s circumstances. For most payments portability is temporary (usually limited to six weeks). However, in most circumstances, recipients of the Age Pension can continue to receive payment indefinitely. This is known as unlimited portability.
While income support recipients with unlimited portability can continue to receive a payment indefinitely while overseas, those who have not resided in Australia for at least 35 years (between the age of 16 and pension age) currently receive a reduced amount after they have been overseas for more than 26 weeks.
The proportion of Australians who were born overseas has hit its highest point in 120 years, with 28% of Australia’s population – 6.6 million people – born overseas, according to recent figures by the Australian Bureau of Statistics (ABS). And according to the Federation of Ethnic Communities’ Councils of Australia (FECCA), nearly 40% of those receiving the Age Pension were not born in Australia.
National Seniors is Australia’s largest consumer lobby for the over-50s, and National Seniors chief executive Michael O’Neill said the move unfairly targets migrant Australians.
“The government’s decision to cut Age Pensions for people who spend more than six weeks overseas will unfairly target many Australians who like to visit their family and friends abroad,’’ he said.
“Reducing the time allowed overseas from 26 weeks to just six weeks is a drastic change for a significant proportion of pensioners.
“The tightening of these portability rules is a step too far, especially as 18 months ago the rules were already tightened.”
The Labor government has also condemned the change, claiming that it is not unreasonable for someone to wish to spend some time overseas visiting family, particularly if that person has spent decades living and working in Australia.
Compare Account Based Pensions with CANSTAR
Scanning the account based pension market? Check out our comparison table below, displaying a snapshot of the current market offerings for account based pensions. Please note that this table has been formulated on the basis of a balanced investment option and is sorted by the total annual cost at $250,000 (lowest to highest).
The Account Based Pension Star Ratings in this table were awarded in September, 2022. Data is updated daily, and current rates and fees displayed may be different to what was rated. View Canstar's Account Based Pensions Methodology Report here.
Products listed above that are not "Sponsored or Promoted" are sorted as identified in the introductory text. Consider whether this general financial advice is right for your personal circumstances. You may need financial advice from a qualified adviser. Read our detailed disclosure here. The table above may not include all providers and may not compare all features relevant to you. Canstar is not providing a recommendation for your individual circumstances. Click here for additional important notes and liability disclaimer. Canstar may receive a commission other fee for referrals to product providers in the table, if a consumer acquires a product after following the link.
*We are Australia’s Biggest Financial Comparison Site. Click here to learn more
This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you. Consider the product disclosure statement and target market determination before making a purchase decision. Canstar provides an information service. It is not a credit provider, and in giving you information about credit products Canstar is not making any suggestion or recommendation to you about a particular credit product. Research provided by Canstar Research AFSL and Australian Credit Licence No. 437917.