Skip to content

How to claim your Age Pension when living overseas

For the many Australians planning on retiring overseas on an Age Pension, there are a few conditions relating to your payments to be aware of. According to 2018 data from the Australian Bureau of Statistics, the previous decade had seen a massive 47% rise in Australians retiring abroad. The most popular destination for Australian retirees is New Zealand, followed by European cultural hubs across Italy, Greece, and Spain.

There are many factors contributing to this trend - from the recent inflation in property prices at home, to the allure of lower costs and a better quality of life overseas. Whatever your specific reasons for considering a move, we've pulled together some information on how retiring overseas may affect your Age Pension eligibility and payments.

Receiving your pension abroad? Avoid hidden currency exchange fees when transferring a pension overseas.

Learn more

Retiring overseas on an Australian Age Pension

The Age Pension is the main income support payment for Australian retirees. Eligibility depends on:

  • Your age. You must be 66 or 67, depending on the year in which you were born.

  • Your income and assets - these must be under the test limits.

  • Your residency status. Most eligible retirees will have lived in Australia for at least 10 years, although there are exceptions listed here.

Even if you're entitled to receive the Age Pension at home, you should find out how living abroad may affect your payments. This article covers the basics - for more specific information about your own case, it's best to consult with Services Australia.

Claiming the Age Pension overseas

Your Age Pension overseas payments depend on a number of factors:

  • How long you plan to stay abroad

If you're already receiving the Age Pension, then you can stay overseas for up to 26 weeks without your payments being affected. However, you need to let Centrelink know if you plan to stay out of the country for longer than six weeks. And if you intend to live overseas for more than 26 weeks, there are other conditions to fulfil to receive the Age Pension. We cover some of these conditions below.

  • Your retirement location

Australia has social security agreements with a number of countries, such as New Zealand, Greece, Italy, Japan and the USA. If your retirement destination has such an agreement (you can check the full list of countries here) then this will determine your Age Pension payment rate. Note that if the country doesn't have such an agreement, you must apply for your pension in Australia via Centrelink. If you're already living overseas, you'll need to return home before you can make your claim.

  • How long you've been an Australian resident

This is called your Australian Working Life Residency (AWLR) and it starts after being an Australian resident for 10 years. It's calculated between 16 and 65 years of age and is dependent on your residency rather than how many years you were employed or paid tax. The bottom line is this - if you've been an Australian resident for more than 35 years then your Age Pension rate overseas is unlikely to change. However, if you've been a resident for fewer than 35 years, you'll usually get a lower rate in line with your own personal AWLR.

  • Your income and assets

When you live outside of Australia, you have different limits on income and assets to determine your Age Pension payments. Make sure to check what's regarded as income and assets, as well as the allowable income and assets thresholds for pensioners who live abroad.

Rate of payments and changes to benefits

If you're not retiring in one of the destinations with an Australian agreement, but you are eligible to get the Age Pension abroad, then you should note that your rate of payments will differ compared to retirees living in Australia. Your pension will be paid at the outside Australia rate, and your pension supplement will drop to the basic rate.

At the time of writing in October 2021, the annual rates of payment for overseas retirees are capped at AU$22,937 for a single person, and AU$34,580 for a couple. Your specific rate may be less than this depending on you and your partner's AWLR, and income and assets. When you live overseas, you'll get your pension payments every four weeks rather than every fortnight. Your energy supplement will also stop and your pensioner concession card will be cancelled.

The two-year waiting period

There's another important rule that affects eligible retirees overseas. You must reside in Australia for at least two years after your Age Pension claim is approved before it becomes portable and you're able to get it abroad. That means that if you're living in Australia and haven't yet applied for the Age Pension, you need to factor in the time it takes for your application to be processed (usually between two weeks and two months) as well as two additional years before embarking on your overseas retirement. And if you're currently living abroad and planning to apply for the Age Pension, you'll need to return home for two years before you're able to take it overseas.

There are exceptions to this rule if you live in one of the countries that have a social security agreement with Australia. In that case, you're then able to carry out your two-year waiting period in your retirement destination. However, you won't receive your pension payments during that time.

Where you receive your payments

You can get your Age Pension payments paid into a bank account of your choosing, whether Australian or foreign. Note that if you opt to receive payments into an Australian bank account, you'll receive it in Australian dollar (AUD) and if you choose a local account abroad then you'll get the funds in local currency.

Whatever you decide, keep in mind that exchange rates and bank fees can reduce how much you eventually receive. You should plan well to minimise costs and take advantage of exchange rates when they're at their most favourable. By using CurrencyFair, you'll always secure the best exchange rate available at that time, and enjoy reduced fees in comparison with the banks.

It's never too early to start planning your dream retirement

For Australians looking to retire abroad on the Age Pension, the message is clear - you need to plan well, and well in advance. You may need to wait two years before your pension becomes portable, and even then you won't be entitled to the same benefits as pensioners at home, so consider whether you'll need extra savings to top up your income.

Shifts in how the Australian dollar is performing against your local currency could also cost you a share of your available funds, so it's a good idea to familiarise yourself with all currency exchange options. And if you haven't yet chosen your retirement destination, researching the agreements that Australia has with other countries will ensure you're making an informed decision for your future.

Receiving your pension abroad? Avoid hidden currency exchange fees when transferring a pension overseas.

Learn more

Photo by sk on Unsplash

This information is correct as of 19 October 2021. The information is not to be relied on in making a decision with regard to an investment. The article is purely for general information purposes.

Share this post:

Related Posts

Fast, secure money transfers

Send money overseas at better exchange rates, with no hidden fees

  • FX rates up to 8x cheaper than the banks

  • Fast transfers, often within 24 hours

  • Send to over 150 countries

Follow Us