Aussie Pension While living in Bali

I was in that position myself. It's a complex issue, but fortunately, I did manage to negotiate a successful outcome. Happy to meet up and chat about approaches that might work. I live in Legian - drop me a private message.
Cheers, Vyt

Hello Borborigmus.
Regarding the Aussie pension. I now find myself in the same position as many others I am sure. Now the powers that be tell me I must return for a two year prison sentence, then my pension may become portable. I'd welcome any ideas you may have on the subject.
Jethro

One thing that International branch of Centrelink look at is the continuous length of time spent living in Australia before going overseas to live.

As I understand it, if this period exceeded 10 years, then provided other requirements are met, the process should go relatively smoothly.

If under 10 years, the requirement is to spend at least 2 continuous years in Australia before departing off-shore and being eligible for a pension.

Another thing to consider is your 'intention' to eventually return to Australia. If it is your 'intention' to do so, no matter how far in the future, you are considered to have ticked another box in the eligibility criteria. If you state an 'intention' never to return, another roll of the dice is loaded against you.

The key, as I see it, is to deal exclusively with personnel from the International branch, who understand the intricacies of off-shore pensions. They also have a fair bit of latitude in interpreting confusing, and sometimes apparently contradictory, aspects of the complex regulations. Dealing with 'normal' regional offices means that you may well receive incorrect advice from well-meaning officers who are not well-versed in specific regulations, and who do not have the flexibility to interpret the rules. In my experience, they tend to 'play safe'.

Thank you. I suppose I'm in with a fighting chance. I worked in Australia for over forty years, been in Bali for six. Thanks again I will keep you updated.

Jethro

Hi, sorry me again.
Further details.
Apparently as of January this year a few changes happened. Because of living here it is considered that I have broken my 'Australian residency'and considered to have no further ties with Australia! which I refute due to still having property there.
I do like your advice of dealing with International services directly though and this I will follow up.
Thanks again

Hi Jethro,
For your Information the int office number is 001 803 61 035
Good luck
Aussiehj

I fell foul of that same 'change' in January, receiving a letter saying that I was no longer considered an Australian resident living overseas, but an overseas resident formerly from Australia. The letter intimated that I would therefore lose my pension.

A call to International Branch sorted out that little misinterpretation quickly. A 'long-term' overseas resident IS treated differently, but only in the sense of receiving their pension monthly instead of fortnightly, and not being eligible for a Health Care card. The right to receive a pension is unchanged.

Out of curiosity, do Australians contribute during their “working life” in OZ to this national pension scheme, or is this truly an entitlement program?

For example, the US scheme, aka Social Security, requires contributions (deducted from pay checks) during one's working years, but SS pays out regardless of where the US citizen lives, and for a non citizens, legal “green card” holders, they pay out as well, again, regardless of where the person lives.

Yes, Australians contribute during their “working life” in OZ to the national pension scheme via tax. The income tax paid is designed to pay for the usual government expenses, which include the age pension scheme. There are no separate 'Social Security" contributions as such.

That is one reason that a minimum residency period is stipulated. The granting of the Age Pension, and the amount paid, is based on many factors, including time lived in Australia, whether one has been the recipient of other support programs such as unemployment benefits, one's wealth and interest income at retirement, combined spousal income, and superannuation savings.

Even the full pension is barely adequate for survival in Australia, and many people receive a very much reduced pension because it is means-tested.

What you call 'entitlement programs' are more the type of payments and benefits currently conferred on asylum seekers entering Australia via Indonesia. Their benefits are actually far in excess of those received by elderly Australian pensioners who have worked for over 45 years and paid their taxes.

The Age Pension can by no stretch of the imagination be called an 'entitlement program'.

Is the period of residency and “working life” in OZ required to be contiguous, or can it be in separate segments of time so long as the sum adds up to a minimum requirement?

In the US it's the total time as added up…no contiguous length of time required. 

Social Security in the US is somewhat similar to the OZ national pension, but residency is not the issue, rather the issue is how many working quarters per year has the applicant contributed. 

Social Security in the US is a true pension, albeit mandatory.  Most who are on it are healthy and otherwise capable of working, but they have reached the minimum eligible age to collect benefits, which currently is 62.  They can wait beyond that minimum age eligibility to collect, and by doing so the monthly benefit received will be somewhat higher. 

It seems that the OZ system is rather Draconian in that it emphasizes residency more than the periods of time of contributing to the national pension scheme.  Actuarially speaking, the Australian scheme would be a huge money maker for OZ.

As far as I know, the residency period needs to be a contiguous 10 years, although I understand there is some flexibility.

That requirement was brought in a long time ago, when young Australians who became citizens after their parents migrated from Italy and Greece in to 1950s returned to their motherlands in early adulthood and stayed until pension age. On their return, some started claiming the age pension and immediately left again on gaining it.

The residency period requirement was brought in to foil this somewhat opportunistic scheme, according to what I was told at Centrelink. It has never been changed.

The system is quite draconian, yes. To me it makes much more sense for a pension to be tied to the amount of tax paid over a working life, as in the US. Australians are also only eligible to receive it at age 65, and the eligibility age is being raised progressively too.

Don't know that it's a 'huge money maker' - it's more a government response to managing a very small and rapidly ageing population, which is expensive to support in terms of health care, pensions and the like.

It's a money maker all right.  Considering what a pension plan is, which is virtually a life insurance policy in reverse, the extent to which one adds restrictions of eligibility of benefits based on residency skews the basic actuarial mortality tables way in favor of the pension sponsor/administrator.

Such a plan would be totally illegal under the insurance laws of all 50 states in the US.

Aside from that basic issue we haven't even touched on the morality or the violation of human rights inherent with any such system demanding residency in the country where the pension contributions were made in order to receive any benefits. 

In short, the Ozzie system is truly despicable.

You're off-track with your understanding and assessment of the Age Pension scheme in Australia. It is NOT a 'pension plan' or 'reverse life insurance'. It would therefore not be 'illegal' in the US.

The system is totally different to that in the US and there are no points of comparison in its operation.

There is no 'violation of human rights' simply because there are no 'pension contributions' being made.

The closest comparison between America's Social Security program and an Australian retirement scheme would be the widely-used Superannuation schemes, which are totally different to the Age Pension, which is paid to eligible citizens by the government from consolidated revenue, NOT from a pool of contributions.

Labelling the Aussie system 'despicable' vis-a-vis the US system is like comparing oranges to celery and maligning the former for not being crunchy.

Forgive my confusion Vyt.

You write now that “the system is totally different to that in the US and there are no points of comparison in its operation.”

But you wrote earlier:

“Yes, Australians contribute during their “working life” in OZ to the national pension scheme via tax. The income tax paid is designed to pay for the usual government expenses, which include the age pension scheme. There are no separate 'Social Security" contributions as such.”

That's exactly how the US Social Security system works…i.e., it is funded through one's annual Federal income tax reported and paid to the IRS…the Internal Revenue Service.  If a portion of one's income tax is being allocated to a person's later benefits (pension) at retirement, old age or disability then indeed it is a contribution, albeit a forced contribution regardless if it is cloaked under the term “tax” or not.

Therefore, denying the portability of benefits by restricting eligibility to those benefits on the basis of residency is despicable unless contributing to the pension plan is optional, which it isn't either in the US or OZ.   

You also wrote earlier “to me it makes much more sense for a pension to be tied to the amount of tax paid over a working life, as in the US” and I agree 100%.   

Requiring a person to reside in the same country where their earnings were taxed and a portion of that tax is allocated to a future pension benefit is definitely a violation of one's human rights.

Hi Jethro & Vyt
Don't forget to draw the Australian aged pension there are two non negotiable factors 1. You must have an Aust. residential address, 2 You must have an Aust bank account into which your pension is paid, Center link will not pay into overseas accounts.
the international office (based in Hobart) told me to refer any and all
correspondence to the International office from Center link .
It seem there is a new category "Australian living abroad"
The only change according to International office is payments may be paid monthly rather than two weekly
Please let us know the outcome.
Aussiehj

Suggest we use P.M.

AussieHj

As I said before, "There are no separate 'Social Security" contributions as such."

All federal tax paid, whether it's income tax, GST, or anything else, goes into one giant bucket. The government, at its discretion, uses the money, via its budget allocations, for education, defence, foreign aid, infrastructure projects, government salaries - AND all social benefits programs of which the Age pension is one component.

Therefore, there is no 'pension scheme' and no direct 'contributions' to it, therefore no regulatory framework as would be required for a 'real' Social Security pension scheme such as that in the United States.

Is the Australian system a poorly-executed, iniquitous and somewhat unfair social benefits program? Yes.

Is the American pension system a better, fairer system ? Definitely.

Is the Australian system a "violation of human rights"? No. At least no more than any government's choice to use its citizens' tax money on questionable expenditures.

But there is no way one can compare the Australian and US systems directly because they are totally different.

“As I said before, "There are no separate 'Social Security" contributions as such."

There isn't in the US either!  The US program is funded through US income taxes which are required, and not optional…just like in OZ.

And, as I've said, the two systems are not that different aside from the draconian requirement of the OZ system that the pension recipient be domiciled in Australia.

“All federal tax paid, whether it's income tax, GST, or anything else, goes into one giant bucket. The government, at its discretion, uses the money, via its budget allocations, for education, defence, foreign aid, infrastructure projects, government salaries - AND all social benefits programs of which the Age pension is one component.”

That is the same in the US and it's all collected by one agency, viz, the Internal Revenue Service.  Moreover, US Federal funds presumably allocated to Social Security system can, and often have been used for other purposes.  In fact, as of 2011, the US government has “borrowed” nearly $2.7 trillion from Social Security allocations to be used for other purposes, “education, defense, foreign aid, infrastructure projects, government salaries”…etc.  .

“Therefore, there is no 'pension scheme' and no direct 'contributions' to it, therefore no regulatory framework as would be required for a 'real' Social Security pension scheme such as that in the United States.”

Of course there is a “pension scheme” and it exists within the fact that benefits are payable as pension income to those of eligible age.  Of course there is a regulatory framework in Australia…there absolutely has to be some government administration of the payments to individuals, the determination of the amount of that payment and the accounting of what portion of the Australian Federal tax gets allocated to the pension benefits.

The only real differences between the US and OZ system are that in the US,

-Foreigners as well as US citizens are eligible to receive monthly pension benefits so long as they paid Federal Income taxes for a minimum required period of employment. 

-Recipients are not required to live in the US or any of its territories to receive benefit payments.  In fact, it would be unconstitutional to include this residency requirement.   

-The US system is more transparent and provides accounting of what portion of the total Federal income tax a worker pays that is allocated to the age pension program…viz Social Security. 

Of course the OZ system is a violation of human rights in so far as it taxes all workers, even those who will never see a penny of benefit from the age pension program which is funded through its income tax system.  So long as the Australian system requires residency in OZ as a prerequisite to receive this benefit, it is violating human rights. 

The only way around this Vyt would be for the OZ system to either remove the domicile requirement for benefit eligibility or to make the program optional and therefore having a slightly less income tax rate for those workers who don't want the program.

I can't imagine that any decent constitutional lawyer would not have serious issues with a government program which is funded by all working people, be they citizens or not, and which requires that citizens or other than citizens must live within country to receive the benefit of what they paid for during their working years in OZ.

Interesting argument. As to your core criticism of the Australian system, many, if not all, people of retirement age would agree with you. Myself included . ;-)

Hi Aussiehj and thanks. I am still a bit lost though, I know I have to return to Aussie to apply but this two year thing worries me.

Cheers!

Hi bloggers. You all are right, this is a complex matter and from what I can ascertain after speaking with Centrelink officers today, there is a possibility each case will be a discretionary decision by the officer at Centrelink assessing your application.

Firstly, for clarification, it would be my understanding the Oz system differs from the U.S. system in that resident Australians do not have to contribute specifically in any way to the pension system, but all Australian residents are entitled to receive a means tested government Age Pension upon reaching retirement age. It is irrelevant whether you paid income tax or not and the amount one receives is completely unrelated to how much income tax one paid during their working life. In the case of migrants, their time as an Australian resident does matter and a formula will determine a pro-rata amount to be received. Australia also has a compulsory superannuation system to supplement the social security aged pension which can be utilized from anywhere.

The age at which one can receive the pension is also increasing progressively dependant on your year of birth. If born after June '52, the eligibility age of 65 yrs increases by 6 months for every 18 months until age 67. You must be in Australia when you apply & you can lodge a claim any time in the13 weeks prior to your entitlement date.

Further, since Jan 1, 2013 apparently the official Centrelink requirements relating to residency have altered for everyone, requiring all applicants to be residents in Oz for either 2 years before or 2 years after they apply for the aged pension before it will be granted. The link below is to a Centrelink information document on pensions, most of which is bureaucratic insomnia-cure BS, however, on p.5 of this document a reference is made to 104 weeks, but this is for widowed women applicants only. No one else is mentioned as being required to satisfy this test.

http://www.humanservices.gov.au/spw/cus … 1209en.pdf

Interestingly, I cannot find anything official relating to the 2 year resident requirement for others on any website, but this information was given to me by a Centrelink officer. However, it was also suggested that by showing “residence”, as below, you may satisfy that 2 year requirement and thus gives your Centrelink assessor the discretion to grant!

Apparently, unofficially for a “dinky-di Aussie” to get the full pension, it is important to demonstrate you are a resident, or that you have not stopped being a “resident” for the pension to be granted, even though for instance, you live in Bali. e.g you still have a house, relatives, bank account, etc. in Oz and that maybe you do return periodically - in other words, some permanent link. By doing this it could be said you are only “traveling” and that it is your intention to come back. I emphasize this is an unofficial position and is seen as discretionary. (An Indonesian wife or a long term lease on property in Bali may not help with that argument!)

It seems that after the pension is granted you are then able to do what you want, which includes living permanently overseas. Nothing else then matters, but you do need to show residency for your application to be approved.

I confirm the overseas number for Centrelink from Indonesia as previously advised by Aussiehj is 001 803 61 035 to speak to staff in Tasmania. It could depend on who you get.

Thanks Jeff great help,I'll let you know how I get on as the time draws nearer.
Thanks again.
Jethro