Media Release by The Hon Jenny Macklin MP

Tightening income support rules for Australians overseas

The Australian Government is tightening the rules for people who travel overseas while receiving income support payments and family assistance.

Under the change, the amount of time individuals can travel overseas while continuing to receive their income support payments will be reduced from 13 weeks to six weeks, effective from 1 January 2013.

This change recognises that many Australians have strong family and friendship connections overseas, while ensuring that people of working age who are receiving Government payments are in Australia participating in the community and preparing to return to work if they can.

This change will affect the Disability Support Pension, Parenting Payment, Carer Payment, Carer Allowance, Widow B Pension, Wife Pension, Widow Allowance, Partner Allowance, Youth Allowance (Student), Austudy, Mobility Allowance, Telephone Allowance, Pension Supplement, Utilities Allowance, Seniors Supplement, Clean Energy Supplement, Low Income Supplement, Pharmaceutical Allowance, Rent Assistance, Pensioner Education Supplement, Family Tax Benefit Part A, Family Tax Benefit Part B, Single Income Family Supplement and Paid Parental Leave and concession cards.

Eligible students who go overseas to study as part of their full-time Australian course will continue to be paid for the duration of their overseas study.

Family Tax Benefit Part A will continue to be paid for up to three years but will reduce to the base rate at six weeks, rather than at 13 weeks under current rules.

This change doesn’t affect the Age Pension or Disability Support Pension recipients who have been assessed under new rules from 1 July 2012 as having a severe and permanent disability and no future work capacity.

The remaining income support payments (Special Benefit, Newstart Allowance, Youth Allowance (other) and Sickness Allowance) cannot generally be received overseas.

The Government will also act to bring Australia in line with other OECD countries by requiring age pensioners to have spent 35 years of their working life in Australia to be eligible to receive their full pension if they choose to retire or travel overseas for extended periods. Currently the eligibility requirement is 25 years.

Other OECD countries generally require 35 to 45 years of contributions to receive a full pension overseas. For example, France, Denmark, Japan and Canada require 40 years of pension contributions and New Zealand requires 45 years residence.

This change will apply from 1 January 2014 and will ensure that people who receive an Australian pension have lived in Australia for the majority of their working lives and contributed to the Australian economy and community.

It will continue to be the case that if an age pensioner moves or travels overseas for longer than 26 weeks that their pension is adjusted according to how many years of their working life (between age 16 and pension age) they spent in Australia.

Currently, if they were in Australia for less than 25 years of their working life, their pension is reduced. For example, if they lived here for 15 years in that period they receive 60 per cent of their full pension entitlement (15/25th).

Under the new rules, the number of years they lived in Australia during their working life will be divided by 35 years – in this example reducing their maximum payment from 60 per cent to 43 per cent (15/35th).

People who are already living overseas on 1 January 2014 will be grandfathered and able to maintain their current 25 year base for calculating their Age Pension. Only if they return to Australia for longer than six months will they be considered under the new rules.

Age pensioners paid under Social Security Agreements with Greece and New Zealand are not affected by these changes due to specific terms of these agreements.

In addition, members of a couple paid under a social security agreement outside Australia will now be paid on their own Australian working life residence rather than at the rate of their partner.

These measures will provide savings of $178 million over four years for other budget priorities