People who have paid National Insurance contributions in the UK may be entitled to contributory benefits even if they go and live abroad. But for many of them the benefits are not uprated. The details are contained in a series of treaties.
In Australia there is an organisation campaigning for reform:
British Australian Pensioner Association Inc.
The relevant treaty is Australian Treaty Series 1992 No 17 (1990 agreement
amended in 1992)
Which provides for Retirement pensions:
(1) For the purpose of determining entitlement to retirement pension under the
legislation of any part of the territory of the United Kingdom, a person who
is permanently resident in that part of the territory shall be treated as if
he or she, or, in the case of a claim made by a married woman or a widow by
virtue of her husband's insurance, her husband, had paid contributions under
the legislation of that part of the territory for any period during which that
person or that person's husband, as the case may be:
(a) was resident in Australia and had attained the age of sixteen years; and
(b) being ...................a man had not attained the age of sixty-five years.
There is a fundamental difference between the UK system and the Oz one. The
UK pension is based on *contributions*, while the Oz one is based on *residence*.
Also of course the UK one does not have a means test but the Oz one does. So,
a week of residence in Australia counts as a week's payment of contributions
in the UK; a week's contribution in the UK counts as a week's residence in Oz.
The official position is put by the Department of Social Security Pensions and
Overseas Benefits Directorate in Newcastle upon Tyne ENGLAND NE98 1Benefits
Agency in a letter to Mr Nelson of BAPA.
As you know there is a Reciprocal Agreement between the United Kingdom and Australia.
The Agreement provides that where a person is permanently resident in the United
Kingdom, each week of residence in Australia between age 16 and pension age
will be treated as a week in which United Kingdom National Insurance was paid
for pension purposes. This can increase a person's United Kingdom Retirement
Pension up to a maximum of the standard rate. The current standard rate is £66.75
per week.
If you are in receipt of any benefits from Australia you should notify the office
making payment prior to your departure.
The publicity you have mentioned about the Reciprocal Agreement with Australia
possibly being terminated in was put out by the Australians and we had no advance
warning of this.
It would be unfortunate if there was an end to this long standing Agreement.
This will be a source of worry for many pensioners. The United Kingdom Government
will continue to work closely with the Australian Government on issues of common
concern.
Background
Unfreezing the State pensions to all United Kingdom pensioners living abroad
would cost over £275 million a year. The United Kingdom Government feels that
its priority is to direct the limited resources available to those pensioners
in the United Kingdom who are in most need.
The Australian Government has linked this move to the United Kingdom Government's
rejection of an Australian proposal for a limited unfreezing of United Kingdom
pensions paid in Australia. The proposal would have applied to only one in 30
of the existing United Kingdom pensioners in Australia - that is the 6,000 or
so who already receive an Age Pension through the Agreement. But not all of
them would have seen any benefit from an increase in their United Kingdom pension.
Other than those, the proposal would have covered only people who started to
get a United Kingdom pension in Australia in the future. The United Kingdom
Government could not agree to a proposal which would have involved the United
Kingdom treating some pensioners living in Australia differently from the rest
in Australia and in other countries where pensions are frozen.
In 1998, the United Kingdom paid over £260 million to United Kingdom pensioners
living in Australia. Those people are contributing to the Australian economy
and very many will have done so for many years as workers in Australia before
they retired.
The United Kingdom pensioners in Australia who benefit from the Social Security
Agreement are those who have lived in Australia for less than 10 years. The
Agreement allows Australia to treat periods of United Kingdom National Insurance
contributions as periods of residence in Australia. This helps people from the
United Kingdom to satisfy the 10 year residence test for entitlement to an Australian
Age Pension. They also have to satisfy Australia's other conditions of entitlement,
including the test of income and assets. The amount of United Kingdom pension
is deducted from any Age Pension due taking the Agreement into account. In 1997
(the last year for which United Kingdom Department of Social Security had figures
from Australia) . Australia was paying Age Pension under the Agreement to about
6,000 United Kingdom pensioners.
United Kingdom pensioners who have lived in Australia for 10 years can qualify
for an Age Pension under Australia's domestic legislation. United Kingdom pension
is taken into account in applying the test of income. The Agreement has no bearing
on this.
The other group of pensioners who benefit from the Agreement are former Australian
residents now living in the United Kingdom.
Australia does not pay its Age Pension to former residents living in the United
Kingdom if they left Australia before they reached pension age. The Agreement
helps them to qualify for a United Kingdom pension, or a higher rate of pension
than they would get on their United Kingdom National Insurance record alone,
by allowing periods of residence in Australia to be treated as periods for which
United Kingdom National Insurance contributions were paid.
People who are already receiving Age Pension before they leave Australia continue
to receive it. Pensioners with an Age Pension who go to live in the United Kingdom
are entitled, through the Agreement, to a full United Kingdom pension less the
amount of Age Pension they are receiving.
The United Kingdom is currently paying pension to 17,000 former Australian residents
under the Agreement, at a cost of £13.5 million a year.
Last updated 4/3/01