How Travelling Overseas Can Affect Your Age Pension

If you’re recently retired or you’re currently planning for your retirement, you may be beginning to think about your travel plans. For some Australians, retirement can be the perfect time to fulfil those dreams of travelling the world that they may have never got round to during their younger years. For others, it can provide a great opportunity to relocate overseas entirely and reduce their living expenses.

Read More: 6 Destinations Where Your Retirement Savings Can Go Further 

Before you finalise your plans and book your flight tickets though, it’s important to first understand how it might affect your age pension.

– What Is The Age Pension?

For those of you that don’t already know, the age pension is a governmental scheme that is designed to provide enough income for a basic standard of living for retirees. It operates somewhat as a safety net for eligible retirees who are unable to fully fund their retirement through other means, such as through their Super and private retirement savings. Not all retirees are eligible to receive the age pension and whether or not you are will depend on whether you meet certain age and residency requirements and on the results of an income test.

Read more: The Aged Pension: Can You Receive It? 

If you are eligible to receive the age pension, you may still be able to receive it during travel outside of Australia. However, the rate of payment may adjust depending on a number of factors, including the duration of your travel outside the country, how long you have lived in Australia, whether or not there have been any changes in your assets and income, and the social security agreements your destination country has with Australia.

– Travel For Less Than Six Weeks

The majority of Australian retirees usually won’t need to inform Centrelink about short travel plans of less than 6 weeks, as it usually won’t affect your age pension. However, there are exceptions to this and some people may need to inform them.

One example of when you might need to inform Centrelink about short-term travel plans is if you have recently returned to live in Australia – within the last two years – and since then have started receiving the age pension. Another example is if you receive your payments under a social security agreement with another country.

– Travel For More Than Six Weeks

If you plan to travel outside of Australia for more than six weeks, you’ll need to inform Centrelink as it will affect your age pension income. After six weeks outside of the country, your Pension Supplement will be reduced to the lowest rate and your Energy Supplement will also stop.

Additionally, it’s worth thinking about how it might affect any concession cards that you currently hold. Some of these cards will become invalid if you’re out of the country for more than six weeks, such as the Low Income Health Card and Pensioner Concession Card. Your Commonwealth Seniors Health Card will remain valid for 19 weeks.

– Relocating Overseas & Travel For More Than 26 Weeks.

If you plan to relocate overseas or travel outside of Australia for more than 26 weeks, the rate of payment you receive will be determined based on the length of your Australian Working Life Residence. This refers to the length of time that you were a resident of Australia between the Age Pension age and the age of 16.

Age Pension payment rates won’t usually change for retirees who have had an Australian Working Life Residence of 35 years or more. If, for example, the current Age Pension age is 65, and you had been an Australian Resident since age 25, your rates wouldn’t change as you would have had a working life residence of 40 years.

If you have lived in Australia for less than 35 years during your working life, the rate of payment of your age pension will usually change once you have been out of the country for more than 26 weeks. The rate of payment that you receive will usually reflect the fraction of the 35 years that you lived in Australia. It’s easier to illustrate this with an example.

Assume you have lived in Australia for 15 years between age 16 and the current Age Pension age and you then moved to the UK to be closer to family members after informing Centrelink. After 6 weeks, you’ll notice that your Pension Supplement will have been reduced to the lowest rate and your Energy Supplement will have stopped. After 26 weeks, your Age Pension payment rate will drop down to 15/35ths of your full entitlement rate as you have lived in Australia for 15 out of the 35 years during your working life. As soon as you return to Australia, your payments will return to normal.

It’s also worth remembering that your Commonwealth Seniors Health Card will be cancelled after 19 weeks out of the country.

– I Plan To Travel Abroad, Who Do I Notify?

You should notify the Department of Human Services before travelling if you’re:

– planning to relocate to another country
– going away for more than 6 weeks
– receiving payments through a social security agreement with another country
– or have returned to live in Australia and started receiving the age pension within the last 2 years

The easiest way to do so is to log in to your Centrelink account through myGov. For those of you that would prefer to speak to a person instead of a computer, you can also inform them by calling the older Australians line on 132 300 or going into a service centre.

– What Else Do I Need To Plan For?

Now that you’ve got a better understanding of planning for travel during retirement, you might want to consider financial planning for other aspects of your retirement, too.

The team at Ethica Private Wealth Specialists can help you to do just that. We can offer you a completely free, no-obligation 2-hour planning session to help you get started. Call (07) 5443 5577 to book yours today.