Pensions for Expats in Australia

For older couples moving to Australia, pensions are an important consideration and were until recently, the subject of much legal debate. Even if you are a long way off retiring, you still need to know about pensions in Australia, especially if you are already paying into a private or company pension in the UK.

As it stands currently, the UK’s social security agreement with Australia ended in February 2001 which means that people who emigrated to Australia before that date are still entitled to have their periods of residence in the UK treated as periods of residence in Australia. If you emigrated after this date then you can still receive the UK state pension for the periods that you paid National Insurance contributions but the pension rate will be frozen at the date of your retirement. You will not be entitled to any annual pension rises. This has been challenged in the courts by a group of pensioners but their appeal to the European Court of Human Rights failed in 2010.

Australian Age Pension

Migrants who have a permanent Australian visa and who have been resident in Australia for a minimum of 10 years are entitled to the Australian Age Pension. The age at which you can receive this varies depending on when you were born. Generally it is 65 for men and slightly lower for women although the age of retirement will increase every six months until July 2023 when it will reach 67 for both men and women.

If you have not lived in Australia for the qualifying time period then you may be able to claim Special Benefits which are means tested. Contact the Australian Government Human Services department for more information.

Australian Company Pensions

Australian employees all benefit from compulsory company pensions which can be claimed on top of your UK state pension. A percentage of your income is paid into a superannuation fund into which your employer also contributes. It is estimated that Australians enjoy around 40% of their pre-retirement income thanks to this government policy.

Private Pension Transfers

If you have a private pension in the UK then you face the decision of whether to leave it in the UK to mature or transfer it to Australia. This is largely dependent on your circumstances, for instance if things don’t work out in Australia and you move back to the UK you would have lost the costs of not only transferring your pension to Australia but also back again to the UK.

The general advice is to leave your pension in the UK until you are certain that your stay in Australia is permanent. There is no doubt that pensions in Australia enjoy a higher rate of inflation than in the UK but this has to be offset with the cost and hassle of a transfer. Also be warned that there are many companies who are only too willing to help you with a pension transfer for extortionate costs. Contact the Qualifying Recognised Overseas Pension Scheme (QROPS) for guidance.