Chile Agreement and foreign pension information 106-04009000

In Chile, the pension system (Sistema de Pensiones) consists of government regulated privatised individual accounts (AFP) that replaced the Instituto de Previsión Social known as the general social insurance schemes (IPS). Special schemes for police and armed forces still apply (Previsión de la Defensa Nacional).

Other social welfare pensions (Pensiones solidaria) may be paid to residents of Chile who do not qualify for a contributory pension.

The Chilean government also provide restitution payments Pensiones de Gracia (Pensions of Mercy - POM) to those who suffered human rights abuses or political violence in Chile between 1973 and 1990.

The Agreement with Chile started on 1 July 2004. There are no previous versions.

The Agreement was modified by protocol effective from 1 October 2009 that included a further exempt payment under Article 17 and made provision for Australia and Chile to agree on further exemptions without need to amend the Agreement.

For Australia:

Department of Social Services (DSS)

For Chile:

Ministerio del Trabajo y Previsión Social - Minister of Labour and Social Security

For Australia:

Services Australia

Note: the Australian Taxation Office (ATO) is responsible for double coverage provisions.

For Chile:

Note: there are various funds affiliated with each scheme. Areas of other organisations that are authorised for the assessment of incapacity and administration of health insurance are also included.

New scheme

Administradoras Privadas de Fondos de Pensiones (AFP) - Administrators of Pension Funds

Old scheme

Instituto de Previsión Social (IPS) - Institute of Social Security

Note: formerly Instituto de Normalición Previsional (INP).

For Australia:

Centrelink International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for double coverage provisions.

For Chile:

Superintendencia de Pensiones - Superintendent of Pensions

Under the Agreement with Chile, information held about customers may be exchanged between the liaison agencies to determine entitlement to payments under the Agreement and under either country’s domestic legislation (Article 24.1).

For information on bulk data exchange, see International Data Exchange Program and auto-indexation of foreign pensions.

The following liaison form is completed by Centrelink International Services (CIS) and sent to Chile:

• AUS187CL - Australia/Chile Agreement on Social Security

For help with creating and completing the liaison form, see Agreement liaisons, NZ CICs and exchange of information.

This following liaison form is completed by Chile and sent to Centrelink International Services (CIS):

Certificate of Insurance Periods (Certificado de Periodos de Seguro) - CH/AUS5

This form only certifies the Chilean insurance periods.

Section 1 - Data on the Worker: provides details of the insured person

• Section 2 - Insurance Periods: provides details of the insurance periods completed in Chile
• Section 3 - Institution Confirming Insurance Periods: specifies who has completed the liaison form

Chile also sends a letter specifying the purpose of the communication, including details of Chilean pension.

Under the Administrative Arrangements, each country will complete an agreed medical report send copies of existing medical information to the other country with invalidity/disability pensions from that country.

Medical examinations can also be done on request for foreign pension claim purpose. The liaison agency will contact Services Australia and request this. There is no provision for reimbursement of costs to either country.

The customer should contact Services Australia if they receive a direct request from the liaison agency to do a medical examination.

Tell the customer to go through the Services Australia’s foreign pension medical assessment process. If they have already done a medical examination based on a direct request from the Agreement partner without consulting Services Australia, the customer should contact the liaison agency to discuss any possible reimbursement options.

If a customer is claiming reimbursement of costs because they did a medical examination requested by Services Australia for foreign pension purpose, consider all evidence provided. For example, if Services Australia gave incorrect advice to the customer and this caused them to:

• seek an independent medical examination, and
• be out of pocket

See Customer compensation and act of grace payments.

Samples of forms, foreign documents and translations are available through the Residence and International program homepage.

The Agreement with Chile includes double coverage provisions. Certificates of coverage are used to confirm exemptions.

Any enquiries about double coverage or certificates of coverage should be directed to the Australian Taxation Office (ATO) website.

Any queries about taxation of pensions or the requirement to lodge a tax return should be directed to:

• in the other country - the tax authority in that country
• in Australia - the Australian Taxation Office (ATO) website

See general information on taxation, including issuing Australian payment summaries.

Tax treaty

Australia has a double tax agreement with Chile, which avoids the need for the customer to pay tax in both countries.

A person who is 'resident' in one country (according to the definition in the tax agreement) generally only pays tax on pensions in that country.

Tax deductions from income by one country may be allowed as a credit against tax payable in the other country.

Tax deductions

Tax is deducted (impuesto) from Chilean pensions in Chile but not in Australia.

The gross rate of Chilean pension, before any deduction, is maintained.

Chilean tax year

Chile uses the calendar year (1 January - 31 December) as the tax year.

Australia does not have a Reciprocal Health Care Agreement (RHCA) with Chile.

See general information on health insurance and Medicare coverage.

Any queries about:

• Health insurance coverage in another country - tell the customer to contact the health insurance authority in the other country
• Medicare coverage - direct them to Medicare

The Agreement allows Australian pensioners who live in Chile, to register with the Chilean Health Care Insurance System under the same conditions as Chilean pensioners (Article 21).

Chilean pensioners usually have a health insurance deduction (Fonasa) taken out of their payments.

The gross rate of Chilean pension, before any deduction, including for health insurance is assessed.

The official language of Chile is Spanish.

See Spanish naming conventions and pronunciation.

It is important to record and use the customer’s full name in communication with Chile.

• Customer’s Name at Birth (NAB) and/or Maiden Name (MDN) are recorded on the Customer Personal Detail Summary (CPDS) screen for female customers
• Pensions from Chile are paid under birth/maiden names

Telephone country code is +56.

Street address

Title FirstName Surname [addressee]

Moneda 1152 [street name + number]

8340648 SANTIAGO [postcode + name of commune/locality/municipality]

REGION METROPOLITANA [region]

CHILE

Street address with apartment/unit/flat

FirstName Surname [addressee]

Avenida Palena 1084, Depto. 505, Piso 5 [street name + number, unit/flat number, floor number]

25000311 MAITENCILLO [postcode + name of commune/locality/municipality]

V REGION VALPARAISO [region]

CHILE

Post Office Box address

Title FirstName Surname [addressee]

Casilla 13-D, Sucursal Plaza de Armas [P.O. Box + name of post office]

8329001 SANTIAGO [postcode (of the post office) + name of commune/locality/municipality]

REGION METROPOLITANA [region]

CHILE

Rural address

Title FirstName Surname [addressee]

Panamericana Norte S/N, Tunca Arriba [street name without number, building/company name]

2970000 SAN VICENTE DE T.T. [postcode (of commune/town) + name of commune/town]

VI REGION DE O’HIGGINS [region]

CHILE

Note:

• Many buildings in rural areas are not numbered, so the address includes the thoroughfare name and often S/N, sin numero, meaning 'without number'
• When addresses are written in Spanish, calle, the Spanish word for street, is rarely written. The Spanish street type, when included, is written before, and separately from, the street name. It should be written with the first letter in lower case
• The word for Post Office Box is Casilla Postal, sometimes abbreviated to Casilla or CP

Same-sex marriage in Chile will be legal from 10 March 2022. Chile previously recognised same-sex couples in the form of civil unions only.

For Australia, the Agreement with Chile (Article 2.1) covers:

• Age Pension
• Disability Support Pension (DSP)

Note: only severely disabled DSP customers may be granted under the Agreement.

Claims for Australian payments under International Agreements use the same methods and processes as domestic claims.

Forms to claim an Australian payment in Chile can be obtained by:

• downloading the relevant form from the Services Australia website. See Resources
• contacting Centrelink International Services (CIS)
• contacting the Chilean authorities

Australian forms needed

The customer is to complete and provide the following:

All claims:

• AUS140CL - Australian Pension Claim - Social Security Agreement between Australia and Chile
• MOD(iA)CL - Income and Assets - Chile

DSP only:

• AUS142 - Work Capacity - Customer Information
• AUS109 - Treating Doctor's Report - outside Australia
• AUS175 - Medical Assessment Report - Disability Support Pension (Outside Australia)

Note: Chile arranges for the AUS175 to be completed on a case-by-case basis.

Forms can be lodged at any Chilean social security office.

Under Sections 8 and 9 of the Administrative Arrangements, the Chilean institutions will:

• accept all forms/documents and date stamp the AUS140 form
• verify identity and personal details
• when necessary, arrange medical forms to be completed, and
• send the form(s) and any supporting documentation to Services Australia with a liaison form specifying periods of coverage in Chile and information regarding Chilean pensions

See Exchange of information and liaison forms.

If a person is not an Australian resident and in Australia on the date the claim is made, they may use the Agreement to meet the residence rules for claims if, on that date, they are

• an Australian resident, a resident of Chile or another Agreement country that accepts claims for Australian pension under another agreement (Article 14(a)), and
• physically present in Australia, Chile or that third country (Article 14(b))

Claims under the Chilean Agreement

Claims for Australian payment under the Chilean Agreement may be lodged in certain other Australian Agreement countries.

See the Claim lodgement matrix.

Accepting other Agreement claims

Chile will accept claims for Australian benefits under other Australian social security agreements.

Claim lodgement consideration

The customer must also satisfy any other rules under the other agreement and social security law provisions, including portability. For example, DSP can be claimed in a third country but has an ongoing residence requirement. Therefore, if the claimant is:

• living in the other country, DSP cannot be paid
• temporarily in the other country, DSP may generally be paid for the period it is portable under domestic legislation

The normal rules for working out the date a claim is ‘made’ and the start day apply to claims under the Agreement with Chile. However, the Agreement also allows:

• the date of lodgement of a claim for an Australian payment in Chile to be used as the date of lodgement in Australia (Article 22.2)

For coding help, see:

• Claims for Australian payments under International Agreements and
• Start Day

The Agreement allows:

• totalisation of periods of qualifying Australian residence and periods of coverage in Chile to meet any minimum periods to qualify for an Australian pension, for example, 10 years for Age Pension (Article 15.1)
• the total of any non-continuous periods of coverage in Chile to be considered to be continuous to meet any continuous residence requirements (Policy)

Note:

• Overlapping Australian residence and Chilean periods of coverage are only counted once (Article 15.2)
• Adjoining periods of Australian qualifying residence and periods of coverage in Chile, with a break of up to 3 months in between, can also be considered to be continuous (Policy)

See Resources in International Social Security Agreements for examples of totalisation.

Chilean period of coverage:

• means a period of insurance, for example, a period during which contributions were paid, or any equivalent period, as defined in the Chilean legislation
• where equivalent periods may include deemed periods, such as for child rearing or military service
• where both actual and deemed periods may be used when totalising for Australian qualification purposes, as long as they are certified, and don’t overlap
• must be certified by the Chilean Competent Institution

To be able to use the totalisation provisions, a person who is not an Australian resident at the date of lodgement must have at least 12 months Australian Working Life Residence (WLR) in Australia of which 6 months must be continuous (Article 15.3(a)).

Note: unlike WLR for rate, this period cannot be rounded.

No minimum WLR is required if the person is an Australian resident at the date of lodgement (Article 15.3(b)).

The Agreement allows the ongoing residence requirement for Disability Support Pension (DSP) to be met by customer’s who reside in Chile (Article 12.1).

For customer’s outside of Australia, the Agreement with Chile (Article 16.1) refers to the overall rate calculation contained in Section 12(1) of the Social Security (International Agreements) Act 1999.

This means customers paid under the Agreement have:

• a proportional rate paid according to their Australian Working Life Residence (WLR)
• the Rate Limiter/Limited Rate applied
• additional child amounts (s14A SS(IA) 1999) included, if eligible

The Chilean Agreement does not include the proportionalisation of any Chilean pension in the income test (Randisi concession).

Non-proportional rate extension

Customers paid under the Agreement and temporarily outside Australia, cannot have their non-proportional portability rate extended if they are unable to return to Australia.

Returns to Australia

The proportional rate continues to apply for the first 26 weeks of a temporary return to Australia (Article 16.2).

• For returns to Australia before 9 June 2018, manually code Temporary Return to Aust Ind on the Residence Savings (RSS) screen.

Customers in Australia under the Agreement are generally paid a direct deduction rate (Article 16.3).

Policy is that the reference to '10 years Australian residence' (Article 16.3) is not applied.

The Agreement does not include a comparison rate in Australia

Departures from Australia

The inside Australia rate continues to be paid for the first 26 weeks of a temporary departure from Australia (Article 16.4).

Payments under the Agreement

Under the Agreement, provided the customer remains qualified, Australian payments are payable indefinitely in both countries, that is, for temporary or permanent absences (Article 12.1).

Third country portability under the Agreement

Portability to third countries for a customer paid under the Agreement is the same as for an autonomous customer leaving Australia (Article 12.2). See Portability of payments.

If necessary, a customer who receives an autonomous payment that stops being payable due to portability reasons can transfer to the Agreement to continue payment if:

• the payment is covered by the Agreement
• the customer meets any payment limitations, such as severely disabled, and
• the customer is able to meet the lodgement provisions of the Agreement

If transferred to the Agreement, all Agreement rules apply to the customer, including portability and rate of payment.

See Transfers to international social security agreements.

A person who would be autonomously qualified but is paid under the Agreement can transfer from the Agreement to autonomous only if they are an Australian resident and in Australia.

On return to Australia, system processing will automatically transfer from the Agreement to autonomous if the person is an Australian resident who has only used the Agreement to extend their portability while outside Australia.

Former resident provisions may affect customers who transfer to autonomous if they leave Australia again within 2 years of becoming an Australian resident.

Australian payments may be issued to customers outside of Australia. If the customer intends to be outside of Australia:

• long-term (12 months or longer), their Australian payment may be issued to an overseas bank account. See Overseas Bank Account Details (OBAD) for payment requirements by country.
• for less than 12 months, payment will generally continue to their normal Australian bank account every 2 weeks.

See Delivery of payments to Centrelink customers outside Australia

For Chile, the Agreement covers:

• Sistema de Pensiones - Old age, invalidity and survivor pensions under the system of privatised individual accounts (AFP), and
• Instituto de Previsión Social (IPS) - The old general social insurance schemes (formerly known as Instituto de Normalización Previsional (INP))

AFP is the new system in Chile from 1983 onwards. IPS (INP) is the old system prior to 1983.

Main payments

• Pensión de Vejez - Old Age Pension (AGE)
• Pensión de Invalidez - Invalidity Pension (INV)
• Pensión de Sobrevivencia - Survivor Pensions (SUR):
• Cónyuge/Viudez (Spouse/Widow)
• Hijos/Orfandad (Child/Orphan)
• Madre/Padres (Parent)

The following known payments are paid by the Chilean authorities but are not covered under the Agreement:

• Pensiones de gracia - Pensions of Mercy (POM)
• Sistema de Pensiones Solidarias (Payments under the non-contributory scheme)
• Social Pensions
• Previsión de la Defensa Nacional (Payments under the National military scheme):
• Pensión de retiro (Retirement pension)
• Desahucio (Politically exonerated under Chilean Article 40 of Law No. 15,386 – former National Fund of the Merchant Navy)
• Asignaciones familiares (Family allowance)
• Pensión de montepío (Montepio pension – Social security benefits for children of Armed Forces pensioners)

Assessable lump sum payments:

• Desahucio under Chilean Article 80 of Law No.15,840

• Prestaciones por fallecimiento/Cuota Mortuoria (Chilean Death Allowance)

For help with:

• Assessment of Chilean pensions, see Assessment
• Coding of Chilean pensions, see Eligibility and Coding

The requirement to claim applies to Chilean AGE and INV.

• Customers may voluntarily claim SUR.

See Foreign pensions claims.

The Eligibility and coding of foreign pensions tab contains detailed information on Chilean payments that are subject to CFP legislation.

Claim packs are available for AGE/INV and SUR.

Claim packs are issued through the Foreign Pension System (FPS). See Assisting customers to claim a foreign pension.

Specific requirements for Chilean claims

The customer is to complete and provide the following.

AGE/INV only:

• Solicitud de Pension - Trabajador/Pension Request - Worker (CH-AUS1)
• Form for collection of bank details for payment of Chilean pension into bank account
• Document confirming National Identity Card number (RUT)

SUR only:

• Solicitud de Pension de Sobrevivencia / Survival Pension Request (CH-AUS2)
• Form for collection of bank details for payment of Chilean pension into bank account
• Document confirming National Identity Card number (RUT)
• Proof of death and/or death certificate
• (Child/ren details and/or birth certificates if required

Requests for additional information

If information provided with the claim for a Chilean pension is incomplete, Chile will send requests for information in Spanish direct to customers.

Receipt of foreign pension claim by Services Australia

Under the Administrative Arrangements, Chilean forms can be lodged in Australia at any service centre. See Processing a foreign pension claim

• All foreign pension claims and supporting documentation must be scanned, and
• The original foreign claim form and copies of supporting documentation must be sent in paper form to Centrelink International Services (CIS). See Processing a foreign pension claim

Centrelink International Services (CIS) only:

CIS will complete the following or arrange for the following to be completed as necessary and attach the documents to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

CIS staff are required to sign the relevant section of the claim form.

All claims:

• AUS187CL - Australia/Chile Agreement on Social Security

For help with creating and completing the liaison form, see Agreement liaisons, NZ CICs and exchange of information.

Note:

• See Chilean naming standards for importance of recording Chilean maiden names and names at birth for females
• Qualified customers are usually presented with information about the various options and required to confirm their choice on the designated form (Acceptance of Offer - Aceptación de la Oferta)

INV only:

• AUS175 - Medical Assessment Report - Disability Support Pension (Outside Australia). See Foreign pension medical assessments

Enquiries about claims for Chilean payments in Chile or a third country should be directed to the Chilean social security authorities.

Chilean payments are paid by direct deposit in Australia. Payments in Australia are made through the Banco Bilbao Vizcaya Argentaria (BBVA).

Any queries about the non-payment of Chilean pensions should be directed to the Chilean pension authorities.

Agreement pensions are paid as 12 regular monthly payments.

Note: Chile may pay bonus amounts throughout the year. As these are small, variable amounts and not shown on notices, policy advice is that these are not assessed.

Other benefits or private pensions are normally paid monthly or annually.

Chilean pensions must be recorded in the source currency - Chilean Peso (CLP). Official statements provide the Chilean Peso or Unidad de Fomento (UF) amounts. See Unidad de Fomento below.

Amounts recorded in source currency on the Foreign Pensions Details (FPD) screen must not be changed to the Australian dollar amount.

Note: payments into Australia are made in Australian dollars.

UF is used in Chile to measure the value of goods, services, and contracts like real estate and loans. It is linked to the Consumer Price Index (CPI), which means that the value is adjusted based on inflation.

UF should not be classed as money, since its main function is to inform of prices which is expressed in values.

It is used in AFP Programme Retirement calculations.

However, as it is not legal tender, amounts must be converted into Chilean pesos before coding.

Converting UF to CLP

UF rates are listed on the Banco Central de Chile website. See Resources for a link. Select the red 'ver todos' to display historical UF rates.

To convert UF to currency Chilean Peso:

<UF amount> x <official UF conversion rate>.

Chilean pensions are generally increased for Consumer Price index (CPI or cost of living) from 1 December each year.

For information on bulk data exchanges and auto adjusted CPI increases, see International Data Exchange Program and auto-indexation of foreign pensions.

• directly deducted (Article 16.3) and ignored in the income test (Article 8(8)(zc) Social Security Act 1991) for customers under the Chilean Agreement who are in Australia
• ordinary income (not proportionalised) for customers paid:
• under the Chilean Agreement who are outside Australia (Article 16.1)
• autonomously who are inside or outside Australia
• under another agreement other than Chile or New Zealand who are inside or outside Australia

See Rate Calculation for when a direct deduction or proportional rate is applied.

Note:

• Each member of a couple is deemed to receive half of the total amount received by the couple (Article 16.5)
• Customers may receive an ongoing pension and/or a lump sum

The system of privatised accounts (AFP) operates in a similar way to managed investments and may offer a qualified person a number of options:

• Immediate Annuity - Renta Vitalicia Inmediata
• Programmed withdrawal - Retiro programado
• Temporary Income with Deferred Annuity - Renta Temporal con Renta Vitalicia Diferida
• Immediate Annuity with Programmed Withdrawal - Renta Vitalicia Inmediata con Retiro Programado

This means that Chilean pension rates may be subject to ongoing variations each year outside of indexation. Customers must provide official statements to verify any changes. AFP pensions can cease when funds are depleted.

• Sistema Pensiones Solidaria - Social Pensions

Consists of a Pension basica solidaria de vejez/ invalidez (Basic social pension for age/invalidity). They are for people who have not got an entitlement under any other pension system. They must be at least 65 years old (for age) or 18 - 65 years old (for invalidity) and meet residence rules.

• Caja de Previsión de la Defensa Nacional – National Defence Provident Fund

Payments under the National Defence Provident Fund, also known as CAPRADENA. Known pension benefits include:

• Pensión de retiro.(Retirement pension)
• Desahucio (Person politically exonerated under Article 40 of Law No. 15,386 - former National Fund of the Merchant Navy)
  - Person is entitled to one month of the base salary for each full year of contributions to the respective fund, with a maximum of 24 months.
• Asignaciones familiares (Family allowance)
• Pensión de montepío (Montepio pension – social security benefits for children of Armed Forces pensioners)

• Assessable lump sum payment

Lump sums may be a refund of contributions or payout of a small pension.

Desahucio is a supplementary benefit made to a politically exonerated person who is in receipt of a non-contributory pension. The person would have worked in the Chilean Directorate of Roads, Architecture, Port works and Irrigation, the Ministry of Public Works or the Directorate of Urban planning. The amount would be equivalent to one month of the last remuneration for which contributions have been made to the fund, per year of service.

Foreign non-remunerative lump sums are assessed as ordinary income for 12 months from date of receipt (s1073 Social Security Act 1991).

Where a customer is granted a lump sum payment in lieu of an on-going pension payment: If the customer has a claim in progress on the FGS screen, FGD screen must be updated to FIN-NOM when FID coding is completed.

These are exempt income for customers paid under the Agreement or autonomously:

• Pensiones de Gracia - Pensions of Mercy (POM):
• are payments that aim to improve the quality of life of people for people in Chile who are living in a situation of social vulnerability
• are granted by the President of Chile
• may be granted for a defined period or for life, as appropriate
• are exempt income in all circumstances (Article 17.1 and 17.2), including for all Australian social security payments

Pensiones de Gracia are paid under any of the following Chilean Law (Ley) numbers:

• 19.123 - Ley de exonerados politicos (Political exonerees)
• may also be displayed as 19.980 due to an extension from 1991-1994
• paid monthly
• 19.234 - Ley de reparacion (Repatriation)
• may be displayed as 19.582 due to an extension in 01/09/1998 and 19.881 due to another extension on 30/06/2004
• paid periodically
• 19.992 - Prision politica y tortura (Political imprisonment and torture)
• paid annually

Pension statements may not have the Ley number displayed – it may just state: Pensions no contributiva.

• Pestaciones por fallecimiento/Cuota Mortuoria - Chilean Death allowance

Prestaciones por fallecimiento/Cuota Mortuoria may be exempt from the income test if payable to the person who incurred expenses associated with the bereavement. Otherwise, the amount is assessable for 12 months from date of receipt. (s1073 Social Security Act 1991). See Treatment of lump sums.

The Agreement does not include embargo provisions.

Arrears debts for customers and their partners are raised under s1228A Social Security Act 1991 and recovered via normal methods under the Act. See Comparable Foreign Payment (CFP) lump sum arrears debts.

When an arrears period is not provided, the arrears period end date may be assumed to be the end of the month before the date on the notice or liaison form.

A contravention debt may also occur if the customer does not advise of the grant of their Chilean payment within their notification period. See Foreign pension coding.

To continue receiving their Chilean payments, customers must renew their Certificate of Survival (Certificado de Supervivencia) once a year. The verification can be done:

• via the Chilean consulate
• via the Liaison Agency (being Services Australia)
• in person, or
• via video call

Chilean Superintendencia de Pensiones will advise the customer if they need to renew their Certificate of Survival (Certificado de Supervivencia) or Life certificate (Fe de Vida).

The Australian Proof of Life (AUS061ES) form is no longer used for this purpose.

Customers located in Australia should be encouraged to use the available video conference option (Atención Virtual (Videollamada).

See Resources for link to application form and information about the Certificate of Survival (Certificado de Supervivencia) or Life certificate (Fe de Vida) process.

For information on helping customers with life certificates, see Assisting customers to maintain an existing foreign pension.

Customers in Australia are sent notices at grant and for changes of rate for example, indexation.