United Kingdom former Agreement information 106-04034000

Agreements on social security between the United Kingdom (UK) and Australia started in 1954.

From 1 March 2001, Australia terminated the Agreement that was in place at the time because the UK refuses to apply cost-of-living increases (indexation) to UK pensions in Australia.

UK Government policy is to only apply indexation of UK pensions in certain countries where compelled under European arrangements or bilateral social security agreements. Australia's former Agreement with the UK did not include indexation.

Appeals against the decision to not index UK pensions in some countries were considered in the UK House of Lords and the European court system. The Australian Government acted as a 'friend of the court' in the ultimately unsuccessful appeal.

Despite the appeals and ongoing representations by various lobby groups and the Australian Government, there has been no change to the UK Government policy of non-indexation.

Note: a customer in receipt of a UK pension visiting the UK can receive an increase to their UK pension while they are present in the UK. On return to Australia, their UK pension reduces back to the normal rate they were paid before they left Australia.

If a customer contacts about the rate we are maintaining, code the lower rate the customer received from date of return to Australia and ask the customer to provide evidence from the UK authorities showing the rate they were paid while in the UK.

The former Agreement with the UK that was in force at the time of termination started on 29 June 1992.

For Australia, the former Agreement covered:

• Age Pension
• Benefits for widows:
• Parenting Payment Single (PPS)
• Widow B Pension
• Bereavement Allowance (BVA)
• Sickness Allowance

Note: 'widow' meant a female who had been legally married to the deceased (de jure) and who was not a member of a couple.

The former Agreement was a host-country style meaning Australian payments could not be granted to UK residents and could not be paid for permanent absences from Australia. Portability under the former Agreement was limited to 12 months for any temporary absence. After 12 months, the absence was deemed to be permanent.

As payments could only be made to Australian residents, a direct deduction rate applied in all cases.

Where a person was paid under the Agreement, any Wife Pension or spouse Carer Payment that was paid to their partner was also deemed to be paid under the Agreement.

While the Agreement was in force, any UK retirement pension, benefits for widows, sickness benefit or invalidity benefit paid under the former Agreement to a person residing in the UK was exempt from the income test.

After negotiations over many years to try and introduce indexation in our bilateral Agreement, Australia officially notified the UK Government on 1 March 2000 that the Agreement was terminated. Under the provisions in the Agreement, the termination took effect 12 months later from 1 March 2001.

A savings provision was enacted in the Social Security (International Agreements) Act 1999 to enable a person who had been an Australian resident continuously since 1 March 2000 or earlier to still use the provisions of the former Agreement as if it had not been terminated.

A person who has been an Australian resident since 1 March 2000 would have accrued 10 years qualifying Australian residence from 1 March 2010 and would not need to use the savings provision. Accordingly, there are no longer any Australian payments made by virtue of the former Agreement.

The UK Government enacted similar savings provisions for former Australian residents in the UK. There are a few customers still being paid a UK pension under the UK savings provision.

There are still a few cases paid by the UK under their savings provisions. Information regarding those remaining cases may still be exchanged.

A regular exchange of information with the UK is in place under a separate Memorandum of Understanding. See International Data Exchange and auto-indexation of foreign pensions.

This exchange does not allow individual liaison like other arrangements under international social security agreements. Customers who required information from the UK need to contact UK foreign pension authority directly. Contact details for foreign pension authorities are available in the CODES facility.

Information on how International Agreements work and general concepts used in agreement is contained in International Social Security Agreements.