International Social Security Agreements 106-04000000

Customer:

• resides outside Australia,
• is paid Age pension by virtue of the Italian Agreement,
• has 200 months Australian Working Life Residence, and
• receives two foreign pensions:
• An Italian AGE pension of EUR 4,500 pa, and
• A German SUR pension of EUR 1,200 pa

In the income test for this customer, we would assess:

• EUR 3,000 of the Italian pension (4,500 x 200/300), and
• The full amount (EUR 1,200) of the German pension

This is because:

• the customer is paid a proportional rate by virtue of the Italian Agreement,
• the Italian Agreement includes the Randisi concession, and the customer's Italian pension is within the scope of the Italian Agreement.

Note: if the above customer was paid under the German Agreement, we would only assess EUR 800 of the customer's German pension in the income test (1,2500 x 200/300). We would include the full amount of the Italian pension in the income test (EUR 4,500).

Defined benefits from New Zealand are never proportionalised.

Customer:

• resides outside Australia,
• is paid Age pension under autonomous conditions,
• has 200 months Australian Working Life Residence, and
• receives three foreign pensions:
• An Italian AGE pension of EUR 4,500 pa,
• A German SUR pension of EUR 1,200 pa,
• A Polish AGE pension of EUR 2,000 pa

In the income test for this customer, we would assess:

• EUR 3,000 of the Italian pension (4,500 x 200/300),
• EUR 800 of the German pension (1,200 x 200/300), and
• The full amount (EUR 2,000) of the Polish pension

This is because:

• The customer is paid a proportional rate without the use of an agreement, that is, autonomously,
• the Italian Agreement includes the Randisi concession and the customer's Italian pension is within the scope of the Italian Agreement,
• the German Agreement includes the Randisi concession and the customer's German pension is within the scope of the German Agreement,
• the customer's Polish pension is within the scope of the Polish Agreement but the Polish Agreement does not include the Randisi concession.

Note: both examples show the proportionalisation calculation of the foreign pension for the income test assessment.

This is different to the proportional rate calculation for payment outside Australia. The denominator used in the outside Australia proportional rate calculation could be 420, 528, 540, 300.

Note: these examples assume there is no overlap with Australian residence.

i) Scenario

Foreign period of coverage advised:

Insurance Period (IP) Insurance Value (IV)

01/02/1977-21/11/1979 32 Months

i) Result

IP = 2Y 10M 21D IV = 32M/12 = 2Y 8M = Incomplete

ii) Scenario

Foreign period of coverage advised:

Insurance Period (IP) Insurance Value (IV)

1985 304 Days

ii) Result

IP = 1Y IV = 304D/30 = 10M 4D = Incomplete

iii) Scenario

Foreign period of coverage advised:

Insurance Period (IP) Insurance Value (IV)

Apr/1995-Apr/1996 52 Weeks

iii) Result

IP = 1Y IV = 52W/52 = 1Y = Complete

iv) Scenario

Foreign period of coverage advised:

Insurance Period (IP) Insurance Value (IV)

1998 Quarters 1, 2 and 3

iv) Result

IP = 1Y IV = 9M = Incomplete

Note: these examples assume there is no overlap with Australian residence.

Foreign periods of coverage advised:

Scenario

Insurance Periods (IP) Insurance Value (IV)

• 01/01/1973-30/04/1979 - 56 Months
• 01/02/1983-27/10/1987 - 124 Weeks
• 1988 9 Months and 24 Days
• 1989 312 Days

Result

Total raw value: 0Y 85M 124W 336D

Firstly convert the Weeks to Years: 124W/52 = 2Y 20W

Running total: 2Y 65M 20W 336D

Then convert remainder Weeks to Days: 20W x 7 = 140D

Running total: 2Y 65M 476D

Then convert Days to Years: 476D/364 = 1Y 112D

Running total: 3Y 65M 112D

Then convert remainder Days to Months: 112D/30 = 3M 22D

Running total: 3Y 68M 22D

Then convert Months to Years: 68M/12 = 5Y 8M

Final total: 8Y 8M 22D

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 1 January 2000 and 1 January 2007 (7 years and 1 day) has been accepted by the delegate.

An agreement country has certified a complete Insurance Period (IP) between 1 January 1990 and 31 December 1992 (3 years) in the agreement country.

Result

The combined total is more than 10 years and the IP is not overlapped so is used.

This means the customer can use all periods of coverage (3 years) in the agreement country to meet the minimum 10 year requirement in the 10 years qualifying Australian residence.

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 31 December 1983 and 31 December 1990 (7 years and 1 day) has been accepted by the delegate.

An agreement country has certified a complete Insurance Period (IP) between 1 January 1985 and 31 December 1987 (3 years) in the agreement country.

Result

Even though the combined total including the original IP is more than 10 years, the entire IP overlaps with the Australian residence and therefore must be excluded.

This means the customer cannot use any period of coverage in the agreement country and therefore cannot totalise.

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 31 December 2003 and 31 December 2010 (7 years and 1 day) has been accepted by the delegate.

An agreement country has certified a complete Insurance Period (IP) between 1 January 2010 and 31 December 2012 (3 years) in the agreement country.

Result

Even though the combined total including the original IP is more than 10 years, the IP from 1 January 2010 to 31 December 2010 overlaps with the Australian residence and must be excluded.

The non-overlapped IP from 1 January 2011 to 31 December 2012 (2 years) is complete the non-overlapped IP is used.

This means the customer can only use 2 years of coverage in the agreement country and therefore only totalises to 9 years and 1 day.

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 31 December 2003 and 31 December 2010 (7 years and 1 day) has been accepted by the delegate.

An agreement country has certified an incomplete Insurance Period (IP) between 1 January 2010 and 31 December 2012 (3 years) in the agreement country with a total Insurance Value (IV) of 18 months insurance paid during that period.

Result

Even though the combined total including the original IP (3 years) is more than 10 years, the IP from 1 January 2010 to 31 December 2010 overlaps with the Australian residence and must be excluded.

The IV (18 months) is less than the non-overlapped IP from 1 January 2011 to 31 December 2012 (2 years) so the period is incomplete and the IV is used.

This means the customer can only use the 18 months of coverage in the agreement country and therefore only totalises to 8 years and 6 months.

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 31 December 2003 and 31 December 2010 (7 years and 1 day) has been accepted by the delegate.

An agreement country has certified an incomplete Insurance Period (IP) between 1 January 2010 and 31 December 2012 (3 years) in the agreement country with a total Insurance Value (IV) of 30 months insurance paid during that period.

Result

Even though the combined total including the original IP is more than 10 years, the IP from 1 January 2010 to 31 December 2010 overlaps with the Australian residence and must be excluded.

The IV of 30 months is greater than the non-overlapped IP from 1 January 2011 to 31 December 2012 (2 years) so the period is now complete and the non-overlapped IP is used.

This means the customer can only use 2 years of coverage in the agreement country and therefore only totalises to 9 years and 1 day.

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 1 January 1985 and 1 January 1989 (4 years and 1 day) has been accepted by the delegate.

An agreement country has certified complete Insurance Periods (IP) between 1 January 1992 to 31 December 1994 (3 years) and 1 January 1997 to 31 December 1999 (3 years) in the agreement country.

Result

Even though the combined total is more than 10 years but there is no one continuous period of at least 5 years, the total of the periods of coverage are taken to be continuous.

This means the customer can use the total of the periods of coverage (6 years) to meet the continuous 5 year requirement in the 10 years qualifying Australian residence.

Note: if the agreement country certifies several incomplete Insurance Periods (IP) but with Insurance Values (IV) which add up to 6 years in total, the total of all periods of coverage are still taken to be one continuous period of 6 years.

Scenario

A customer in Australia has claimed Age Pension. A period as an Australian resident between 1 January 2002 and 31 December 2009 (8 years) has been accepted by the delegate.

An agreement country has certified a complete Insurance Period (IP) between 1 February 2009 and 31 January 2011 (2 years) in the agreement country.

Result

Even though the combined total is exactly 10 years but is not continuous, and the IP commenced one month after having ceased to reside in Australia, the gap is less than 3 months so is adjoining and taken to be one continuous period.

This means the customer can use the total adjoining period (10 years) to meet the continuous 10 year requirement in the 10 years qualifying Australian residence.

Scenario

A customer in Australia has claimed Age Pension. Two separate periods as an Australian resident, between 1 January 1982 to 31 December 1985 (4 years) and between 1 January 1996 and 1 January 2000 (4 years and 1 day), has been accepted by the delegate.

An agreement country has certified an incomplete Insurance Period (IP) between 1 December 1993 and 30 November 1995 (2 years) in the agreement country with an Insurance Value (IV) of 18 months insurance paid during that period.

Result

Even though the combined total including the original IP is more than 10 years and the adjoining IP and period of Australian residence is more than 5 years, the IP is incomplete so cannot be used.

This means the customer cannot use any periods of coverage in the agreement country to meet the minimum continuous requirements.

Scenario

A customer in Australia has claimed Age Pension. Two separate periods as an Australian resident, between 31 December 1995 and 31 December 1998 (4 years and 1 day) and between 1 January 2005 and 31 December 2008 (4 years).

An agreement country has certified an incomplete Insurance Period (IP) between 1 January 2008 and 31 December 2010 (3 years) with an Insurance Value (IV) of 30 months insurance paid during that period.

Result

Even though the combined total including the original IP is more than 10 years, the IP from 1 January 2008 to 31 December 2008 overlaps with the Australian residence and must be excluded.

The IV of 30 months is greater than the non-overlapped IP from 1 January 2009 to 31 December 2010 (2 years) so the period is now complete and the non-overlapped IP is used.

Even though the combined total is still more than 10 years but there is no one continuous period of at least 5 years, the non-overlapped IP from 1 January 2009 to 31 December 2010 (2 years) is adjoining to the Australian residence from 1 January 2005 to 31 December 2008 (4 years) so is taken to be one continuous period of 6 years.

This means the customer can use 2 years of coverage in the agreement country to meet the continuous 5 year requirement in the 10 years qualifying Australian residence.

Note: agreements vary in the application of WLR. Each agreement file should be checked for specific rules. For example, the agreement with New Zealand uses working age residence and the agreement with India modifies the definition for different contexts.

Scenario

A customer in an agreement country has claimed Age Pension. The customer was born in Australia to Australian citizen parents and a period as an Australian resident from birth to age 7 and a half has been accepted by the delegate.

An agreement country has certified a complete, non-overlapping period of coverage of 3 years in the agreement country.

Result

The relevant agreement states that a customer who is not an Australian resident and in Australia on the date they make the claim must have a minimum of 12 months of Australian working life residence (WLR) before they can use the totalisation provisions.

Even though the combined total is more than 10 years with a continuous period of at least 5 years, the customer was not an Australian resident at claim and does not have the required minimum of 12 months WLR.

This means the customer cannot use any period of coverage in the agreement country and therefore cannot totalise.