Post by siddhartha on Sept 5, 2010 9:09:35 GMT 7
Portability of Australian Income Support Payments
•Introduction
•The evolution of portability policy
•Portability rules - 1973 to 2000
•Portability changes introduced on 20 September 2000
•Portability rules and changes from 1 July 2004
•Table 1: Portability Rules by Payment Type
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Introduction
The term 'portability' refers to the continuation of Australian income support payments during a recipient's overseas absence. Portability policy acknowledges that travel is an integral part of modern living. This is particularly true in ethnically diverse societies such as Australia, where almost a quarter of the population is overseas born. In 2004/05, there were 262,302 overseas customer departures.
As at August 2005 there were 51,442 Centrelink customers residing overseas permanently who were receiving the Australian Age Pension. The majority of these customers (79%) reside in European countries. A further 8,409 customers were receiving the Disability Support Pension, 792 customers were receiving Widow B Pension and 1,627 customers were receiving Wife Pension.
Yearly expenditure on Australia's pension payments to people living overseas amounts to Aus $416 million (August 2005). At the same time, pensions from overseas countries being paid to Australian pensioners residing in Australia totalled Aus $1,161 million. This represents a significant inflow of funds into Australia, an increase in disposable income for pensioners and a saving for Australian taxpayers. This is shown in Figure 1.
The policy underlying the portability of Australian pensions reflects international practice. Most contributory systems, particularly those operating in the member states of the European Union, have for many years encouraged portability of their benefits. They acknowledge that the individual's acquired right to benefits is derived from financial contributions and that the modern, global economy requires unhindered movement of people, finances and services. Nevertheless, some countries still restrict portability of their social security payments to countries with which they have international social security agreements or reciprocal portability arrangements.
Portability is also a function of modern social policy objectives. Currently, most developed countries view social security payments in terms of building self-reliance and encouraging social participation for their recipients rather than being simply a financial support. Portability of benefits as well as the possibility of accruing rights in one country and being paid in another country constitutes an important part of this new philosophy in the globalised world.
There is a fundamental difference between the contributory systems and the Australian income support system. Australia's income support system is residence based and is funded from general revenue. The rate of benefits paid in Australia depends on need (assessed through income and assets tests) and not on the length of contribution. To be eligible for income support, customers must be Australian residents and in Australia at the time of the claim. For many payments, such as Age pension and Disability Support Pension, claimants must also satisfy payment-specific criteria on periods of Australian residence.
In line with international practice, Australia has made many of its social security payments portable. In 1973, in response to the needs of the overseas born community, Australia unilaterally introduced arrangements for general portability. Since then, the portability rules of Australian social security payments have undergone several revisions to bring them closer in line with the portability rules of contributory systems and to better reflect the 'residence and need' nature of the Australian system.
In October 2001, International Branch, Australian Government Department of Family and Community Services (FaCS), completed a Cost/Benefit Analysis of Portability Policy—the first such comprehensive analysis of the costs and social benefit of the portability policy in Australia. Community attitudes, revealed by the results of a specially designed, contingent value survey, show that Australians attribute a very high social benefit to short-term portability. At the same time, the costs of short-term portability were found to be small. Conversely, long-term or permanent portability elicited a lower level of public support yet produced significant savings in social security and other government outlays (eg, health costs). The Cost/Benefit Analysis of Portability Policy found portability policy to be both cost effective and of unquestionable benefit to society.
Portability of Australian social security payments is regulated by the Social Security Act 1991 (the Act), which sets out which payments are portable, for how long, at what rate and under what conditions. Portability of Family Tax Benefit is regulated by the A New Tax System (Family Assistance) Act 1999. Apart from this portability under domestic law, Australia has a number of international social security agreements that regulate reciprocal portability of benefits between Australia and an agreement country. The provisions of the agreements override the domestic law's portability rules. This paper elaborates on Australian portability policy under domestic law. Portability rules under international social security agreements are country specific and can be found in the Social Security (International Agreements) Act 1999 and the policy aspects in Chapter 10 of the Guide to Social Security Law.
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The evolution of portability policy
Portability rules - 1973 to 2000
In 1973, Australia unilaterally introduced indefinite portability for many of its pensions. Indefinite portability was extended to most pension categories and did not impose additional residence conditions for export. Generally, if a pension was payable in Australia, it was payable overseas. This approach was supported by the special need provisions. Former residents with a substantial connection to Australia, in special need of financial assistance, could access entitlements if they had left Australia without a portable pension before the enabling date of the new legislation introducing indefinite portability(8 May 1973).
The evolution of portability policy since 1973 has continued to defer to the residence-based nature of the Australian system. In the last decade, policy initiatives have curtailed the export of pensions that can be acquired after very little residence. Introduced in 1986 for the purpose of negotiating a network of shared responsibility agreements, the policy of proportionalisation of the portable rate provided a mechanism to rationalise the extent of Australia's responsibility to provide income support to non-residents. Proportional portability also provided for some compatibility to the minimal contributory period imposed by the social security systems of other countries. In order for the customer to be paid, a minimal contributory period is required. In the Australian social security system, once a person satisfies the qualifying residence, the pension is paid. The overseas rate of pension may be reduced to reflect Australian residence of less than 25 years.
Since general portability of Australian pensions began in 1973 a number of important changes have been made which affect FaCS' international program generally. These are:
•On 8 May 1985, in line with its intention to create a portability system compatible with the contributory systems of other countries and the network of international social security agreements, the Government modified general portability conditions with the introduction of proportional portability based on working life residence for pensions granted after 1 July 1986, with savings provisions.
•Indefinite Carer Pension portability was stopped from 1 October 1987.
•From 1 July 1988, the portability of Sole Parent Pension was limited to the first twelve months of an absence except for special widows.
•Departure certificates were introduced from 1 February 1989.
•From 1991, the portability of Wife and Widow B Pensions was limited to the first twelve months of an absence unless recipients are entitled persons.
•From 12 November 1991, a twelve-month limitation on the portability of certain Disability Support Pensions was introduced.
•Short-term portability of Carer Pension was re-introduced in 1992 for carers travelling overseas together with the person being cared for and for carers in a respite period.
•From 1 January 1993, Additional Family Payment ceased to be portable. This is the date from which additional payments for children of pensioners were integrated into the family payments system. Portability of those payments was barred, unless pensioners were already overseas or able to export the payments under the provisions of an international social security agreement.
•With effect from 1 January 1995, the penalty clauses in the departure certificate provisions were moderated.
These portability rules were introduced in an ad hoc and inconsistent manner and were difficult to administer. For example:
•The portability period for temporary absences was not standard (for example: Partner Allowance - three months, Parenting Allowance - 13 weeks, Mature Age Allowance - 26 weeks, Carer Pension - 52 days). This created the difficult situation whereby a couple travelling overseas together who were receiving different payments had different portability periods.
•While portability qualification depended primarily on the benefit type, it also depended on how the benefit was granted when benefit qualification was attained (Disability Support Pensions granted before 12 November 1991 had one set of rules, those granted on or after had another).
•Portability qualification for permanent departures was not consistent across benefit types. Most benefits and allowances were portable for temporary departures only but some (Mature Age and Mature Age Partner Allowances, for example) were portable only if the absence was not expected to exceed a specified period and, by qualification criteria, were not portable in the event of permanent departure.
•Portability qualification for family payment, Child Disability Allowance and Double Orphan Pension depended on the recipient remaining an Australian resident. No other payment type used this criterion.
•Portability qualification for Sole Parent Pension depended on the civil status and gender of the pensioner. No other payment type discriminated in this way.
•The rate of portable pensions depended not only on the working life residence of the individual but also on the working life residence of the pensioner partner or the deceased partner and, since 1991, variations on these rules had been operating for entitled persons. Also the rate depended on when the pension was granted (most portable pensions granted before 2 July 1986 were not subject to proportional portability).
•Age, Disability, Wife, Widow B and Sole Parent Pension categories were supported by additional categories (Special Needs Pensions) for people who had been overseas since 8 May 1973. The special need categories were not subject to the normal portability qualification and rating provisions.
•Never used provisions such as 'specified foreign countries' remained in the portability legislation.
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Portability changes introduced on 20 September 2000
As part of the 1999 - 2000 Budget, the Government proposed simplification of all portability rules contained in the social security law. The simplified portability rules were introduced by the Social Security and Veterans' Entitlements Legislation Amendment (Miscellaneous Matters) Act 2000 with the date of effect 20 September 2000. The simplified rules addressed the problems of complexity and provided a comprehensive and consistent approach to portability across all payment types.
The simplified approach to portability was guided by the principles of fairness and equity and the need for administrative simplicity. Instead of nine different portability periods, the simplified rules generally prescribed only two portability periods for social security payments:
•short-term, 26 week portability for temporary absences; and
•indefinite portability for permanent absences.
As part of the changes, portability was not considered a qualification criterion for Australian social security payments. It became a payability issue. From 20 September 2000, all social security payments could be paid while a customer was overseas subject to continuing qualification. For payments that required a customer to be an Australian resident to maintain qualification for the payment, portability was allowed for temporary absences of up to 26 weeks. This change complied with the residence principles of the Australian social security system and, at the same time made the standardised portability system possible.
In the case of a payment for a major contingency of life, such as age or severe disability, the recipient was offered the right to choose their permanent place of residence and could continue to be paid overseas indefinitely. However, portability of these pensions also reflected international practice in that the overseas pension rate for this group depended on the length of contributions/residence in the paying country.
The most important feature of the September 2000 changes was the introduction of a standard 26-week portability period. Selection of the length of the standard short-term portability period was based on research of the travelling patterns of social security customers. More than 85% of all social security recipients who travel overseas go for less than 26 weeks. Within the group that travel around 90% travel for up to 13 weeks. After 13-weeks period the numbers of travellers rapidly decline. Also, in a survey commissioned by FaCS in 1999, more than 80% of respondents from a representative sample of the Australian population identified periods shorter than 26 weeks as the intended period of travel. A majority of respondents selected a portability period of up to 13 weeks. Taken together, the available statistical data and the survey results confirmed the view that a period of up to 26 weeks was widely considered short-term travel—that is, a temporary absence.
Where the customer could not return to Australia before the end of the portability period, the new portability rules also introduced the possibility of an extension of the portability period under strictly defined conditions. This discretionary power could only be applied if the event preventing the return occurred while the person was overseas and was not foreseeable before departure. The typical events are described in social security legislation and the Secretary's discretionary power was delegated to Business Managers in Centrelink.
Customers already overseas at the time of introduction of new portability rules were protected against any possible detrimental effects of the changes. Customers in receipt of pensions such as Age, Disability Support, Wife and Widow B pension were subject to old rules until they returned to Australia for longer than 26 weeks. Other customers overseas were subject to old rules until they returned to Australia.
Finally, the changes also recognised that customers who travel for short periods may have ongoing financial commitments in Australia such as: rent, telephone or pharmaceutical bills. Under the rules ancillary payments such as Rent Assistance, Telephone Allowance and Pharmaceutical Allowance became portable, thus making it easier for customers to travel.
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Portability rules and changes from 1 July 2004
•Portability of Australian Income Support Payments Fact Sheet
As part of the 2003- 2004 Budget, the Government reduced the allowable period of temporary overseas absence for portable pensions and allowances from 26 to 13 weeks. These rules were introduced by the Family and Community Services and Veterans' Affairs Legislation Amendment (2003 Budget and Other Measures) Act 2003 and are effective from 1 July 2004. The budget measure encourages people who are of workforce age and on income support payments to remain in Australia and be available to contribute through employment or social participation.
The changes did not apply to Age Pensioners and 'entitled' Widow B and Wife Pensioners. 'Entitled' Widow B and Wife Pensioners included women who had been Australian residents for more than 10 years or whose legally married partner died. However, these changes applied to Disability Support Pensions paid to people who were severely disabled or blind (who at the time of the changes had unlimited portability). These people, from 1 July 2004, l have their allowable overseas absence limited to 13 weeks. Carer Payment and Carer Allowance customers were also affected by these changes
People paid Age Pension or a Disability Support Pension under an International social security agreement were not affected as long as they remained in the agreement country. They are able to travel outside that country for 13 weeks without being affected, the same allowable period that applies to someone who is temporarily absent from Australia. Customers who were overseas at 1 July 2004 were l not affected unless they returned to Australia.
In special circumstances, defined in the legislation, recipients of Disability Support Pensions may be granted payment indefinitely if they are terminally ill and planning to return to their country of origin to be with family for care and support.
Disability Support Pensioners who are residing overseas and are currently paid portable pensions can continue to receive payment if they come to Australia to visit family and return overseas without becoming Australian residents again.
While all short-term portable payments are made portable for up to 13 weeks, qualification for some payments also requires that a person satisfies criteria such as looking after a dependent child, providing care to a person with a disability, studying or actively seeking employment. It may not be possible to satisfy these criteria while customers are overseas. For this reason, in order for payments to be portable, recipients have to be exempted from these qualifying requirements for the period of overseas absence. This exemption is usually for a defined period of time and often under specific conditions. For example, recipients of Newstart Allowance may be exempted from the activity test if they are going overseas to seek medical treatment of a kind not available in Australia, to attend to an acute family crisis, for a humanitarian purpose, or Army Reserve training camp. The exemption from the activity test and, therefore, portability of the payment is only for the period needed to undergo the treatment or attend to other responsibilities.
The standard short-term portability period of 13 weeks means that if a customer qualifies for the payment, it can be paid for up to 13 weeks while the customer is overseas. After that period, the payment will stop due to portability limitations. However, if a recipient of a payment is required to satisfy specific qualification criteria that can be satisfied only in Australia and has been exempted from these for a specified period, the person can go overseas for the duration of the exemption period provided that this is not longer than 13 weeks. However, if the person remains overseas longer than the period of exemption the payment will stop even though the portability period of 13 weeks may not have expired. This is because the recipient will cease to be qualified for the payment.
For some payments such as Youth Allowance and Austudy, the activity test can be satisfied while overseas, for example, recipients going overseas as a part of an Australian educational course. In these circumstances portability is allowed for the duration of the overseas course. Also, recipients of payments such as Newstart Allowance, Youth Allowance, Austudy, Parenting Payment and Mature Age Allowance who are overseas for the purpose of undertaking Reserve Service can be paid for the whole duration of the Reserve Service activities overseas.
The availability of short-term portability, excluding Disability Support Pension, Widow B and Wife pensions, depends on whether the customer continues to satisfy residence criteria. In deciding whether a person travelling overseas for a short time continues to reside in Australia, regard is given to the nature of the person's accommodation in Australia, family relationships, employment, business, financial ties, assets and the frequency of or duration of travel outside Australia. Customers who return to Australia just to renew the portability period would not satisfy the 'residing in Australia' criterion and would not qualify for payment.
Most contributory systems pay their minimum overseas rate after about 15 years and their maximum rate of pension after about 40 years of contribution. After the 20 September 2000 changes, the Australian overseas rate of Age and Disability pensions became proportional after 26 weeks of absence from Australia. After that period the Australian overseas rate reflects the years of residence that a recipient has accumulated in Australia during his/her working life. Recipients moving overseas for more than 26 weeks can only be paid their full rate of Age Pension only if they have 25 years or more of Australian Working Life Residence (the period between the age of 16 and Age pension age). Recipients with less than 25 years are paid a proportional rate based on the duration of their working life residence in Australia. For example, if a person has 16 years of working life residence, after 26 weeks of absence they will receive 16/25th of the rate paid in Australia.
A period of 25 years for the maximum rate puts the Australian system at about the mid-point of the periods under the various contribution-based schemes operating overseas. Proportionality does not apply to severely disabled Disability Support Pension recipients if the disabling event occurs when the person was an Australian resident.
The fundamental tenets of the Australian Social Security system are residence and need. Because residence is a fundamental qualification criterion for Australian social security payments, former residents who return to the country and subsequently claim Australian social security payments with indefinite portability, are required to stay in Australia for at least two years before their payment becomes portable. The policy rationale for this requirement is that indefinite portability is allowed to Australian residents only. The former resident rule prevents people who loose their connections with Australia to return to Australia just to obtain a pension and return overseas.
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Table 1 shows the pre and post 1 July 2004 portability rules.
Table 1: Portability Rules by Payment Type Income Support Payments
Payment Type
Previous Portability Rules
Current Portability Rules (From 1 July 2004)
Any payment under an international Social Security Agreement
Determined by Agreement
Determined by Agreement
Age Pension
Unlimited portability. For the first 26 weeks paid at the full domestic rate. After 26 weeks of absence proportional rate is paid if a person does not have 25 years of Australian working life residence.
Unlimited portability. For the first 26 weeks paid at the full domestic rate. After 26 weeks of absence proportional rate is paid if a person does not have 25 years of Australian working life residence.
Disability Support Pension
Portable for up to 26 weeks.
Indefinite portability if severely disabled. After 26 weeks of absence a proportional rate is paid if the disabling event occurred outside Australia and the person does not have 25 years of Australian working life residence.
Portable for up to 13 weeks.
May be granted payment indefinitely if terminally ill and planning to return to country of origin to be with family for care and support.
Wife Pension
Portable for up to 26 weeks.
Entitled persons have indefinite portability.
Portable for up to 13 weeks.
Entitled persons have indefinite portability.
Widow B Pension
Portable for up to 26 weeks.
Entitled persons have indefinite portability.
(An Entitled person means: a woman who has at any time been an Australian resident for a period of, or for periods totalling, at least 10 years; or a woman in receipt of a widow B pension because she was legally married and her husband died; or a woman who was, or is the partner of a man who was, the subject of a recommendation by an allegation authority that resulted in payment of an amount of compensation by the Commonwealth to her or her partner).
Portable for up to 13 weeks.
Entitled persons have indefinite portability.
Bereavement Allowance
For the period of the payment in respect of all absences.
For the period of the payment in respect of all absences.
Carer Payment
Portable for up to 26 weeks where the carer and the person being cared for are overseas together.
If the carer travels overseas without the care receiver, and intends to return to the care situation, then the temporary cessation of care rules apply. The customer remains qualified for carer payment from the date of departure, up to the 63 day limit.
Portable for up to 13 weeks where the carer and the person being cared for are overseas together.
If the carer travels overseas without the care receiver, and intends to return to the care situation, then the temporary cessation of care rules apply. The customer remains qualified for carer payment from the date of departure, up to the 63 day limit.
Parenting Payment
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Mature Age and Mature Age Partner Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Partner Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Widow Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Newstart Allowance
Portable for up to 26 weeks of temporary absence if exempt from the activity test and absent for medical treatment not available in Australia, humanitarian reasons, acute family crisis or for Armed Forces Reserves service.
Portable for up to 13 weeks of temporary absence if exempt from the activity test and absent for medical treatment not available in Australia, humanitarian reasons, acute family crisis or for Armed Forces Reserves service.
Newstart Allowance for customers over 50 years of age
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Youth Allowance
For non–full time students portable for up to 26 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 26 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
For non–full time students portable for up to 13 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 13 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
Austudy
For non–full time students portable for up to 26 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 26 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
For non–full time students portable for up to 13 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 13 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
Special Benefit
Portable for 26 weeks of temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Portable for 13 weeks of temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Sickness Allowance
Portable for 26 weeks of a temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Portable for 13 weeks of a temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Carer Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Add-ons and Mobility Allowance
Payment Type
Previous Portability Rules
Current Portability Rules (From 1 July 2004)
Mobility Allowance
Portable for up to 26 weeks of a temporary absence.
Portable for up to 13 weeks of a temporary absence.
Rent Assistance
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
Pharmaceutical Allowance
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
Telephone Allowance
Portable for up to 26 weeks of an absence, when the primary pension remains payable and telephone rental is paid in Australia.
Portable for up to 13 weeks of an absence, when the primary pension remains payable and telephone rental is paid in Australia.
Incentive Allowance
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
•Introduction
•The evolution of portability policy
•Portability rules - 1973 to 2000
•Portability changes introduced on 20 September 2000
•Portability rules and changes from 1 July 2004
•Table 1: Portability Rules by Payment Type
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Introduction
The term 'portability' refers to the continuation of Australian income support payments during a recipient's overseas absence. Portability policy acknowledges that travel is an integral part of modern living. This is particularly true in ethnically diverse societies such as Australia, where almost a quarter of the population is overseas born. In 2004/05, there were 262,302 overseas customer departures.
As at August 2005 there were 51,442 Centrelink customers residing overseas permanently who were receiving the Australian Age Pension. The majority of these customers (79%) reside in European countries. A further 8,409 customers were receiving the Disability Support Pension, 792 customers were receiving Widow B Pension and 1,627 customers were receiving Wife Pension.
Yearly expenditure on Australia's pension payments to people living overseas amounts to Aus $416 million (August 2005). At the same time, pensions from overseas countries being paid to Australian pensioners residing in Australia totalled Aus $1,161 million. This represents a significant inflow of funds into Australia, an increase in disposable income for pensioners and a saving for Australian taxpayers. This is shown in Figure 1.
The policy underlying the portability of Australian pensions reflects international practice. Most contributory systems, particularly those operating in the member states of the European Union, have for many years encouraged portability of their benefits. They acknowledge that the individual's acquired right to benefits is derived from financial contributions and that the modern, global economy requires unhindered movement of people, finances and services. Nevertheless, some countries still restrict portability of their social security payments to countries with which they have international social security agreements or reciprocal portability arrangements.
Portability is also a function of modern social policy objectives. Currently, most developed countries view social security payments in terms of building self-reliance and encouraging social participation for their recipients rather than being simply a financial support. Portability of benefits as well as the possibility of accruing rights in one country and being paid in another country constitutes an important part of this new philosophy in the globalised world.
There is a fundamental difference between the contributory systems and the Australian income support system. Australia's income support system is residence based and is funded from general revenue. The rate of benefits paid in Australia depends on need (assessed through income and assets tests) and not on the length of contribution. To be eligible for income support, customers must be Australian residents and in Australia at the time of the claim. For many payments, such as Age pension and Disability Support Pension, claimants must also satisfy payment-specific criteria on periods of Australian residence.
In line with international practice, Australia has made many of its social security payments portable. In 1973, in response to the needs of the overseas born community, Australia unilaterally introduced arrangements for general portability. Since then, the portability rules of Australian social security payments have undergone several revisions to bring them closer in line with the portability rules of contributory systems and to better reflect the 'residence and need' nature of the Australian system.
In October 2001, International Branch, Australian Government Department of Family and Community Services (FaCS), completed a Cost/Benefit Analysis of Portability Policy—the first such comprehensive analysis of the costs and social benefit of the portability policy in Australia. Community attitudes, revealed by the results of a specially designed, contingent value survey, show that Australians attribute a very high social benefit to short-term portability. At the same time, the costs of short-term portability were found to be small. Conversely, long-term or permanent portability elicited a lower level of public support yet produced significant savings in social security and other government outlays (eg, health costs). The Cost/Benefit Analysis of Portability Policy found portability policy to be both cost effective and of unquestionable benefit to society.
Portability of Australian social security payments is regulated by the Social Security Act 1991 (the Act), which sets out which payments are portable, for how long, at what rate and under what conditions. Portability of Family Tax Benefit is regulated by the A New Tax System (Family Assistance) Act 1999. Apart from this portability under domestic law, Australia has a number of international social security agreements that regulate reciprocal portability of benefits between Australia and an agreement country. The provisions of the agreements override the domestic law's portability rules. This paper elaborates on Australian portability policy under domestic law. Portability rules under international social security agreements are country specific and can be found in the Social Security (International Agreements) Act 1999 and the policy aspects in Chapter 10 of the Guide to Social Security Law.
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The evolution of portability policy
Portability rules - 1973 to 2000
In 1973, Australia unilaterally introduced indefinite portability for many of its pensions. Indefinite portability was extended to most pension categories and did not impose additional residence conditions for export. Generally, if a pension was payable in Australia, it was payable overseas. This approach was supported by the special need provisions. Former residents with a substantial connection to Australia, in special need of financial assistance, could access entitlements if they had left Australia without a portable pension before the enabling date of the new legislation introducing indefinite portability(8 May 1973).
The evolution of portability policy since 1973 has continued to defer to the residence-based nature of the Australian system. In the last decade, policy initiatives have curtailed the export of pensions that can be acquired after very little residence. Introduced in 1986 for the purpose of negotiating a network of shared responsibility agreements, the policy of proportionalisation of the portable rate provided a mechanism to rationalise the extent of Australia's responsibility to provide income support to non-residents. Proportional portability also provided for some compatibility to the minimal contributory period imposed by the social security systems of other countries. In order for the customer to be paid, a minimal contributory period is required. In the Australian social security system, once a person satisfies the qualifying residence, the pension is paid. The overseas rate of pension may be reduced to reflect Australian residence of less than 25 years.
Since general portability of Australian pensions began in 1973 a number of important changes have been made which affect FaCS' international program generally. These are:
•On 8 May 1985, in line with its intention to create a portability system compatible with the contributory systems of other countries and the network of international social security agreements, the Government modified general portability conditions with the introduction of proportional portability based on working life residence for pensions granted after 1 July 1986, with savings provisions.
•Indefinite Carer Pension portability was stopped from 1 October 1987.
•From 1 July 1988, the portability of Sole Parent Pension was limited to the first twelve months of an absence except for special widows.
•Departure certificates were introduced from 1 February 1989.
•From 1991, the portability of Wife and Widow B Pensions was limited to the first twelve months of an absence unless recipients are entitled persons.
•From 12 November 1991, a twelve-month limitation on the portability of certain Disability Support Pensions was introduced.
•Short-term portability of Carer Pension was re-introduced in 1992 for carers travelling overseas together with the person being cared for and for carers in a respite period.
•From 1 January 1993, Additional Family Payment ceased to be portable. This is the date from which additional payments for children of pensioners were integrated into the family payments system. Portability of those payments was barred, unless pensioners were already overseas or able to export the payments under the provisions of an international social security agreement.
•With effect from 1 January 1995, the penalty clauses in the departure certificate provisions were moderated.
These portability rules were introduced in an ad hoc and inconsistent manner and were difficult to administer. For example:
•The portability period for temporary absences was not standard (for example: Partner Allowance - three months, Parenting Allowance - 13 weeks, Mature Age Allowance - 26 weeks, Carer Pension - 52 days). This created the difficult situation whereby a couple travelling overseas together who were receiving different payments had different portability periods.
•While portability qualification depended primarily on the benefit type, it also depended on how the benefit was granted when benefit qualification was attained (Disability Support Pensions granted before 12 November 1991 had one set of rules, those granted on or after had another).
•Portability qualification for permanent departures was not consistent across benefit types. Most benefits and allowances were portable for temporary departures only but some (Mature Age and Mature Age Partner Allowances, for example) were portable only if the absence was not expected to exceed a specified period and, by qualification criteria, were not portable in the event of permanent departure.
•Portability qualification for family payment, Child Disability Allowance and Double Orphan Pension depended on the recipient remaining an Australian resident. No other payment type used this criterion.
•Portability qualification for Sole Parent Pension depended on the civil status and gender of the pensioner. No other payment type discriminated in this way.
•The rate of portable pensions depended not only on the working life residence of the individual but also on the working life residence of the pensioner partner or the deceased partner and, since 1991, variations on these rules had been operating for entitled persons. Also the rate depended on when the pension was granted (most portable pensions granted before 2 July 1986 were not subject to proportional portability).
•Age, Disability, Wife, Widow B and Sole Parent Pension categories were supported by additional categories (Special Needs Pensions) for people who had been overseas since 8 May 1973. The special need categories were not subject to the normal portability qualification and rating provisions.
•Never used provisions such as 'specified foreign countries' remained in the portability legislation.
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Portability changes introduced on 20 September 2000
As part of the 1999 - 2000 Budget, the Government proposed simplification of all portability rules contained in the social security law. The simplified portability rules were introduced by the Social Security and Veterans' Entitlements Legislation Amendment (Miscellaneous Matters) Act 2000 with the date of effect 20 September 2000. The simplified rules addressed the problems of complexity and provided a comprehensive and consistent approach to portability across all payment types.
The simplified approach to portability was guided by the principles of fairness and equity and the need for administrative simplicity. Instead of nine different portability periods, the simplified rules generally prescribed only two portability periods for social security payments:
•short-term, 26 week portability for temporary absences; and
•indefinite portability for permanent absences.
As part of the changes, portability was not considered a qualification criterion for Australian social security payments. It became a payability issue. From 20 September 2000, all social security payments could be paid while a customer was overseas subject to continuing qualification. For payments that required a customer to be an Australian resident to maintain qualification for the payment, portability was allowed for temporary absences of up to 26 weeks. This change complied with the residence principles of the Australian social security system and, at the same time made the standardised portability system possible.
In the case of a payment for a major contingency of life, such as age or severe disability, the recipient was offered the right to choose their permanent place of residence and could continue to be paid overseas indefinitely. However, portability of these pensions also reflected international practice in that the overseas pension rate for this group depended on the length of contributions/residence in the paying country.
The most important feature of the September 2000 changes was the introduction of a standard 26-week portability period. Selection of the length of the standard short-term portability period was based on research of the travelling patterns of social security customers. More than 85% of all social security recipients who travel overseas go for less than 26 weeks. Within the group that travel around 90% travel for up to 13 weeks. After 13-weeks period the numbers of travellers rapidly decline. Also, in a survey commissioned by FaCS in 1999, more than 80% of respondents from a representative sample of the Australian population identified periods shorter than 26 weeks as the intended period of travel. A majority of respondents selected a portability period of up to 13 weeks. Taken together, the available statistical data and the survey results confirmed the view that a period of up to 26 weeks was widely considered short-term travel—that is, a temporary absence.
Where the customer could not return to Australia before the end of the portability period, the new portability rules also introduced the possibility of an extension of the portability period under strictly defined conditions. This discretionary power could only be applied if the event preventing the return occurred while the person was overseas and was not foreseeable before departure. The typical events are described in social security legislation and the Secretary's discretionary power was delegated to Business Managers in Centrelink.
Customers already overseas at the time of introduction of new portability rules were protected against any possible detrimental effects of the changes. Customers in receipt of pensions such as Age, Disability Support, Wife and Widow B pension were subject to old rules until they returned to Australia for longer than 26 weeks. Other customers overseas were subject to old rules until they returned to Australia.
Finally, the changes also recognised that customers who travel for short periods may have ongoing financial commitments in Australia such as: rent, telephone or pharmaceutical bills. Under the rules ancillary payments such as Rent Assistance, Telephone Allowance and Pharmaceutical Allowance became portable, thus making it easier for customers to travel.
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Portability rules and changes from 1 July 2004
•Portability of Australian Income Support Payments Fact Sheet
As part of the 2003- 2004 Budget, the Government reduced the allowable period of temporary overseas absence for portable pensions and allowances from 26 to 13 weeks. These rules were introduced by the Family and Community Services and Veterans' Affairs Legislation Amendment (2003 Budget and Other Measures) Act 2003 and are effective from 1 July 2004. The budget measure encourages people who are of workforce age and on income support payments to remain in Australia and be available to contribute through employment or social participation.
The changes did not apply to Age Pensioners and 'entitled' Widow B and Wife Pensioners. 'Entitled' Widow B and Wife Pensioners included women who had been Australian residents for more than 10 years or whose legally married partner died. However, these changes applied to Disability Support Pensions paid to people who were severely disabled or blind (who at the time of the changes had unlimited portability). These people, from 1 July 2004, l have their allowable overseas absence limited to 13 weeks. Carer Payment and Carer Allowance customers were also affected by these changes
People paid Age Pension or a Disability Support Pension under an International social security agreement were not affected as long as they remained in the agreement country. They are able to travel outside that country for 13 weeks without being affected, the same allowable period that applies to someone who is temporarily absent from Australia. Customers who were overseas at 1 July 2004 were l not affected unless they returned to Australia.
In special circumstances, defined in the legislation, recipients of Disability Support Pensions may be granted payment indefinitely if they are terminally ill and planning to return to their country of origin to be with family for care and support.
Disability Support Pensioners who are residing overseas and are currently paid portable pensions can continue to receive payment if they come to Australia to visit family and return overseas without becoming Australian residents again.
While all short-term portable payments are made portable for up to 13 weeks, qualification for some payments also requires that a person satisfies criteria such as looking after a dependent child, providing care to a person with a disability, studying or actively seeking employment. It may not be possible to satisfy these criteria while customers are overseas. For this reason, in order for payments to be portable, recipients have to be exempted from these qualifying requirements for the period of overseas absence. This exemption is usually for a defined period of time and often under specific conditions. For example, recipients of Newstart Allowance may be exempted from the activity test if they are going overseas to seek medical treatment of a kind not available in Australia, to attend to an acute family crisis, for a humanitarian purpose, or Army Reserve training camp. The exemption from the activity test and, therefore, portability of the payment is only for the period needed to undergo the treatment or attend to other responsibilities.
The standard short-term portability period of 13 weeks means that if a customer qualifies for the payment, it can be paid for up to 13 weeks while the customer is overseas. After that period, the payment will stop due to portability limitations. However, if a recipient of a payment is required to satisfy specific qualification criteria that can be satisfied only in Australia and has been exempted from these for a specified period, the person can go overseas for the duration of the exemption period provided that this is not longer than 13 weeks. However, if the person remains overseas longer than the period of exemption the payment will stop even though the portability period of 13 weeks may not have expired. This is because the recipient will cease to be qualified for the payment.
For some payments such as Youth Allowance and Austudy, the activity test can be satisfied while overseas, for example, recipients going overseas as a part of an Australian educational course. In these circumstances portability is allowed for the duration of the overseas course. Also, recipients of payments such as Newstart Allowance, Youth Allowance, Austudy, Parenting Payment and Mature Age Allowance who are overseas for the purpose of undertaking Reserve Service can be paid for the whole duration of the Reserve Service activities overseas.
The availability of short-term portability, excluding Disability Support Pension, Widow B and Wife pensions, depends on whether the customer continues to satisfy residence criteria. In deciding whether a person travelling overseas for a short time continues to reside in Australia, regard is given to the nature of the person's accommodation in Australia, family relationships, employment, business, financial ties, assets and the frequency of or duration of travel outside Australia. Customers who return to Australia just to renew the portability period would not satisfy the 'residing in Australia' criterion and would not qualify for payment.
Most contributory systems pay their minimum overseas rate after about 15 years and their maximum rate of pension after about 40 years of contribution. After the 20 September 2000 changes, the Australian overseas rate of Age and Disability pensions became proportional after 26 weeks of absence from Australia. After that period the Australian overseas rate reflects the years of residence that a recipient has accumulated in Australia during his/her working life. Recipients moving overseas for more than 26 weeks can only be paid their full rate of Age Pension only if they have 25 years or more of Australian Working Life Residence (the period between the age of 16 and Age pension age). Recipients with less than 25 years are paid a proportional rate based on the duration of their working life residence in Australia. For example, if a person has 16 years of working life residence, after 26 weeks of absence they will receive 16/25th of the rate paid in Australia.
A period of 25 years for the maximum rate puts the Australian system at about the mid-point of the periods under the various contribution-based schemes operating overseas. Proportionality does not apply to severely disabled Disability Support Pension recipients if the disabling event occurs when the person was an Australian resident.
The fundamental tenets of the Australian Social Security system are residence and need. Because residence is a fundamental qualification criterion for Australian social security payments, former residents who return to the country and subsequently claim Australian social security payments with indefinite portability, are required to stay in Australia for at least two years before their payment becomes portable. The policy rationale for this requirement is that indefinite portability is allowed to Australian residents only. The former resident rule prevents people who loose their connections with Australia to return to Australia just to obtain a pension and return overseas.
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Table 1 shows the pre and post 1 July 2004 portability rules.
Table 1: Portability Rules by Payment Type Income Support Payments
Payment Type
Previous Portability Rules
Current Portability Rules (From 1 July 2004)
Any payment under an international Social Security Agreement
Determined by Agreement
Determined by Agreement
Age Pension
Unlimited portability. For the first 26 weeks paid at the full domestic rate. After 26 weeks of absence proportional rate is paid if a person does not have 25 years of Australian working life residence.
Unlimited portability. For the first 26 weeks paid at the full domestic rate. After 26 weeks of absence proportional rate is paid if a person does not have 25 years of Australian working life residence.
Disability Support Pension
Portable for up to 26 weeks.
Indefinite portability if severely disabled. After 26 weeks of absence a proportional rate is paid if the disabling event occurred outside Australia and the person does not have 25 years of Australian working life residence.
Portable for up to 13 weeks.
May be granted payment indefinitely if terminally ill and planning to return to country of origin to be with family for care and support.
Wife Pension
Portable for up to 26 weeks.
Entitled persons have indefinite portability.
Portable for up to 13 weeks.
Entitled persons have indefinite portability.
Widow B Pension
Portable for up to 26 weeks.
Entitled persons have indefinite portability.
(An Entitled person means: a woman who has at any time been an Australian resident for a period of, or for periods totalling, at least 10 years; or a woman in receipt of a widow B pension because she was legally married and her husband died; or a woman who was, or is the partner of a man who was, the subject of a recommendation by an allegation authority that resulted in payment of an amount of compensation by the Commonwealth to her or her partner).
Portable for up to 13 weeks.
Entitled persons have indefinite portability.
Bereavement Allowance
For the period of the payment in respect of all absences.
For the period of the payment in respect of all absences.
Carer Payment
Portable for up to 26 weeks where the carer and the person being cared for are overseas together.
If the carer travels overseas without the care receiver, and intends to return to the care situation, then the temporary cessation of care rules apply. The customer remains qualified for carer payment from the date of departure, up to the 63 day limit.
Portable for up to 13 weeks where the carer and the person being cared for are overseas together.
If the carer travels overseas without the care receiver, and intends to return to the care situation, then the temporary cessation of care rules apply. The customer remains qualified for carer payment from the date of departure, up to the 63 day limit.
Parenting Payment
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Mature Age and Mature Age Partner Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Partner Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Widow Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Newstart Allowance
Portable for up to 26 weeks of temporary absence if exempt from the activity test and absent for medical treatment not available in Australia, humanitarian reasons, acute family crisis or for Armed Forces Reserves service.
Portable for up to 13 weeks of temporary absence if exempt from the activity test and absent for medical treatment not available in Australia, humanitarian reasons, acute family crisis or for Armed Forces Reserves service.
Newstart Allowance for customers over 50 years of age
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Youth Allowance
For non–full time students portable for up to 26 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 26 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
For non–full time students portable for up to 13 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 13 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
Austudy
For non–full time students portable for up to 26 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 26 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
For non–full time students portable for up to 13 weeks where the purpose of travel is to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose.
For full-time students portable for up to 13 weeks.
A customer whose overseas absence if for the purpose of undertaking overseas study as a part of a full-time Australian course is paid for the entire period of the overseas study.
Special Benefit
Portable for 26 weeks of temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Portable for 13 weeks of temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Sickness Allowance
Portable for 26 weeks of a temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Portable for 13 weeks of a temporary absence for medical treatment not available in Australia, humanitarian reasons or acute family crisis.
Carer Allowance
Portable for up to 26 weeks.
Portable for up to 13 weeks.
Add-ons and Mobility Allowance
Payment Type
Previous Portability Rules
Current Portability Rules (From 1 July 2004)
Mobility Allowance
Portable for up to 26 weeks of a temporary absence.
Portable for up to 13 weeks of a temporary absence.
Rent Assistance
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
Pharmaceutical Allowance
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
Telephone Allowance
Portable for up to 26 weeks of an absence, when the primary pension remains payable and telephone rental is paid in Australia.
Portable for up to 13 weeks of an absence, when the primary pension remains payable and telephone rental is paid in Australia.
Incentive Allowance
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
If the person's maximum portability for a payment is an unlimited period, 26 weeks after the period of absence commenced. Otherwise payable until the end of the portability period for the payment.
