2015-16 Budget – Tightening proportionality requirements

2015-16 Budget – Tightening proportionality requirements

What was announced in the Budget?

The 2015-16 Budget announced that, from 1 January 2017 and subject to the passage of legislation, the Government will be adjusting certain pensions according to the pensioner’s Australian Working Life Residence (AWLR) when they have been travelling or living outside Australia after six weeks, instead of 26 weeks.

AWLR is the period a person has resided in Australia, as a permanent resident, between the age of 16 and Age Pension age.

Currently, to retain their basic means-tested payment rate while overseas, a person, who can be paid their pension indefinitely outside of Australia, needs 35 years AWLR. If a person has less than 35 years AWLR, their pension is adjusted after 26 weeks overseas, according to their years of AWLR.

  • For example, if a person has 15 years of AWLR, they would be paid 15/35ths of the amount of pension that is payable in Australia

From 1 January 2017, pensioners with less than 35 years AWLR will be paid an adjusted rate of pension after six weeks.

This measure will affect the Age Pension, some Disability Support Pension, and Wife Pension and Widow B Pension recipients, who have access to indefinite portability.

This measure will reinforce and strengthen the residence based nature of Australia’s social security system.

This measure does not impact on the length of the portability period. The Age Pension, and a limited number of other pensions, will continue to be payable overseas indefinitely. Only the amount they may receive after a six week absence may change.

Departure before 1 January 2017 or residing overseas

Pensioners who are travelling or are residing overseas before 1 January 2017 will retain access to the longer, 26 week period. If they return to Australia, for any subsequent travel overseas, their amount of pension will be adjusted after six weeks.

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