10.1.1.20 Reason for Agreements
Why Australia has agreements
Most other countries have social security systems where contributions are collected from employers and employees. Contributions are compulsory.
Some categories of people may be regarded as having made contributions. This may include women who are looking after small children or the unemployed.
Residents who have not made sufficient contributions may be able to claim a means tested welfare payment.
Shared responsibility agreements improve social security coverage for people who move between countries by:
- helping them to qualify for benefits to which they may not otherwise be entitled,
- easing or eliminating restrictions on the grant and payment of social security benefits overseas, and
- providing administrative cooperation between the social security organisations of the agreement countries.
Agreements particularly help the following groups of people:
- those in Australia and the agreement country who do not otherwise meet minimum residence and/or contribution requirements for benefits from either or both social security schemes,
- those in the agreement country who are qualified for an Australian pension but cannot claim one because they are not an Australian resident, and
- those in one country who already get a portable payment from the other country may be able to receive a higher rate of payment through the equality of treatment provisions or income test concessions.
The underlying principles of an agreement is to preserve a person's entitlement, not to maximise the rate of pension payment. This means that:
- An agreement should only be used when the person is not entitled to an autonomous pension or autonomous entitlement ceases.
- Where more than one agreement may apply, unless specifically requested by the person, the agreement for the country from where the person certifies their location should be used (if the person is outside of Australia).