22.214.171.124 Calculating proportional portability for non-agreement pensions
Payments that can be paid overseas indefinitely, e.g. Age and DSP (where terminally ill and leaving Australia permanently, or permanently and severely impaired with no future work capacity), are paid at the non-proportional rate for the first 26 weeks of an absence.
A non-proportional rate is the rate generally payable in Australia to a qualified person. It is calculated after the relevant income and assets tests have been applied. The non-proportional rate during the first 26 weeks of an absence may also include ancillary payments, such as RA, PhA or IA, if the absence is temporary. Note, TAL and maximum pension supplement can only be paid for up to 6 weeks of a temporary absence. DSP recipients who are granted indefinite portability because they are terminally ill cannot receive ancillary payments. This is because indefinite portability is only granted for permanent absences.
After the 26 week non-proportional period, the rate may become proportional - depending on the recipient's circumstances.
Some recipients retain pre 20 September 2000 proportionalisation rules. This may mean other exemptions from proportional rate, 12 months for the non-proportional period, or possible use of the partner's AWLR to calculate the proportional rate, see 126.96.36.199.
Policy reference: SS Guide 188.8.131.52 Payability of DSP, 184.108.40.206 Manifest grants & rejections for DSP, 220.127.116.11 Overview of portability legislation, 18.104.22.168 Application of portability rules (portability table)
When a recipient with unlimited portability stays overseas for more than 26 weeks and has less than 420 months (35 years) of AWLR (1.1.A.340), the person is generally paid at a 'proportion' of the normal rate or at a proportional rate. The proportional rate is calculated using the proportional portability (1.1.P.310) provisions of the SSAct, unless the recipient has an exemption from the proportional rate, or is entitled to a portability extension (see below).
Some international social security agreements (1.1.A.120) allow concessions for foreign incomes. One of these concessions is that if the person's rate is proportionalised, then any foreign pension that would be covered by an agreement is also proportionalised before being added into the income test. For couples, all affected foreign pensions received by either partner are added together, with half of the total income then being allocated to each partner and the appropriate AWLR rules being used for that partner. In all these cases (single and partnered) the rate can never exceed the rate that would be payable if the person had 420 months AWLR (for agreement pensions granted outside Australia before 1 July 2014 this will generally be 300 months AWLR.) This limit did not apply before 1 August 2000.
Exemptions from the proportional rate
If a person has AWLR of 420 months or more, their rate will not be proportionalised after 26 weeks and the normal income and asset-tested rate will be paid while overseas. Ancillary payments, such as RA, will still cease after 26 weeks of a temporary absence, or on departure if the absence is permanent. TAL and maximum pension supplement are only paid for 6 weeks of a temporary absence, although the pension supplement basic amount (former GST supplement) can be paid overseas indefinitely for temporary or permanent absences.
The following income support recipients, with indefinite portability, are exempt from the proportional rate, irrespective of their AWLR. These are:
- terminally ill DSP recipients who are severely disabled, who qualified for DSP because they became unable to work or permanently blind whilst they were an Australia resident
- permanently and severely impaired DSP recipients with no future work capacity who qualified for DSP because they became unable to work or permanently blind whilst they were an Australian resident
- former entitled WidB pensioners whose partner died while both members of the couple were Australian residents, and who were overseas immediately before 20 Sept 2000 and have not returned to Australia for more than 26 weeks
- all pensioners granted before 2 July 1986 (proportional portability only came in on 1 July 1986), who were overseas immediately before 20 Sept 2000 and have not returned to Australia for more than 26 weeks.
Act reference: SSAct section 1221(2) Proportionality - WP and WidB rate for entitled persons, section 1220B(2) Proportionality - DSP rate for a severely disabled person
Discretion to extend the portability period
Normally after 26 weeks overseas, payment may be proportionalised based on the person's AWLR and certain supplements (RA and IA) will cease. However, from 1 July 2021, recipients of a payment with indefinite portability can apply for an extension of the 26 week period if they are temporarily overseas and unable to return to Australia within 26 weeks due to certain specified reasons (22.214.171.124). If granted an extension, the person's payment rate will not be proportionalised and RA and IA can continue to be paid, provided the person otherwise remains eligible.
Act reference: SSAct section 1216(2) If the Secretary is satisfied …, section 1220A(1A) If the Secretary is satisfied …, section 1220B(1A) If the Secretary is satisfied …
Policy reference: SS Guide 126.96.36.199 General rules of portability
Transfer between payments
For recipients who are transferred from one payment to another (e.g. transfers to Age under the SS(Admin)Act section 12) while they are overseas, SSAct sections 1220A, 1220B and 1221 apply as if the transfer occurred on the day on which the person departed Australia.
If transfer from one payment to another would be disadvantageous to the recipient, the transfer should not be made.
Example: A permanent and severely impaired DSP recipient with no future work capacity who is overseas and is not paid at the proportional rate because they become unable to work or blind while an Australian resident, should not be transferred to Age if that pension would be subject to proportionalisation and they have less than 420 months AWLR.
Act reference: SSAct section 1220A Proportionality - age pension rate, section 1220B Proportionality - disability support pension rate for a severely disabled person
SS(Admin)Act section 12 Deemed claim in certain cases
The pensions portability rate calculator
The pensions portability rate calculator is in the SSAct section 1221-A1 and is used to calculate the proportional rate. The following formula shows how the rate is derived:
|Overseas rate = (P × Q) ÷ 420, where:|
|P =||the yearly income and asset tested rate payable in Australia (the notional domestic rate)|
|Q =||the number of months of AWLR plus one month, but not exceeding 420, and|
|420 =||35 years expressed in months.|
Example: A recipient with a yearly income and asset tested rate of $3,500 and 18 years working life in Australia would get an overseas rate of $1,808.30 a year [(3,500 × 217) ÷ 420].
Act reference: SSAct section 1221 Pension Portability Rate Calculator
Recipients with partners
A recipient's proportional rate of pension is calculated using his or her own AWLR.
Recipients with no AWLR (1.1.A.340)
Recipients with unlimited portability who have no AWLR will get a proportional portability (1.1.P.310) rate of nil, even though they may still qualify for a pension after 26 weeks of continuous absence.
Effect of compensation (1.1.C.240) payments
If a recipient also receives compensation payments that are directly deducted from their Australian payment, that direct deduction should occur immediately after the notional domestic rate has been calculated in step 3 of the Pension Portability Rate Calculator.
Transfer to an agreement pension
An individual may be transferred from an autonomous pension to an agreement pension if they would be better off under the agreement. The following conditions must be met before a transfer can occur:
- the individual's non-proportional period must have ended
- the agreement needs to cover that particular payment type and category of person, and
- the individual must be present in the relevant agreement country.
For further details, see Part 10.
Example: A DSP recipient may be eligible to receive their payment for longer than 4 weeks in a 12 month period under an international social security agreement.
Policy reference: SS Guide Part 10 Australian Social Security Agreements