220.127.116.11 Reasonable Action Requirements
- a recipient or their partner is entitled to a CFP under the law of the CFP claim country,
- a CFP claim country accepts claims from overseas,
- a CFP claim country exports it pensions,
- a CFP claim country does not impose foreign exchange restrictions,
- for agreement countries - if the person is any age and could claim a CFP,
- for non-agreement countries - only if the person is of age pension age and could claim an entitlement to Age, survivor pensions, company pensions or superannuation payments that are regulated through a country's national social security law.
If a CFP claim country does not accept claims from overseas or does not export its pensions, a notice may still be issued when the recipient travels to, or resides in, the CFP claim country.
Some countries will increase the rate of the pension they pay to someone who normally resides in Australia (1.1.A.320) if the person returns to the paying country.
Example: The UK will index the rate of British pension if someone who is usually an Australian resident returns to the UK.
|If a recipient intends to stay…||Then a request to seek an increase from the paying country…|
|LESS than 26 weeks,||is NOT required.|
|MORE than 26 weeks,||IS required.|
Examples of CFP entitlement
Information provided by the recipient during the claim process will indicate whether or not a possible CFP entitlement exists. If entitlement to a CFP is likely, the recipient must take reasonable action to obtain it.
- A 65 year old man was born in Germany and came to Australia at age 32 after having worked and contributed to the German social security system for 12 years. He has met the minimum contribution requirements to qualify for a German age pension and is thus required to claim CFP. In this example, the pensioner does not need to rely on totalisation under the Agreement, i.e. he qualifies for a German pension without regard to his period of AWLR.
- A 65 year old man was born in Italy and came to Australia at age 35 after having worked and contributed to the Italian social security system for 7 years. He has met the minimum contribution requirements under the Agreement and is required to claim CFP. This is because the Agreement allows him to totalise, i.e. to add his AWLR to his 7 years of credited contributions in Italy to satisfy the minimum period of credited contributions for an Italian pension.
Reasonable action for the recipient
The legislation requires a recipient to take reasonable action to obtain the CFP at the HIGHEST rate applicable to them or their partner. Reasonable action means:
- lodging a claim for a pension, AND
- pursuing that claim to determination.
Example: A recipient who was sent a foreign claim package for an agreement country but failed to complete it and return it, would not be taking reasonable action. Similarly, a CFP claimant who fails to give the other country information that is within their possession that is needed to determine the claim would not be taking reasonable action. A recipient asked to lodge a claim with a non-agreement country who does not take the required steps to lodge a claim and who does not have a specified exemption would not be taking reasonable action.
Failure to take reasonable action
If a recipient, or their partner, does not take reasonable action to obtain the CFP, by the time specified in the notice, their Australian payment:
- can be cancelled/suspended, or
- their claim can be rejected.
Act reference: SS(Admin)Act section 82 Cancellation or suspension for failure to take action to obtain foreign payment
If appropriate, the possibility of exempting the recipient from the requirement to claim a CFP should be investigated as an alternative to rejecting the claim or cancelling/suspending the current entitlement.
Under existing provisions, the Secretary may vary a decision to cancel or suspend payments or reject a claim. Provided the recipient seeks a review within 13 weeks of the day of notification of the decision arrears for such variations may be paid from the day the payment was cancelled or suspended, or from the day the claim was rejected.
Policy reference: SS Guide 7.3.2 CFP Exemptions
Capital outlay required
Cases may arise where a recipient who is claiming or already receiving a pension needs to pay money into the social security system of the CFP country in order to secure a CFP.
Example: Some systems will give former contributors the option of buying their way back into the scheme when contributions have been refunded in the past.
Under the CFP provisions, it is NOT compulsory for recipients to outlay capital to secure an overseas pension. If a recipient is able to secure an overseas pension only by outlaying money, and they decide not to do so, they are regarded as having no entitlement to the particular CFP.
Deferring entitlement to an overseas pension
Contributory social security systems base pension entitlement on both the amount contributed and period of time a person has contributed into the system. A number of contributory social security systems give contributors the option of deferring age or retirement pension entitlement for a number of years in order to get a pension at a higher rate.
Recipients of Australian age pension age who are required to claim a CFP are required to pursue their claim without deferral.