The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

10.1.100 General principles glossary

Introduction

This section contains a list of terms used in and applicable to agreements.

Administrative arrangement

The agreed way in which the parties to a Scheduled International Social Security Agreement will administer that agreement is set out in a document called the administrative arrangement. This document, unlike the agreement, is not a legally binding treaty under international law. However, it is a record of the procedures that the parties prefer to follow when applying the agreement.

Age pension age

This is defined in SSAct section 23(5A), 23(5B), 23(5C) and 23(5D).

Act reference: SSAct section 23(5A) to (5D) Pension age

Agreement country

An agreement country is a country with which Australia has a current Scheduled International Social Security Agreement.

Agreement pension

Agreement pensions are those pensions where qualification, payability or retaining qualification (e.g. short-term portability cases) relies on 1 or more provisions of a Scheduled International Social Security Agreement. In some agreements, partner related benefits (e.g. wife or carer pensions) are deemed to be agreement pensions when granted in Australia (without the help of an agreement) to partners of agreement pensioners.

Note: An agreement pensioner is a person who receives an agreement pension.

Australia

Australia is defined in SSAct section 23(1). It is also defined in the Acts Interpretation Act 1901 as 'the Commonwealth of Australia and, when used in a geographical sense, includes Norfolk Island, the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, but does not include any other external Territory'.

It is not necessary for Australia to be defined in an agreement given these definitions in domestic law. Most agreement partners also have their territory already defined in their domestic law but, if not, it is defined in the Interpretation Article of the agreement, especially if the country has external territories or borders under contention.

Act reference: SSAct section 23(1)-'Australia'

Australian resident

Australian resident is defined in SSAct section 7(2).

Note: Where an agreement refers to Australian residence at any time in a person's life, the expression 'period as an Australian resident' is used.

Note: Where an agreement refers to a 'period of Australian residence' this term has the same meaning as AWLR as defined in SSAct section 1221-B1.

Act reference: SSAct section 7(2) An Australian resident is a person who …, section 1221-B1 Working life

Australian working life residence (AWLR)

AWLR refers to a person's period of residence in Australia between age 16 and age pension age. If the rate of an agreement pension is calculated on a proportional basis, the proportion to be paid is generally based on an AWLR up to a maximum of 35 years (420 months). A person's AWLR is calculated in whole months and a full month is added for odd days.

Note: The Agreements with Greece and the Republic of North Macedonia have provision for a maximum of 44 years (528 months) and New Zealand has 45 years WAR requirements.

Note: From 1 July 2014, a person receiving Age, DSP or CP under an agreement (with the exception of New Zealand Agreement CP) will have their pension calculated on the basis of their own individual AWLR, rather than utilising their partner's or former partner's AWLR, which may be longer.

Pensioners already in receipt of an agreement pension and overseas at 1 July 2014 continue to have their pension calculation based on a maximum AWLR of 25 years (300 months) unless they return to Australia for at least 26 weeks. A person already in receipt of CP can move to the new calculation if it will result in a higher rate of payment.

Note: Although listed as Australian benefits covered in some agreements, from 20 March 2020, WP, WidB and BVA ceased. Recipients of these payments were transferred to another payment, such as Age, where eligible and retain the AWLR calculation provisions used prior to their transfer, unless they return to Australia for at least 26 weeks.

Autonomous pension

Autonomous pensions are pensions that are paid under domestic social security legislation without any help from the provisions of a Scheduled International Social Security Agreement.

Ceiling

With effect from 1 August 2000, the rate of an Australian pension paid to a person outside Australia is not to exceed the notional rate otherwise payable to that person in Australia. This applies to both autonomous and agreement pensions. The introduction of a ceiling on the rate of Australian pension paid overseas ensures that people outside Australia, who are entitled to an income test concession on their contributory foreign pension, cannot receive a higher rate of Australian pension than they would if they were in Australia.

This will usually only occur when the combination of high foreign pension and low working life residence produces a rate of pension higher than the inside Australia income tested rate.

Note: A ceiling has always applied under the Agreement with Italy.

Act reference: SS(IntAgree)Act section 13(2) Overall calculation process

Cooperation

Some agreements provide for cooperation in respect to the implementation of agreements on social security entered into by either of the parties with third states. Refer to the relevant administrative arrangements to determine to what extent each party has agreed to cooperate.

Direct deduction

Direct deduction refers to the special rating arrangement that applies to pensioners in Australia who get accelerated access to Australian pensions through totalisation. These pensioners have any pension which is received from an agreement country deducted from the Australian entitlement on a dollar for dollar basis (rather than under the ordinary income test) until they can qualify for an Australian autonomous pension. Refer to individual agreements to ensure this has not been modified in any way.

Domestic law

Refers to national laws of either country that are relevant to the operation of that country's social security (or equivalent) system. These laws may encompass a broad range of topics, including social security law, privacy law and laws relating to definition or interpretation rules (such as the Acts Interpretation Act for Australia). These laws may apply to agreement pensioners except where overridden by provisions in the SS(IntAgree)Act or Scheduled International Social Security Agreement. This may include, but is not limited to, provisions relating to claim requirements, residency requirements, minimum requirements for accessing social security benefits, portability of benefits and privacy restrictions on the collection, use and storage or data.

Note: Domestic laws may also be relevant to the double coverage provisions in an agreement (affecting Australia's superannuation guarantee). These are the responsibility of the ATO.

Embargo

Embargoes are the special provisions in agreements that allow one country to recover, from the arrears of benefit due from the other, any overlapping payments it has made pending the grant of the other country's benefit.

Equivalent periods of residence

Equivalent periods of residence are those periods in the agreement country that are converted to Australian residence (in Step 2 of the totalisation process in 10.1.5.30).

Government employment

Government employment means employment by the Australian Government and also includes employment by a political subdivision or local authority of Australia, that is, a state, territory and local government.

Legislation

Legislation means the laws of both parties referred to in Article 2 of individual agreements. For Australia, it refers to those parts of the social security law dealing with the pensions and allowances listed in the Article.

Lodgement

Each agreement has provisions for the lodgement of claims. Some agreements allow people residing in third countries that also have an agreement with Australia to lodge claims for Australian benefits. Refer to the relevant agreement country for details on specific provisions.

Overlapping

When periods of Australian residence and social insurance periods in the agreement country overlap, the country applying the totalisation provisions will count the overlapping periods once only.

Example: Where contributions were made to the Italian scheme from 1980 to 1994 and the claimant for Australian pension was an Australian resident from 1992 to 1996, Australia will use only the Italian contributions from 1980 to 1991 in the totalisation process. These will be added to Australian residence from 1992 to 1996.

Portability

Portability is the term used to describe the period that a pension or allowance is payable while a person is outside the territory of the paying country and is specified in each individual agreement. Generally, payments covered under the scope of the agreement are portable at least to the agreement country, and often to third countries (there are some exceptions - see individual agreements for details).

Proportional rate

A proportional rate refers to the pension rate to be paid overseas based on the pensioner's AWLR, or, in some cases, on their partner's AWLR.

Pro-rata

Pro-rata is the term used by countries with contributory social security systems to describe the amount of benefit to be paid to a person who qualifies for that benefit through totalisation. The pro-rata usually involves a fraction, consisting of the period of actual contributions as the numerator and the totalised period as the denominator.

Protocol

A Protocol is a formal document which both parties to an agreement sign and pass into their laws so that it can become part of the agreement. Protocols allow minor amendments to be made to the original agreement without having to renegotiate and redraft the entire agreement.

Reciprocity

Reciprocity refers to the situation that can be achieved under agreements when each country agrees to offer comparable social security coverage and benefits to the people affected.

Scheduled International Social Security Agreement

A Scheduled International Social Security Agreement is an agreement on social security matters between Australia and a foreign country, the text of which has been included as a Schedule in the SS(IntAgree)Act.

Totalisation

Totalisation refers to the process used in agreements whereby periods of residence or contributions in one country are added to periods in the other country in order to meet minimum residence or contribution requirements to qualify for benefits.

Example: A claimant for Australian Age who has 7 years as an Australian resident (including 5 years continuously) and 4 years of contributions to the Italian social security system, could totalise those periods to meet Australia's minimum 10 year residence requirement.

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