7.3.3 CFP notices & reasonable action requirements
Summary
CFP requirements apply if Centrelink issues a recipient or claimant a legal notice to this effect. If a recipient or claimant (or their partner) is issued with a notice, they must take reasonable action to obtain the CFP (1.1.C.230) at the highest rate applicable to them.
Notices
Centrelink may issue a recipient or claimant with a notice in writing requiring them or their partner (1.1.P.85) to take reasonable action to obtain a CFP if:
- the recipient or claimant, or their partner, is likely to be entitled to a CFP under the law of the CFP claim country
- the CFP claim country accepts claims from overseas
- the CFP claim country exports its pensions to Australia
- the CFP claim country does not impose foreign exchange restrictions
- for agreement countries - the person is any age and could claim a CFP
- for non-agreement countries - 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 there is a possibility that a person may not be entitled to a CFP, it should be considered before the notice is issued, so that ongoing foreign claim action can cease at an early stage.
If a CFP claim country does not accept claims from overseas or does not export its pensions, a notice may be issued when the recipient travels to, or resides in, the CFP claim country.
A notice may also be issued where a person already receiving a CFP may be entitled to a higher rate. 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 temporarily index the rate of UK pension for the duration of the person's stay if they are usually an Australian resident and return to the UK temporarily.
| 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. |
Act reference: SS(Admin)Act section 66 Notice to obtain foreign payment
Policy reference: SS Guide 7.3.1 CFP legislation & requirements
Examples of CFP entitlement
The requirement to claim a CFP is only triggered if, under the legislation of the other country, there is a likelihood of a successful claim.
Information provided by the person during the claim process will indicate whether or not a possible CFP entitlement exists.
Examples:
- 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 would qualify for a German age pension and is required to claim that pension under the CFP provisions. In this example, he does not need to rely on totalisation under the Agreement in order to be eligible for the German pension, that is, he has sufficient contributions to meet the minimum requirements to qualify for the German pension.
- 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 would qualify for an Italian age pension under the Agreement and is required to claim under the CFP provisions. This is because the Agreement allows him to totalise, that is, 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
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
A person who is given a notice under the legislation must be given no less than 14 days to comply.
If a recipient or claimant, 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 or suspended, or their claim for an Australian payment can be rejected (see 7.3.1 for the payments affected).
Act reference: SS(Admin)Act section 40 Rejection of claim for failure to obtain foreign payment, section 66 Notice to obtain foreign payment, section 82 Cancellation or suspension for failure to take action to obtain foreign payment
Exemption from claiming a CFP
If a CFP notice has been issued to a person, the person can subsequently be exempt from the requirement to claim a CFP (7.3.2).
If appropriate, exempting a person from the requirement to claim a CFP should be investigated as an alternative to rejecting the claim or cancelling/suspending the current entitlement.
Under review existing provisions, where a decision has been made to cancel or suspend payments or reject a claim, the Secretary may vary that decision and determine an exemption applies. Provided the recipient or claimant 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
Deferring entitlement to an overseas pension
Overseas 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.
A person of Australian age pension age who is required to claim a CFP is required to pursue their claim without deferral.
Capital outlay required
Cases may arise where a person who is claiming or already receiving an Australian pension needs to pay money into the social security system of another country in order to secure a CFP from that country.
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.
It is not compulsory for a person to outlay capital to secure an overseas pension. If a person is only able to secure an overseas pension by outlaying money, and they decide not to do so, they are regarded as having no entitlement to the particular CFP.
Lump sum foreign payments & overpayments
Some people receive a lump sum foreign payment for a past period. Usually, this occurs when a person lodges a claim for an overseas pension and the overseas authority decides to grant a payment, which is backdated to the day of claim. The lump sum may be paid either to the person or the person's partner, if the person is a member of a couple. This lump sum amount may affect the rate of the recipient's Australian pension. Where this occurs the lump sum is treated as periodical payments for the past period and an overpayment raised if required.