CHOICE membership

Centrelink & Overseas Pensions


#1

On learning that we might be entitled to a Dutch pension from time working in Holland we contacted the Dutch authorities who referred us to Centrelink. Centrelink sent us forms which we completed and submitted to our local Centrelink branch in March. Some 5 months later in August, having not heard anything, we wrote to Centrelink asking what the situation was regarding our application. Shortly after we received letters from Centrelink saying that the claim papers were forwarded to Holland on 29th August (over 5 months from submission). Not quite believing this, and wondering if they meant the August enquiry, we enquired and were told claims were only sent overseas in batches!
Is this normal Centrelink practice and if so how can such a delay be justified?


#2

This Centrelink submission process is because of Reciprocal Arrangements and that when the Pension from Overseas is issued Centrelink can then amend their rate of payment to reflect this. I would still lodge a claim directly with the overseas country and on it’s grant would then inform Centrelink. I know you tried to do so directly but sometimes the obscure approach works and in this case may be to apply for a DigiD code (to read about it see https://www.svb.nl/int/en/aow/direct_regelen/dni/) then once registered to use the online system use https://digid.nl/inloggen to log in and submit your claim online.

Once you receive the Netherlands Pension (this should be as soon as you receive the advice not the payments) you should advise Centrelink immediately so they can adjust their records.

Hope that this might help.


#3

I hope that you realise that if you receive any pension from overseas Centrelink will probably reduce your Australian pension accordingly. Worthy of note is that the reduction is by a ‘deemed’ exchange amount, and not the actual exchange amount.

It will also mean extra paperwork annually, having to confirm the quantum of your Dutch pension to Centrelink.


#4

…some foreign pensions are also taxed in Australia regardless of their ‘home country’ tax free/taxed status.

Best to check on your relevant Tax Treaty!


#5

No they don’t have to do that paperwork. This is a result of the Dutch Pension Treaty with Australia. Like the UK Pension the rates are exchanged in both directions so that expat Australians getting a Dutch Pension in the Netherlands have their rate adjusted by any Australian Pension they receive and vice a versa in Australia. Some Pensions do not have these arrangements and any rate adjustments need to be advised to Centrelink (Dept of Human Services (DHS)) within the short notification period allowed, however Centrelink and before them the Dept of Social Security were very involved in getting as many agreements in place as possible, ostensibly to reduce the burden on the Australian Tax system but also to know every particle of a person’s background.

The “deemed” rate of exchange (it is reset each 1st day of each month) was to smooth out any rapid fluctuations in both directions so that pension payments could be more easily calculated than on a daily movement of rates. They use a figure supplied by the Commonwealth Bank in most cases and for some currencies they also use other Banks. From Centrelink’s web site:

"Rates we use

Normally the exchange rate we use is:

  • a buying rate from the Commonwealth Bank
  • available 5 working days before the 1st of each month

For some currencies we get the rates from other banks.

We update the exchange rates we use on the 1st working day of each month."

Sometimes this rate is to the benefit of customers and sometimes not but in general it is considered to reasonably even out over a 12 month period. Family Assistance payments however are different and foreign income is assessed at the rate it was on 1st July of a given financial year ie for this year:

"Exchange rates for 2018-19

We’ll use these rates for the 2018-19 Australian financial year.
    Currency	                           Rate
    Canadian Dollar 	                   1.0172
    Danish Kroner 	                   5.0916
    English Pound 	                   0.5936
    European Currency Unit 	           0.6726
    Hong Kong Dollar 	                   6.0979
    Japanese Yen 	                  86.9800
    New Zealand Dollar 	                   1.1323
    Norwegian Kroner 	                   6.5407
    Singapore Dollar 	                   1.0675
    South African Rand 	                  10.5727
    Swedish Kronor 	                   7.0199
    Swiss Franc 	                   0.8245
    Thai Baht 	                          25.9600
    US Dollar 	                           0.7832"

#6

Sorry I didn’t fully answer this above, but even in the Dutch system they request you submit your application at least 6 months in advance of your possible entitlement date. The delays are long because of all the checks and rate determinations that must be done. The date your paperwork was lodged with Centrelink’s International Services is typically the date that they work any entitlement out from, this is because of the agreement terms that arise out of the Pension Treaty. Your entitlement to a pension based on these terms can include residence in one country being used for entitlement purposes in the other. When your entitlement is determined and if a pension is then granted it will be backdated to the appropriate date within the lodgement period if needed and you will receive a lump sum back pay and an adjustment to your Australian Pension if you receive one. This is why if you apply directly overseas you should advise Centrelink as soon as your are notified of the date of your Dutch Pension commenced and any payments you will receive due to any adjustment due to backdating of entitlement.


#7

My mother receives an o/s accorn pension and has to do the paperwork every year. Obviously no treaty.


#8

Oh there are certainly Countries and sometimes just specific pensions within some countries with which Australia does not have these reciprocal arrangements covering the reporting and in those cases Centrelink do require notification about overseas rate changes that must be done by the client. If the rate is set annually then it would be an annual requirement and if they occur more frequently then the reporting is in line with those timetables, typically Centrelink code an automatic reminder that generates a request if they are aware of what timing of increases is used.

For those who wish to amble through the Netherlands Treaty the link follows…it has a bit of legalese and as such can be a bit wordy and confusing:

https://www.dss.gov.au/about-the-department/international/international-social-security-agreements/current-international-social-security-agreements/social-security-agreement-between-australia-and-the-netherlands

For a more complete list of Countries that have these arrangements with Australia see:

https://www.dss.gov.au/about-the-department/international/international-social-security-agreements/current-international-social-security-agreements

The original UK agreement was cancelled some years ago but the reporting of payments does continue. This change came about because the way the UK now pays recipients of their pensions who live outside the UK/EU.