Can I access the pension while living overseas?

I intend to retire at the end of 2023 at the age of 64. As a dual-national, I will be moving to Italy as a self-funded retiree drawing initially on my Australian superannuation. Should my super balance drop below the Centrelink age pension threshold for singles in the future and current pension rules remain unchanged, could I access any Centrelink assistance as an Australian citizen living abroad? What government pension entitlements would I be eligible for when I reach 67?

Australia and Italy have a social security agreement generally allowing you to submit a claim for an Australian age pension and live overseas. You must have lived at least 10 years in Australia as an Australian citizen or permanent visa holder to get a part pension, and 35 years to get a full pension.

Australia and Italy have a social security agreement that allows you to submit a claim for an Australian age pension and live overseas.

However, you can add together periods of residence in Australia and periods of social security coverage in Italy to meet this requirement.

If you live outside Australia when you claim, you generally need at least 12 months ‘Australian Working Life Residence’, i.e. between the ages of 16 and 67 of which six months must be continuous.

To get a claim form you can either print out two forms from the Services Australia website – Claim for Age Pension and Pension Bonus form, and the Income and Assets form – or open a myGov account linked to a Centrelink account.

Submit your claim and all necessary documents up to 13 weeks before your 67th birthday. The whole single age pension paid overseas is currently $25,038, lower than that paid to residents, as you only get the basic pension supplement of $681.40 a year and lose the energy supplement of $366.60. To get a full pension, you need assets below the current thresholds (which rise every six months) of $280,000 (or $504,500 if a non-homeowner) and income below $190 a fortnight ($4940 a year).

To get a part pension paid overseas, assets currently need to be under $601,000 if a homeowner, or $825,500 if not, along with income below $2116 a fortnight ($55,016 a year).

For pensioners in Italy, payments are made every four weeks in euros if paid into an Italian bank account. Arrivederci!

My wife and I will be 59 this year. We are living on investment income since I was made redundant and our living expenses are about $60,000 a year. We own our home and have $660,000 and $1,200,000 respectively in super, $2,500,000 in shares and cash generating about $100,000 in gross income. We recently topped up my wife’s super with $330,000, and I’ve continued to make non-concessional contributions to my super fund with excess investment income. When we turn 60, should we transition our super accounts to the pension phase to take advantage of the zero tax on super investment earnings? Then can we roll the pension income back into super, or should we stay in the accumulation phase for as long as possible?

Super is simply a tax shelter and so should be used to minimise tax. You could do this by making concessional (deductible) contributions up to $27,500 to age 67 and, in your case, topping up non-concessional contributions to the maximum. From this July, the transfer balance cap is rising to $1.9 million.

If your non-super investments are (a) providing all the income you need and (b) being taxed at more than 15 per cent a year in total, then there is no need to start a super pension.

If, at some stage, the reverse is true, then once you turn 60 and non-preserved components can provide an untaxed pension, start the pension you need with some or all of your super and preferably don’t roll back and forth, it’s expensive.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Investors should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. All letters answered.

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