What social security benefits are provided, including state pensions?

Social security is the name given to state benefits paid to residents in Australia. It’s non-contributory and financed from general taxation, although there’s a specific levy for Medicare. Nevertheless, many people fail to apply for allowances and pensions to which they’re entitled. If you apply and your application is rejected, you can ask for the decision to be reviewed by an Authorised Review Officer (ARO); if it’s turned down again, you can appeal to the Social Security Appeals Tribunal, and finally to the Administrative Appeals Tribunal.

   A range of publications detailing social security allowances, benefits and pensions is available from social security offices and community organisations. Centrelink provides a telephone enquiry service on 13-1021, local rate. For more information, contact the Department of Families, Community Services and Indigenous Affairs (FaCSIA, Box 7788, Canberra Mail Centre, ACT 2610, 1300-653227, local rate, www.facs.gov.au), which is a Centrelink service aimed at helping people through the social security maze.

Eligibility

The main beneficiaries of social security are the aged; single parents; the unemployed; those who are disabled, sick or in special need; and families with children. Eligibility for most social security benefits is subject to an income and/or means test. The poorest 10 per cent of Australians receive some 600 per cent more in government payments than the richest 10 per cent over their lifetime, and over 40 per cent of families receive more in handouts from the federal government than they pay in income tax. Assets that are means tested include most investments (which count as income), but not superannuation pensions or belongings such as cars and antiques. Your assets don’t include your principal family home or the land (up to two hectares) on which it’s built, provided it’s used for domestic purposes.

Migrants

Migrants must wait two years before they can claim most social security payments, although refugees and humanitarian migrants are exempt from the waiting period. Migrants can, however, claim Medicare benefits, the minimum rate of family tax benefit and, in exceptional circumstances, can claim a special benefit or a widow’s allowance during the two-year waiting period. Some sponsors of migrants need to provide an Assurance of Support, which makes them liable to repay the government if the migrant claims any welfare benefits during his first two years (ten years for children sponsoring a parent who’s within ten years of retirement).

   According to the Welfare Rights Centre, the two-year waiting period for welfare has caused some migrants to become destitute and homeless, and there have been calls to have it suspended or cancelled, although these have so far been unsuccessful. Migrant service units monitor and review services to migrants and refugees, and liaise with ethnic and voluntary groups, and there are also migrant resource centres in the major towns and cities. Settlement support is provided for migrants with genuine financial problems.

Benefits

Social security benefits include a bereavement allowance, carer pension, child disability allowance, disability support pension, double orphan pension, family tax payment, health care card, ‘baby bonus’, mobility allowance, multiple birth payment (triplets or more), ‘jobsearch’ and ‘newstart’ allowances, parenting or guardian allowance (if a single parent), pharmaceutical allowance, rent assistance, sheltered employment and rehabilitation allowances, sickness allowance, widow’s allowance and youth training allowance. The principal benefits of relevance to new residents are outlined below. A discretionary payment (called special benefit) may be paid to those who aren’t eligible for other forms of assistance but are unable to support themselves.

   The federal and state governments jointly fund a wide range of welfare services relating to home care for the elderly and disabled and their families. Some 1,500 nursing homes and around 1,000 hostels receive federal support to provide residential care for elderly people. A federal programme funds organisations to provide services which help people with disabilities maintain their independence and achieve their potential, and the Commonwealth Rehabilitation Service (www.crsaustralia.gov.au) employs a number of specialists to work with disabled people to help them attain economic and social independence.

Unemployment Benefits

Australia’s unemployment benefit system takes the form of ‘jobsearch’ and ‘newstart’ schemes. If you’re unemployed, under 18 or have been registered with Centrelink for less than one year and are a permanent resident, you must register for a jobsearch allowance. You must provide proof of identity and your tax file number. If you’ve been ‘terminated’ (sacked, made redundant, etc.) from a previous position, you need your Employment Separation Certificate, which states the reason you left work and your final wage. For immigrants there’s a two-year waiting period before payments start.

   If you remain unemployed for more than a year, you must apply for a newstart allowance, for which you must be aged over 21, a permanent resident and unemployed, and have been registered with Centrelink for over a year. Rates of payment depend on your circumstances, including your age, income, marital status and number of children. Unemployed people aged 21 to 34 who have been receiving a newstart allowance for six to 12 months can be obliged to do work experience, mainly on local projects or in community service.

   For information, see the Centrelink website (www.centrelink.gov.au).

State Pension

As in many other developed countries, there’s a worsening crisis in state pension funding in Australia, where fewer and fewer workers must support an increasing number of pensioners. In 2000, 12 per cent of Australians were over the age of 65; by 2050, the figure is expected to be 25 per cent. The Commonwealth government spends around 3 per cent of the country’s GDP on retirement benefits and this figure is expected to increase to only 4.5 per cent by 2050. As in many countries, there are plans to transfer the burden from the public to the private sector, which is why the mandatory Superannuation Guarantee Scheme was created in 1992.

   However, despite the introduction of superannuation, some 75 per cent of people are still expected to be eligible for a full or part state pension (known as an Age Pension) for at least the next 25 years. In fact, the poor performance of super funds in recent years has led thousands of pensioners, who previously didn’t qualify for the pension, to now claim it.

   State retirement pensions are paid to men at 65 years of age and currently (until 1st July 2009) to women at 63.5. The pensionable age for women is gradually being increased to 65; the qualifying age was raised from 60 to 60.5 on 1st July 1995, and is being increased further by six months at two-year intervals until 1st July 2013, when it will reach 65.

   Pensions are pegged at 25 per cent of average male earnings. A full pension in 2009 was $562.10 a fortnight for a single person and $469.50 each for a married couple. State pensions are indexed twice a year in line with changes in the Consumer Price Index (CPI).

   Unlike state pensions in most countries, which are paid irrespective of a person’s wealth or income, most Australian pensions are subject to income and asset tests (the test which produces the lower rate of pension applies, although there’s no asset test for those over 70). This is the case for all pensions except invalidity pensions for permanently blind people and pensions for war and defence widows. Around 25 per cent of Australians are considered too wealthy to receive a state pension.

   You can choose the day on which you want your pension paid. Pensions are usually paid into a bank, building society or credit union account. Australian pensions can be paid overseas, although pensioners going overseas for longer than six months must obtain a pre-departure certificate from social security.

   For more information about state pensions in Australia, contact Centrelink (www.centrelink.gov.au) or the Department of Families, Community Services & Indigenous Affairs (1300-653227, local rate, www.facs.gov.au).

Qualification

You generally need to have lived continuously in Australia for ten years to qualify for a state pension. A full pension is payable after 25 years’ residence during your ‘working’ life (i.e. from the age of 16). However, Australia has reciprocal social security agreements with some countries (including Austria, Canada, Cyprus, Denmark, Ireland, Italy, Malta, the Netherlands, Portugal and Spain), which may enable newcomers to receive a pension as soon as they reach pensionable age, irrespective of their residence period. The UK no longer has a reciprocal social security agreement with Australia.

   If you’ve lived in Australia for less than 25 years and then go to live overseas, you receive an Australian pension proportionate to the number of years spent there, e.g. if you’ve spent 12.5 years in Australia, you receive half of the full retirement pension. Pensioners who delay their retirement become eligible for a cash bonus equal to 9.4 per cent of their pension entitlement for each year they continue working.

   In addition to the basic retirement pension, various other pensions are paid in Australia, including pensions for bereaved people, carers, the disabled, double orphans (i.e. those whose parents are both deceased), single parents, widows and wives. All pensions are paid at the same rates. Other social security payments may be claimed in addition to a pension. The basic retirement pension is taxable but on its own is below the tax threshold.

Benefits for Pensioners

Australian pensioners are entitled to concessionary dental treatment, optometrist services and prescriptions, concessions on public transport fares in most states and territories, and various other benefits (which vary from state to state) which may include reduced council tax rates and utility costs (e.g. telephone rental and water rates), free post redirection and reduced registration fees for dogs.

For more information see Living and Working in Australia by David Hampshire