International Programs - U.S.-Australian Social Security Agreement - Article 8

To qualify for old-age, survivors or disability benefits under the Australian system, a person must generally meet certain length of residence requirements and be an Australian resident and present in Australia when the claim is filed. Under the rules established in Articles 8-11, Australia will add a person's U.S. Social Security credits to his or her periods of Australian residence, if necessary, to meet the minimum residence requirements. These rules also permit a person to file a claim for Australian Social Security benefits while resident and present in the United States or in certain other countries. In addition, they establish the method of computing Australian benefit amounts when entitlement is based on the provisions of this Agreement.

AUSTRALIAN SOCIAL SECURITY BENEFITS

GENERAL

Under the Australian Social Security system, eligibility for benefits is based on residence and financial need. Benefits are paid in flat-rate amounts that are adjusted twice a year for inflation. These amounts are reduced if a beneficiary's income or assets exceed specified levels. If the amount of income or assets changes, the benefit amount is adjusted accordingly.

Australian Social Security beneficiaries are eligible for various supplemental benefits. Rental assistance, pharmaceutical allowances, remote area supplements, telephone allowances and reduced rates for certain federal, state and local government services are available to qualified individuals. In addition, beneficiaries with dependent children receive child supplement benefits.

OLD-AGE PENSION

Australian old-age pensions are payable to men at age 65 and to women at age 61� as of 2001. (Retirement age for women is being increased gradually and will reach age 65 in 2013.) To qualify for an old-age pension, a person must be resident and physically present in Australia when the claim is filed. In addition, he or she must have resided in Australia for a minimum of 10 years, including a continuous period of at least 5 years.

DISABILITY SUPPORT PENSION

To qualify for an Australian disability support pension, a person must be between age 16 and normal retirement age and have a physical or mental impairment that will prevent him or her from working for at least 2 years. The person must also be resident and physically present in Australia on the date of application. There are no minimum residence requirements if the disability occurs while the claimant is a permanent resident of Australia. If the disability occurs while the person is outside Australia (other than during a temporary absence), then he or she must meet the same residence requirements that apply to the old-age pension.

CARER PAYMENT

A "carer payment" is payable to an individual who provides constant care at home for a disabled Social Security beneficiary. The maximum amount of the carer payment is the same as for other Australian pensions, and the same income and assets tests apply.

PENSIONS PAYABLE TO WIDOWED PERSONS

Parenting Payment Single

Although the "parenting payment single" is the primary benefit payable to a surviving spouse, it is also paid to other categories of beneficiaries. To be eligible, a person must be a sole parent (e.g., a widow or widower, separated or divorced spouse, single parent) with at least one dependent child who is under age 16 or disabled. In addition, the sole parent must be resident and physically present in Australia on the date of application. No minimum period of residence is necessary if the couple was residing permanently in Australia on the date of the qualifying event (death, divorce, etc.). Otherwise, they must have been Australian residents and in Australia for at least 2 years at any time.

Bereavement Allowance

A bereavement allowance is paid to a person whose partner has died if the survivor does not qualify for parenting payment single or certain other benefits. The survivor must have been living with the deceased partner immediately before death. There are no residence requirements if the survivor and his or her deceased partner were Australian residents on the date of death; otherwise, the survivor must meet the same residence requirements that apply to the old-age pension. The maximum amount of the bereavement allowance is the same as for other Australian pensions, and the same income and assets tests apply. The bereavement allowance is paid for a maximum of 14 weeks from the partner's date of death.

SUPERANNUATION GUARANTEE

In 1992, Australia introduced a Government-regulated program, called the Superannuation Guarantee (SG), to provide employed persons with additional income upon retirement. Under the SG program, employers are required to contribute a specified minimum percentage of each employee's salary into funds run by banks, insurance companies and other private financial institutions. An employer who fails to make the minimum contribution must pay a charge to the Government to cover the shortfall plus administrative expenses. The Government then distributes the shortfall and interest to a Superannuation fund established for the employees. Employees are not required to make contributions, but may do so voluntarily to increase future benefits.

Benefits under SG-qualified plans must be payable to retired individuals as early as age 55, but the minimum retirement age will increase to 60 in gradual steps. Benefit amounts are generally determined based on an individual's account balance at the time of retirement, including total employer contributions plus accrued investment returns. Employees may elect to receive their benefit as a lump sum or as an annuity, but the Government encourages the annuity option by providing tax concessions for those who choose periodic payments.

Since benefits under the SG program must be immediately vested (i.e., there is no minimum coverage requirement) and be payable outside Australia without restriction, Articles 8-11 do not affect SG benefits.

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