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FREQUENTLY ASKED QUESTIONS (FAQs)
Social Security Agreement between Australia and the Kingdom of Norway
A Social Security Agreement between Australia and the Kingdom of Norway was signed on 2 December 2005. Below are answers to questions about what Australia’s social security agreements do, and how this Agreement in particular will help people living in Norway.
WHEN WILL THE NEW AGREEMENT START?
The Agreement is expected to begin operating on 1 January 2007, after the necessary treaty, legislative and administrative processes are completed in both countries.
WHY DO WE HAVE SOCIAL SECURITY AGREEMENTS?
The proposed Social Security Agreement between Australia and Norway coordinates the two countries’ social security schemes to provide better social security coverage for people who have moved between Australia and Norway.
People who have lived in more than one country often find, when they claim a pension or benefit, that they do not have enough residence or contributions under a social security scheme to qualify for payment. To help overcome this problem, a network of social security agreements has been set up within the international community. One of the key elements in these agreements is that the partner countries broadly share the responsibility for social security coverage and related costs. If a person has lived and worked in more than one country, then it is fair that those countries share the responsibility for supporting that person when he/she claims a pension or benefit. Agreements help many people to receive a part pension from one or both countries, which they would not otherwise get.
It is an important principle that Agreements do not take away existing entitlements.
The proposed Agreement with Norway is Australia’s latest agreement of this type - similar agreements are already operating with Austria, Belgium, Canada, Chile, Croatia, Cyprus, Denmark, Germany, Ireland, Italy, Malta, The Netherlands, New Zealand, Portugal, Slovenia, Spain and the USA.
WHAT DOES THE AGREEMENT DO?
Under the Agreement, Australia and Norway share the responsibility for paying pensions to people who would not otherwise be entitled to a pension from one or both countries. Under Australia's residence based system, this could be because they do not have enough (permanent) residence here and/or are not living in Australia. Under Norway's pension system, this could be because of a combination of their country of residence and/or their citizenship. In summary, the agreement helps people who could not otherwise claim a pension because of where they are living; it does this by overcoming restrictions in each country's domestic legislation.
WHAT PAYMENTS ARE COVERED BY THE AGREEMENT?
The social security pensions covered by the Agreement are as follows:
• age pension
• disability support pension for the severely disabled
• old-age pension (including supplements for supported wife or children)
• disability pension (including supplements for supported wife or children)
• rehabilitation benefits
• pensions for survivors
WHAT WILL AUSTRALIA DO UNDER THE AGREEMENT?
To qualify for an Australian pension people normally have to be Australian residents and in Australia on the day a claim for pension is lodged, and certain periods of residence (eg 10 years for an age pension) are required before an Australian pension can be granted. Also, most payments are not payable outside Australia except for temporary absences.
The Agreement modifies these rules so that:
• Australia will treat someone who is resident in Norway as being a resident of Australia and present in Australia, so that the person can lodge a claim for Australian pension;
• Australia will add the person’s periods of insurance in Norway to his or her Australian residence so that the person can meet the minimum residence qualifications to get an Australian pension;
• Australia will pay benefits covered by the Agreement indefinitely in Norway, as long as the person otherwise remains qualified.
Note: To use the Agreement to claim an Australian Age pension while residing in Norway, a person must have actually resided in Australia during their working life (Australian working life residence is between age 16 and 'Age pension' age), for a minimum of 12 months.
WHAT WILL NORWAY DO UNDER THE AGREEMENT?
In order to qualify for an old-age pension in Norway, a person must have a minimum of 3 years of coverage in the Norwegian social security between the ages of 16 and 66. To receive a full pension, a person must normally have a 40 years of insurance contributions. A partial pension is paid to people who have less than 40 years of coverage. Under the Agreement, Norway will treat periods of Australian working life residence [this is the period between age 16 and Age Pension age] as Norwegian periods of insurance, providing a person has at least 12 months of employment or three years residence in Norway. This means that people who have less than the minimum periods of insurance required to qualify for payment can count the periods they resided in Australia during their working life toward satisfying this minimum requirement. The Agreement will also assist claimants for disability and survivor benefits. Centrelink will be able to assist people in Australia to claim any Norwegian pension to which they may be entitled, including non-Centrelink customers.
HOW ARE PENSIONS CALCULATED UNDER THE AGREEMENT?
People who live in Australia but do not have ten years’ residence in Australia can count their Norwegian periods of insurance to qualify for an Australian pension, subject to the means test. During this time (until they have ten years residence in Australia) they will be paid the normal income-tested pension rate less the amount of any Norwegian pension - ie, the Norwegian pension would be ‘topped-up’ to the rate of Australian pension they would receive if they had no Norwegian pension.
Australian pensions in Norway will be based on the person’s period of ‘Australian Working Life Residence’ [this is the period between age 16 and Age Pension age]. A full pension, subject to the means test, is payable to a person with 25 years ‘Australian Working Life Residence’. For example, under the Agreement, a man who has lived in Australia from age 30 to age 50 (ie 20 years) may, at age 65, be paid 20/25ths of a means-tested Australian Age pension in Norway. No pension is paid overseas if a person has less than 12 months Australian Working Life Residence.
Following are examples of how the Agreement assists people living in Norway:
A person who lived in Australia for 20 years during working life (between age 16 years and 'Age pension' age) is now living in Norway and is already receiving a Norwegian old-age pension. The person left Australia before receiving an Australian Age pension.
• Without the Agreement
Although this person has more than the 10 years Australian residence required to qualify for Australian Age pension, he/she does not qualify for payment because the person is not an Australian resident and in Australia at the time of lodging the claim.
• With the Agreement
Australian Age pension can be claimed while the person is in Norway. The pension rate will be proportionalised, that is, the person will receive 20/25th of the means-tested rate. The same proportion of Norwegian pension will be counted as income.
A 65 year old woman in Norway is already receiving a Norwegian old-age pension. She lived in Australia during her working life (between age 16 and 'Age pension' age), but only for 9 months.
• Without the Agreement
This woman is entitled to Norwegian pension only. No Australian pension can be paid because she is not an Australian resident and also because she is not living in Australia.
• With the Agreement
No change. This woman will still receive a Norwegian pension but won't be entitled to an Australian pension because the minimum period of Australian working life residence required for the grant of Australian pension under the Agreement to a person living outside Australia is 12 months.
A 65 year old man in Norway has also lived in Australia, as a permanent resident, for 6 years. Apart from that he has a total period of insurance in Norway of 35 years.
• Without the Agreement
The man is entitled to Norwegian pension only. No Australian pension can be paid because of lack of Australian residence and also because the person is not living in Australia.
• With the Agreement
The man can add his 6 years as an Australian resident to the 35 years of insurance in Norwegian so that he meets the minimum 10 years Australian residence required to qualify for Australian 'Age pension'. His Australian pension rate will be proportionalised, that is, he will receive 6/25th of the means-tested rate. The same proportion of Norwegian pension will be counted as income.
Norway will add periods of working life residence in Australia to periods of insurance in Norway in order to reach the minimum qualifying periods. The Norwegian benefit paid will be based on the proportion of the period of insurance the person has completed in Norway and the total periods required under the relevant Norwegian legislation.
WHEN DO PAYMENTS START?
In Australia's case, payment starts from the date the claim is lodged, or or the date the person qualifies for payment, whichever is later. Accordingly, it is important to lodge claims promptly, to avoid losing potential entitlements.
Note: Payments cannot start from a date before the Agreement starts
HOW ARE AUSTRALIAN PENSIONS PAID?
If you get an Australian pension in Australia, Centrelink will pay it directly into your bank account every 2 weeks.
If you get an Australian pension and you reside permanently in Norway, Centrelink will pay it into your Norwegian bank account every 4 weeks.
ADMINISTRATION AND LODGEMENT OF CLAIMS
The Agreement will create administrative links between the social security systems of Australia and Norway which will help pensioners in one country in their dealings with the social security authorities of the other.
DOUBLE SUPERANNUATION COVERAGE
The Agreement between Australia and Norway also includes provisions that address the problem of double coverage. Double coverage can arise where an employee is sent temporarily from one country to another to work and compulsory superannuation (or equivalent) contributions are required under the laws of both countries for the same work. The Agreement provides that, in these situations, the employer/employee will generally only be subject to the legislation of their home country. For example, where an employer sends an employee from Australia to work temporarily in Norway, and double coverage would arise, the Agreement provides that the employer will instead only be required to make Australian Superannuation Guarantee contributions and will be exempted from making contributions under Norwegian law. Equivalent provisions apply for a Norwegian employee seconded to work in Australia.
WHERE CAN I FIND MORE INFORMATION?
Further information and the text of the Agreement can be found on the Department of Families, Community Services and Indigenous Affairs (FaCSIA) website at:
Or you can write to:
PO Box 7788
Canberra Mail Centre ACT 2610