Taking the Age Pension with you: What you need to know before retiring overseas

For many Australians, the idea of retiring overseas is more than just a lifestyle dream — it’s a practical plan. Whether driven by family ties, better weather, or a more affordable cost of living, an increasing number of retirees are exploring life beyond Australia.

But taking your Age Pension with you isn’t as simple as booking a one-way flight. Centrelink has strict portability rules that can significantly impact what you’re paid, when you’re paid, and how long those payments continue. Planning ahead – with a full understanding of income tests, asset rules, and international agreements – can help make that dream retirement a sustainable reality.

Popular destinations

Australians choose to retire overseas for a range of reasons, and a few locations consistently stand out:

• New Zealand
  Just across the Tasman, New Zealand appeals for its cultural similarities, proximity and ease of travel.  It’s a natural choice for many Australians with family connections or prior work history there.  
  
  Tip: If you’ve lived or worked in both Australia and New Zealand, the time spent in each may have already helped you qualify for the Age Pension.
  
• Southeast Asia
  
  Countries like Thailand, Malaysia, Vietnam, and Indonesia (particularly Bali) are favoured for their warm climates and low cost of living. Many Australians find their retirement savings go further here, especially in areas such as healthcare and accommodation.
  
• Southern Europe
  Italy, Portugal, and Spain continue to attract Australian retirees seeking a Mediterranean lifestyle, good healthcare systems, and accessible retirement visas. While these countries are not as close to home, they offer thriving expat communities and a slower pace of life.
  
  Wherever you choose, it’s essential to consider the local visa rules, tax systems, and support services – and how Centrelink’s portability rules will apply to your specific situation.

Understanding portability: how long your pension lasts overseas

If you’re already receiving the Age Pension and move overseas permanently, your rate of payment may change after 26 weeks. Centrelink calls this the ‘outside Australia rate’, and it applies regardless of your financial situation or destination.

This reduced payment:

• removes the Energy Supplement,
• reduces the Pension Supplement to the basic rate and
• continues to be paid monthly in arrears, rather than fortnightly.

This is separate from proportional portability, which is based upon your Working Life Residency -and applies when you’re living outside Australia long term.

Working Life Residency and proportionality

Centrelink’s proportional portability rule applies when someone moves overseas permanently and has not lived in Australia for a full 35 years between the ages of 16 and Age Pension age. This rule reduces your Age Pension entitlement in proportion to the number of those years you were an Australian resident.

For example, if you were receiving $1,000 per fortnight before moving overseas, Centrelink will divide that into 35 equal portions which is $28.57. If you were only living in Australia for 10 years before leaving, you will only receive 10 portions. Your new payment would be $285.70 per fortnight. However, as mentioned above, you would start getting monthly payments not fortnightly so you go from $2,000 per month down to $571.40.

This rule can catch people off guard – particularly those who have worked internationally, lived abroad earlier in life, or migrated to Australia later.

Even if you qualify for the Age Pension under one of Australia’s international social security agreements, your payment overseas may still be reduced under this proportionality rule.

Chris and Jane: 

Should they rent out the home or sell and invest in super?

Members, Chris and Jane had two key questions before relocating overseas. They both had over 35 years of Working Life Residency, meaning their Age Pension was portable at the reduced ‘Outside Australia’ rates. But they were weighing up two financial strategies:

• Renting out their Australian home:
  They planned to rely on rental income while living abroad in Greece. Centrelink treats rental income as gross rent minus allowable deductions, such as council rates, property management fees, and repairs. The property’s value (less any mortgage) was included in the assets test.
  
• Selling the home and contributing to superannuation:
  Their alternative plan was to contribute the sale proceeds into super and draw a regular income via an Account-Based Pension (ABP). In this case, the full super balance would be assessed under the assets test, and the income drawn would be deemed under Centrelink’s income test — regardless of the actual returns.

While both strategies had pros and cons, they wanted clarity on how each would affect their Age Pension. Whilst selling the home and contributing to super meant the value of the home still counted under the asset test, the income assessment for Centrelink changed. Also, they would have additional flexibility with drawing a regular income that could also meet unexpected capital expenditure.

This real-life scenario illustrates the complexity of retiring overseas, especially when balancing home ownership, income planning, and Centrelink rules.

International agreements and what they cover

Australia has more than 30 international social security agreements with countries including New Zealand, Spain, Portugal, Italy, and Greece.  

These agreements are designed to help people who’ve lived or worked in more than one country access their Age Pension entitlements. They typically allow:

• Combining residency: You can count the time spent in a partner country toward the 10 year residency rule.
• Lodging a claim from overseas: In theory, you can apply for the Australian Age Pension while living in an agreement country – but this rarely works smoothly in practice.

Practical tip:

Although you can technically lodge a claim from overseas under an agreement, we’ve found this often leads to complex follow-up, delays, or even declined claims. 

For that reason, we strongly recommend lodging your application while in Australia.

Our service is specifically designed to support people who are already in Australia or plan to return before applying.

Important distinction: the two-year rule for returning Australians

If you’re returning to Australia after living overseas and want to apply for the Age Pension, there’s an important rule to understand. You must remain in Australia for two years before your pension becomes portable – meaning you can’t receive the full overseas rate straight away.

You need to live in Australia continuously for two years before your Age Pension becomes portable. If you leave the country before the two years are up, your payments may stop or be reduced, depending on your situation.

This rule is often overlooked and can catch people off guard – especially if they return expecting to travel again or move back overseas soon after resettling.

Planning tips from Smartraveller

The Department of Foreign Affairs and Trade’s Smartraveller platform provides practical guidance for retirees thinking about moving overseas. Their advice includes:

• Trial before you commit: Spend 6-12 months in your chosen country before making a permanent move
• Plan your healthcare: Australia’s Medicare system doesn’t cover you overseas, and reciprocal healthcare agreements are limited. Private international health insurance is essential — and can be expensive
• Understand visa requirements: Many retirement visas require proof of financial self-sufficiency and do not permit you to work
• Keep your options open: If your circumstances change, such as health or family needs, returning to Australia can be costly unless planned for

Further reading: Smartraveller – Retiring Overseas

Making the move: 
Get informed, not caught out

Retiring overseas can offer lifestyle and financial benefits — but only if you’re fully prepared. Your Age Pension doesn’t automatically travel with you at the same rate, and decisions like keeping your home or shifting assets into super can have long-term affects on your entitlements.

If you’re considering a move or supporting a family member in their decision, a Retirement Advice or Entitlements Consultation can help you navigate Centrelink’s rules and make the most of your financial position – both here and overseas.

We’d love to hear from you

Have you recently returned to Australia after living overseas?

What surprised you most about restarting Centrelink payments?

Or navigating the two-year portability rule?

What questions or concerns do you have about how long you’ll need to stay in Australia to keep your payments?