Income from Foreign Pensions

Last amended: 05 August 2022

Income from foreign pensions

The current gross rate of an assessable foreign pension is treated as income for DVA purposes whether the payments are made:

• from overseas, or
• through an Australian agent.

No amount is deducted for any bank charges incurred.

Exemption of foreign pensions from the income test

The circumstances in which foreign pensions may be excluded from the income test are limited to:

• where the pension is a payment in respect of incapacity or death resulting from employment in connection with a war or war-like operations in which the Crown has been engaged;     
  VEA →

   

  Subsection 5H(8) (e) VEA

   

  VEA → (go back)
• where the pension is a payment in respect of reimbursement of incurred costs (e.g. medical-related expenses) and as a result is not assessable income as it is not available for the person's own use or benefit; or
• where the pension payment has been specifically declared by legislative instrument to be an exempt payment.

Note: A person assessed as receiving an overseas payment similar in character to Australian war widow(er)'s pension or Disability Compensation Payment may have their DVA war widow(er)'s pension or Disability Compensation Payment reduced on a dollar for dollar basis by the overseas payment.     

A person who receives an overseas payment similar in character to Australian war widow(er)'s pension is not entitled to receive partner service pension.    

Indexation of British state pension

Most British state pensions (formerly known as British social security pensions) are not indexed when received by Australian residents. Those that are, such as Industrial Injuries Disablement Benefit, Jersey and Guernsey pensions, are indexed annually at different times. United Kingdom state pension is only indexed for recipients living in:    

• the European Economic Area, or
• countries which have a social security agreement with the United Kingdom

Note: If the Industrial Injuries Disablement Benefit includes an economic loss component, for example, through payment of the associated reduced earnings allowance, then the compensation recovery provisions may apply.     

Indexation of British official public service and armed forces pensions

British official public service pensions and armed forces superannuation pensions are indexed every year in line with the UK Retail Price Index.    

Indexation of other foreign pensions

Other British pensions and other foreign pensions are paid from a variety of sources depending on the person's country of origin and work history. They may be indexed at different times and rates. The foreign currency amount of non-government British and other foreign pensions is only updated when the person notifies a change in the foreign currency amount actually paid to them.