OK, in Australia there is sun, sea and thousands of miles of nothingness. Australia has great infrastructure and a very good quality of life. So, why do so many Aussies come over to the Philippines to have a vacation and some stay on for years. Ignoring the sex tourist, what about the real quality people coming to live in the Philippines?
A vacation is very cheap when using the Aussie Dollar and it is remarkably easy to travel around the main Islands in the Philippines and stay at reasonable priced resorts and spend time drinking and eating at a fraction of a price that you would in Australia. The weather is great, but probably it is the people that attract the visitors. Filipinos are always smiling, and the longer you live here you may see that some of those smiles are a little false or forced.
Those who retire can make their pension money go much further when moving to the Philippines.
The Australian Age Pension can be paid overseas permanently, with some estimates suggesting that more than 60,000 Australians are currently receiving their Age pension overseas. However, the rules in this area are both complicated and unclear in certain areas – particularly for current expatriates – and it is suggested you seek advice from both Centrelink and financial advisors regarding your entitlements. Much depends upon the detail of your situation, and we have just tried to present a short summary below:
1. Entitlement to an Australian age pension is dependent upon applicants meeting both income and asset tests – with pension entitlements progressively reducing if an applicant’s assets or income exceed specific levels. Obviously, there are no issues about self-funded individuals or couples retiring overseas – just make sure to check out how your income is assessed in your new home. Happily, most Asian countries do not (yet) tax income generated outside the country.
2. To qualify for an Age pension you must also have been an Australian resident for a total of 10 years, at least five of these in one continuous period. You must also be an Australian resident and in Australia on the day your claim is lodged, unless you are claiming under an International Social Security Agreement (see below).
3. As mentioned, you need to be a resident of Australia at the time the first claim for the age pension. Note that if you have been an expatriate (“former resident”) and have been living overseas, the restriction for former residents means that you need to remain in Australia for two years before you can leave and be paid overseas. In practice, many Australian expatriates return home two years prior to becoming eligible for an age pension – this ensures eligibility from a residency point of view and “should” mean the two-year restriction does not apply – although this needs to be confirmed.
4.When a person goes overseas their rate of Age Pension is paid according to their Australian Working Life Residence (AWLR) or years in Australia between the ages of 16 and Age Pension age. A person who has resided in Australia for 25 years between the ages of 16 and Age Pension will get the full means tested rate, less any add-ons; while a person with less than 25 years will get a proportionate rate. For example, if you have lived in Australia for 10 years between the ages of 16 and age pension age, your proportion would be 10/25 multiplied by the normal income and asset tested rate of Age Pension. This rate change, however, does not occur until a person has been outside Australia for 26 weeks. This is because all Age pensioners can go overseas temporarily for 26 weeks regardless of their AWLR.
Alternatively, you can make a claim for a pension without returning to Australia, if you are living in a country with which Australia has an International Social Security Agreement.
Finally, one issue that many people overlook when considering retiring overseas is access to health care -international health insurance, particularly in retiree age groups, can be very expensive. And you cannot just rely upon going home to Australia when the need arises – if an emergency develops and you need to be evacuated to Australia at short notice it may cost $100,000 from some destinations.