As with most countries, there are restrictions on accessing social security outside the country, but they are not as onerous as you might think. US expats and Australians who have lived and worked in the US but are retiring in Australia may be entitled to US social security.
This blog discusses qualification and application for US social security payments in the context of the US retirement pension, which is administered by the Social Security Administration (SSA).
Do I qualify for the US pension as an expat?
Under the US/Australian social security agreement, Australians residing in Australia can qualify. Therefore, you do not need to be residing in the US, and there is no requirement to be a US citizen or green card holder to qualify.
You typically need:
- 40 quarters of coverage, which means 10 years of covered earnings
- To have had earnings of at least USD1640 per 3-month quarter of covered earnings.
Under the US/Australia social security agreement, as long as you have six quarters of coverage in the US, for the purposes of meeting minimum qualifying periods only, periods of employment or self-employment in Australia are treated by the US as contributions to the US system.
Is the US pension means-tested?
Unlike the Australian Old Age Pension (OAP), the US retirement pension is not means-tested. This means you can qualify regardless of assets or income, so it may be a suitable option for those who do not qualify for local payments.
Will my superannuation impact my entitlements?
It is important to note that you may have reduced entitlement if you hold a superannuation fund under the ‘Windfall Elimination Provision’.
The Windfall Elimination Provision can impact how the SSA ‘calculates your retirement or disability benefit. If you work for an employer who doesn’t withhold social security taxes from your salary, any retirement or disability pension you get from that work can reduce your Social Security’. This typically includes superannuation funds.
Is the US pension taxed in Australia?
No, under the tax treaty between the US and Australia, US social security payments are not taxed in Australia. It will, however, be treated by the US tax system, and you may need to complete a US tax return. You should receive advice from a tax agent who understands the US system before applying for a US pension.
How do I apply for US social security from Australia?
The payment is processed and administered via the SSA in the US. However, Centrelink can assist with the collection and forwarding of information. Centrelink will collect your personal details (including your US social security number) and forward this information to the Veteran Affairs Office based in the Philippines, which will then send the necessary SSA claim forms.
Seek professional advice
Navigating finances as an expat can seem complex, but it doesn’t have to be. Working with a team of professionals who understand both jurisdictions is recommended to ensure you make the right moves.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.