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Chapter 2 Agreement between Australia and the Slovak Republic on Social
The proposed Agreement between Australia and the Slovak Republic on
Social Security (Agreement with the Slovak Republic) will allow for payment
of social security entitlements accrued by individuals who have migrated
between the party nations.
Social security bilateral agreements generally aim to close gaps in
social security coverage for such people. These gaps may arise because of
domestic eligibility obligations, such as legal requirements for citizenship,
minimum contributions, past residence history or current country of residence.
At present Australia has 24 similar agreements in place.
The proposed Agreement with the Slovak Republic incorporates
substantially the same principles as those in existing shared responsibility social
security agreements held by Australia.
Under the Agreement, residents of Australia and the Slovak Republic will
be able to move between both countries with the knowledge that their rights to
benefits are recognised in both countries. The Agreement will streamline the trans-national
assessment processes, facilitate portability of pensions and accrued benefits, and
provide greater choice to recipients in retirement.
This Agreement covers the Australian and Slovak age pensions, and Slovak
invalidity and survivors benefits. It also contains provisions to avoid ‘double
coverage’ (exemptions for superannuation and pension requirements) for
employees seconded for work in the other country.
The Department of Families, Housing, Community Services and Indigenous Affairs
(FaHCSIA) estimates that the proposed Agreement with the Slovak Republic will
provide substantial increases in foreign income to Australia. Specifically,
this is because of the disparity between Slovak and Australian residency
numbers and corresponding pension entitlements:
We are expecting around 520 Australian residents to claim a
Slovakian pension and around 60 Slovak residents to claim an Australian
pension, a total of about $80,000 a year compared to a total of $1.1 million
for people claiming a Slovak Republic pension.
Benefits of the Agreement
Australia’s social security laws stipulate that all claimants of
pensions must take reasonable action to claim any foreign pension entitlement
they may have.
The proposed Agreement would establish a formal arrangement whereby such
claims can be registered and overseen by Centrelink through its international
branch in Hobart:
The claims, which might come from all over Australia, are
sent through to Hobart and they are processed there and then forwarded to their
counterparts in Slovakia. The usual arrangement is that the Slovakian authorities
will notify both the individual concerned of the grant or rejection of the
pension and also Centrelink.
Department representatives estimated that Centrelink will be able to identify
and assist roughly half of the 1 000 Slovakian-born people living in
Australia and receiving the aged pension to access a Slovak pension. At present
there are only 34 people able to obtain these entitlements.
The agreement framework also contains dispute resolution provisions and
those for termination of the Agreement if disputes are not resolved.
The Committee was informed that Centrelink International has well tested
procedures in place to address problems, for example, if payments are not made.
These include specialised language services, with liaison for these processes
formalised under a signed agreement between the Parties appended to the formal document.
For those individuals moving between the party nations for employment, the
Agreement’s ‘double coverage’ provisions will ensure that pensions and
superannuation contributions are not required under both systems at the same
In the Australian context, the Agreement will exempt
employers and/or employees from making compulsory social security contributions
in the Slovak Republic if superannuation guarantee contributions continue to be
made in Australia. Similarly, Slovak employers will be exempt from making
superannuation guarantee contributions for employees sent to work temporarily
in Australia provided contributions continue to be made in the Slovak Republic.
In addition to maximising the income accessible to individuals on
retirement, these ‘double coverage’ exemptions may also be expected to provide
benefits to the Australian economy, supporting the development of business
links between the two countries and removing unnecessary costs.
The Committee notes that the Slovak Republic is one of the best
performing economies in the European Union, but that Australia’s trade
engagement with Slovakia is largely undeveloped at this stage.
The general obligations of the Parties are in Part I (Articles 1 to 5)
of the Agreement, which requires equal treatment of all eligible persons
(Article 4) and removes restrictions based on residence in the other
country (Article 5).
The Agreement creates obligations for Australia in relation to:
- social security law
as it applies to or affects the age pension; and
- the law concerning
the superannuation guarantee.
For the Slovak Republic it covers legislation regarding:
- age pensions;
- invalidity pensions;
- pensions for widows,
widowers and orphans.
Part II of the Agreement (Articles 6 to 10) addresses ‘double coverage’
of exemptions for employers and employees. Article 8 specifies that only
the legislation of the home country, with respect to compulsory pension or superannuation
contributions, should apply where an employee is temporarily seconded to work
in the other country.
Under Part III, key provisions establish the entitlements of split and
former residents of the Slovak Republic to benefits payable by Australia, so
- Australia must regard
residents of the Slovak Republic as Australian residents, and Australian
residents temporarily in the Slovak Republic as present in Australia, for the
purpose of claiming the Australian age pension (Article 11); and
- ‘creditable periods’
in the Slovak Republic (periods for which contributions were paid and periods
related to those contributions) are to be regarded as periods of residence in
Australia, so as to meet the ten year qualifying period for the Australian age
pension (Article 12).
Article 13 specifies that benefits shall be paid in accordance with
Australian legislation, after a qualifying period of 26 weeks. Part payment
shall be made on the pension as calculated by:
…deducting the amount of the Slovak Republic benefit which
that person is entitled to receive from the maximum rate of that Australian
Part III Chapter 2 covers the reciprocal obligations of the Slovak
Republic, based on creditable periods of ‘Australian working life residence.’
- Article 14 provides
that the eligibility of a person for a benefit be determined by totalising of Australian
and Slovak creditable periods, and that these must not overlap; and
- Article 15 provides
for calculation of benefits in the Slovak Republic if no totalisation occurs
and if totalisation is required, with benefits not to be awarded for periods of
less than 12 months.
Part IV (Articles 16 to 25) sets out the administrative obligations,
including requirements for lodgement of documents, payment of benefits, and recovery
of overpayments. Exchange of Information and Mutual Assistance arrangements are
established under Article 20, and provision for dispute resolution and review
of the Agreement are at Articles 24 and 25 respectively.
Part V provides that the Agreement is entered into for an unlimited
amount of time, but may be subject to termination by notification (Article 28
The Agreement with the Slovak Republic will enter force on the first day
of the third month in which diplomatic notes are exchanged with the parties.
The proposed commencement date, subject to Committee approval, is 1 January
Implementation will follow introduction of a new Schedule into the Social
Security (International Agreements) Act 1999, which gives effect in
domestic law to the relevant provisions of the Agreement. The Schedule will
contain the full text of the Agreement pursuant to Sections 8 and 25 of the
Cost estimates in the National Interest Analysis indicate there
will be a shortfall in funding for implementation of the Agreement in Australia
initially. In 2009–10, $2.4 million was allocated, with outgoing pensions to be
reduced by $0.6 million in the first year. Forward cost estimates are of a
total of $2.171 million, with set up-costs included.
The Committee supports the proposed social security agreement with the
Slovak Republic. Bilateral agreements of this type provide reciprocal benefits
to individuals with ties to both nations, whether gained through permanent migration
or temporary secondment. The Agreement would optimise choice in retirement, increase
retirement incomes and potentially facilitate family reunion.
The Agreement with the Slovak Republic may also create opportunities for
greater economic engagement between our two nations. The Committee has noted
that, among Europe Union nations transitioning from a controlled economy, the
Slovak Republic has performed strongly, opening new opportunities for
Australian businesses and investors.
The Committee supports the Agreement between Australia
and the Slovak Republic on Social Security and recommends that binding
treaty action be taken.