The official retirement age in Australia is 65 and Australian citizens have two options for income when they retire. Superannuation is one of these options and this is paid for by contributions made while you are working. The age pension is the second option and this is funded from tax monies and paid out by the government.

Superannuation payments are taken from contributions made by your employer while you are working. 9% of your salary is the contribution but this is only from ordinary time earnings and not including any bonuses and overtime. This is compulsory and employers do not have the choice to opt out. The employer can choose the retirement fund but it must be one that is registered with the government. All employees should check how this is funded by the employer as some will include this 9% in the salary package and deduct it as you are paid.

Balanced superannuation funds are the most common and this means that 66% of the fund is invested in the stock markets. These are not final salary schemes so you are dependent upon a fund which performs well on the markets. As people get closer to retirement they tend to change funds to be sure of a safer investment. Workers are able to add to these funds as they choose.

The age pension is paid out at the age of 65 and in order to qualify you must have been a resident of Australia or a citizen of the country for a minimum of 10 years. The age pension is worth around $17,500 for a single person, although this rises to more than $26,000 for couples. This is reviewed annually. There are supplements available for those who need an extra income, although these supplements are not very much. The age pension will only be paid to those who have reached the age of 65.5 years from 2017. There are plans for the age to increase by 6 months every 2 years until 2023, when only those who are aged 67 will be able to claim this pension. Age pensions are tested on income and assets.

The asset test checks to see if you have your own home and assets that are worth less than $181,750. This qualifies you for the full pension if you are a single person. The threshold for couples is $258,000. Thresholds are higher for those who do not own their own home. If you are above the thresholds then the age pension is reduced by $1.50 per fortnight for every $1000 that your assets are valued above this amount. The thresholds are reviewed regularly.

The income test will check other sources of income too. If you get less than $146 per fortnight or $256 for a couple then you qualify for the full amount of the age pension. For every dollar you get above this amount the pension is reduced by 50 cents.

Those who are moving to Australia from the UK may be entitled to claim their British state pension provided they have made the right number of national insurance contributions. The British basic pension will pay you an amount of money based on the number of years that you have contributed to the system. The minimum amount payable is 25% and this rises in increments until the 100% is reached for those who have made the most contributions. In order to determine how much you are entitled to you need to contact the Department of Work and Pensions in the UK.

Many UK residents also opt to have a private pension in addition to their state pension and these can normally be paid to you regardless of where you live, but you will need to check with your pension company first. You may have to have this paid into an account in the UK and then arrange a transfer of monies yourself. Private pensions may be transferrable for those who are working through the Qualifying Recognised Overseas Pension Scheme, but this can be expensive and you should take professional financial advice before you make this decision. Superannuation is the most common option for those working in Australia and these schemes are compulsory.

There is no longer a social security agreement between Australia and the UK. This means that your British pension will freeze at the value it was when you moved to Australia, or the value when you stopped making social security contributions and you will not receive the increases which are given to other recipients of the pension. However, if you are in Australia for long enough you may qualify for the Australian age pension.

Most people who retire to Australia do so for the good climate and laid back lifestyle. It attracts large numbers of expats but if you are moving to the country without the intention of working then you need to be sure that you have your finances in place to support you. Those who are already of retirement age when they move to Australia will not be entitled to any pension benefits from that country.