A Social Security Agreement between Australia and the Czech Republic was signed on 16 September 2009 and came into effect on 1 July 2011.
In general terms this agreement enables workers to combine periods of activity and residence in both countries, thus acquiring entitlement to retirement, invalidity and survivors' pensions; it also avoids situations whereby workers employed temporarily in one country pay contributions to both systems. The Agreement covers the payment of retirement and other pensions abroad without deductions or retentions and aims to facilitate the administrative procedures involved.
The Agreement will provide better social protection for people who work or who have worked in both countries, their spouses and dependants, facilitating the mobility of residents in the two countries and promoting commercial activities between Australia and the Czech Republic. Workers and their employers thus avoid the requirement to pay contributions to both social security schemes when temporarily relocated. This agreement will provide cover for approximately 2,000 people resident in the two countries.
The scope of application of the Agreement in concrete terms is that established by the legislation of the Czech Republic concerning the following benefits under general social security and under social security for rural workers:
a. Old age, invalidity and survivors' pensions;
Similarly, the Agreement applies in accordance with the provisions of Australian legislation concerning:
a. Old age pensions provided under social security legislation;
b. Pensions provided under various acts of legislation governing the Superannuation Guarantee (1992 Acts).
The Agreement will not apply to future legislation extending the existing regulations in either of the two States to new groups of beneficiaries, unless the responsible state authorities agree. Similarly, the legislation covered by the Agreement does not include other social security agreements between Australia or the Czech Republic and other states.
As regards the scope of application as to persons, the Agreement provides coverage for individuals resident in Australia or who have been subject to Czech legislation, as well as to others with acquired rights as dependants of the former.
As regards payment, the states agree to pay the benefits provided under this Agreement to all residents of either of the signatory states or, where feasible, in another country for persons resident in Australia or in the Czech Republic. Such payments will be exempt from administrative costs.
Workers on temporary assignment will remain subject only to the legislation of the state where they normally work as if they had continued to work in their usual country of residence, provided that the transfer does not exceed five years. The same conditions apply to civil servants of either state moving to the other. The effect of this measure is that workers on temporary assignment remain subject to the legislation of their country of origin and are not required to pay social security contributions in the host country.
Under the agreement, periods of activity can thus be aggregated to enable workers or their survivors to claim the above-mentioned benefits.
Since the Czech system is contributory while the Australian system is non-contributory, the Agreement provides for the combination of periods of activity under the Czech system with periods of residence in Australia. In concrete terms, periods of coverage under Czech legislation are treated as periods of residence in Australia, while periods of residence in Australia are combined with periods of activity under Czech legislation. In either case only periods of activity of more than one year are taken into account, provided that they are not concurrent with periods of activity in the other country.
Concerning the amount of the benefits, the Czech Republic will pay its share based on the periods of coverage completed under Czech legislation as a proportion of the calculated pension that would be paid under Czech regulations for the total number of periods accumulated under both schemes. Australia will pay benefits based on a normal Australian non-contributory pension, in addition to the share paid by the Czech system, taking into account years of residence in Australia as a proportion of the total years required under Australian legislation.
The Agreement includes measures specifying the benefits to be provided by each signatory country. Whereas for Australia the Agreement covers only retirement pension benefits, the Czech measures include disability and survivors' pensions, based in certain cases on residence requirements in the Czech Republic. It is important to note that the Agreement allows the combination of periods of work in other countries which have entered into similar agreements with Australia or the Czech Republic.
As regards administrative cooperation, the Agreement establishes the principle whereby the institutions provide mutual assistance largely free of charge, providing information needed by any of the institutions concerned for the implementation of the Agreement as quickly as possible,. Thus, any exemptions, tax rebates and other cost reductions applied in either state for the provision of certificates will be applied by the other for similar documents. Similarly, the relevant documents will be exempt from the requirement of authentication by diplomatic authorities.
The Agreement also includes clauses concerning the protection of personal data which indicate that information concerning individuals communicated within the framework of the Agreement will remain confidential and for the exclusive use of the latter and the associated legislation, and will not be released to any other state or organization without the agreement of the states involved.
To sum up, the Social Security Agreement between Australia and the Czech Republic provides a framework for the protection of their retirement benefits for workers from both countries and avoids double social security payments. The way in which benefits under contributory and non-contributory schemes have been coordinated is particularly noteworthy, as is the possibility of combining periods of work in other countries with which Australia or the Czech Republic have agreements similar to this one.
Implementation date: 07.2012