A major change has been announced for pensioners travelling or moving overseas from September 20.

The pension supplement, which is paid in addition to the pension and was designed to support Australians with utility, phone, internet and medicine costs, will be soon available to travelling recipients for six weeks longer.

But after 12 weeks, subject to legislation, pensioners still on holiday after that will be be cut off from their supplementary payment.

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Those moving overseas permanently will also lose their supplementary payment entirely upon departure.

The current system reduces the pension supplement to its basic rate, both when recipients travel for more than six weeks, and when they move overseas permanently.

“The basic amount was originally introduced to help cover GST costs. It is the only part of this supplement that currently continues indefinitely while overseas,” the Department of Social Services.

The new system which will cut the supplement completely after the extended 12-week period, is expected to save $218 million over five years, and about $63.8 million annually after that, according to the Department of Social Services.

Tens of thousands affected

The base rate of the pension supplement for a single person is about $30 a fortnight, with the full supplement payment for a single person per fortnight being close to $86.

For partnered pensioners those payment rates are $24 and $65 respectively.

About 24,000 recipients travel overseas for more than 12 weeks each year, according to the DSS.

A single person travelling overseas long-term travel after September 20 will receive an $169 before they are cut off from the supplement.

That means travelling pensioners will be better off under the new system, unless they are on holiday overseas for more than five months.

“Around 68,000 recipients travel overseas for between 6 and 12 weeks and will receive more than under current rules,” the DSS said.

For the 88,000 recipients already living permanently overseas, they will receive a small payment reduction on September 20.

The estimated 3000 recipients estimated to move permanently overseas after that will receive their payment reductions on departure.

“This ensures the Pension Supplement supports pensioners who are based in Australia and remains fair and sustainable,” the DSS said.