Australians aged over 80 who are living overseas will soon have to produce a "proof of life certificate" to continue receiving the pension.
From July 1, pensioners will be asked to go to an Australian embassy or consulate every two years to register that they are still alive and entitled to receive a welfare payment.
Social Services Minister Paul Fletcher said estimates suggested there had been thousands of cases where a person died while living overseas but continued to receive the pension.
"We believe we will identify about 6,000 people living overseas who are dead or whose families are wrongfully receiving taxpayer money," he said.
"In some cases it could be fraud, in other cases it could be that the pensioner's family incorrectly think that they remain entitled to receive the pension formerly paid to their loved one."
About 96,000 Australian pensioners are living overseas, a quarter of them aged over 80.
The Government predicts the new measure will save $150 million over four years but it is basing that figure on average death rates.
Mr Fletcher said the proof of life certificates were a simple and fair way of ensuring welfare payments were only going to eligible recipients.
"Countries like the UK, Germany, Netherlands, France and Italy all have systems in place to verify whether a pensioner living overseas in still alive and we're now going to introduce a similar system," he said.
"We do have a duty to be careful and responsible with taxpayers' money and so it's appropriate to have a process in place to check that where a pension is being paid that that person continues to be alive."
Under the new system, pensioners will be given 13 weeks to tell the Government they are alive before their payment is cancelled.
