What you’ve got over the past year
Taking a long view when managing your money is almost always the best strategy. It can be difficult to do this with frequent changes to key financial indicators such as price hikes, stock market volatility and changing Age Pension rules. But it does provide the best lens through which to review your own financial health and how it is tracking.
For this reason today, we are reviewing the key changes in Age Pension rates and entitlements over the past 12 months (September 2021 – 2022).
And for those who read on, there’s quite a pleasant surprise in store.
Namely that they are thousands of dollars better off than they were a year ago.
How so?
First let’s run through a comparison of the key wealth indicators for those receiving the full Age Pension or those who will now be eligible for a Commonwealth Seniors Health Card (CSHC).
| Benefit | September 2021 | September 2022 | Change |
| Age Pension | per annum | per annum | |
| Full Age Pension inc. supplements for singles | $25,155 | $26,689 | +$1,534 |
| Full Age Pension inc. supplements for couples | $37,924 | $40,238 | +$2,314 |
| Full Age Pension income threshold for singles | $4,680 | $4,940 | +$260 |
| Disqualifying income threshold for singles | $54,990 | $58,318 | +$3,328 |
| Full Age Pension income threshold for couples | $8,320 | $8,736 | +$416 |
| Disqualifying income threshold for couples | $84,167 | $89,206 | +5,039 |
Other Indicators
| Deeming rates: Single *frozen until June 30, 2024 | 0.25% for first $53,600 and 2.25% thereafter | 0.25% for first $56,400 and 2.25% thereafter | |
| Deeming rates: Couple *frozen until June 30, 2024 | 0.25% for first $89,000 and 2.25% thereafter | 0.25% for first $93,600 and 2.25% thereafter | |
| Official cash rate | 0.1% | 2.35% | |
| Market 3-month term deposit rate (indicative) | 0.5% | 3.0% | |
| CSHC thresholds for singles
Proposed *Legislation is in parliament |
$57,761 | *$90,000 | +$32,239 |
| CSHC thresholds for couples (combined)
Proposed *Legislation is in parliament |
$92,416 | *$144,000 | +$51,584 |
| Work bonus –
Proposed *Legislation is in parliament |
$7,800 | $11,800 | +$4,000 |
As you can see the overall situation for Age Pensioners in particular has improved dramatically over the past 12 months.
This statement rests on changes to the base rate of the full Age Pension, increased thresholds for qualification for a full and part entitlement, the freezing of deeming rates and a massively expanded thresholds for self-funded retirees who can soon apply for a Commonwealth Seniors Health Card.
Let’s consider these changes one by one
Age Pension increases over the past 12 months
The full Age Pension has increased, per annum, by $1,534 ($30 weekly) for singles and $2,314 ($44.50 weekly) for couples. Traditionally Age Pension increases have been noted as ‘less than a cup of coffee’. But this is no longer the case. Yes, prices are rising, but these annual Age Pension increases can now cover some significant expenses such as insurance, rates and domestic travel.
Thresholds and increased Work Bonus
Income thresholds have also moved up, so those of a full or part Age Pension can earn more without being penalised. In addition the imminent Work Bonus limit being increased by $4,000 for this financial year means a single person will be able to earn $11,800 from employment before their Age Pension payments are affected.
Deeming rates frozen
The freezing of the deeming rates for another two years is also a bonus. They have arguably been too high during periods of a rock bottom Reserve Bank cash rate, so it would have been very galling indeed to be penalised just when cash deposits are returning a little extra. These rates are now locked in, and it is finally possible to earn a little more than the current deeming rate. This translates into real gains in the form of higher income without a negative impact on the Age Pension..
Expanded Commonwealth Seniors Health Card
We’ve covered the decision to increase access to this card, and eagerly await the passing of the relevant bill before the end of the month. This is a really big deal. It means that the vast majority of self funded retirees will now have a card that gives them the same medical and pharmaceutical benefits as Age Pensioners receive. Conservatively, this card can deliver around $3,000 per annum in Commonwealth funded health concessions plus a range of state by state benefits.
Asset limits have also increased
There are also new, higher, disqualifying asset limits which means that the Age Pension will be received by a whole new group of retirees. These new limits are:
- Single homeowners $622,250
- Single non-homeowners $846,750
- Couple homeowners. $935,000
- Couple non-homeowners $1,159,500
It would be naive to assume that any or all of the above increases are the result of warm-hearted government largesse. The deeming rates and Commonwealth Seniors Health Card expansion were both announced during a hard fought Federal Election – and supported by both parties who were keen to secure the votes of older Australians.
Age Pension base rates are indexed to the movement of prices, meaning that recipients do not get left behind by the rising cost of living. They have grown faster than wages over the last few years and are further benchmarked against male total average weekly earnings so that when wages are rising rapidly the Age Pension doesn’t fall behind. The Consumer Price Index (CPI) rose 6.1% from June 2021 to June 2022. We won’t know the results of the September quarter until 26 October, but market expectations are that it will reveal a 5.6% year-on-year increase.
So yes, it may be that much of the direct increase to Age Pension rates is eroded by rising costs of living. But the extra benefits in the table above are not just on rates – and will hopefully mean that you are much better off overall.
What do you think? Are you feeling a little easier about household expenses? Or have none of these benefits flowed in your direction?
With all these changes it can be difficult to keep on top of your own entitlements – we’ve made it easy for you with the Retirement Essentials Age Pension Entitlements Calculator.
At what date exactly does the Thresholds and increased Work Bonus commence please
Hi Amanda. This is still subject to legislation which is currently in Parliament. We are expecting it to be passed imminently and will know the start date after that. The CSHC thresholds will become effective 7 days after the legislation receives Royal Assent
Once either the age pension or the Commonwealth Seniors Health Card are applied for, how long does it take on average these days provided all the paperwork is correct?
Hi Ian, great question! Commonwealth Seniors Health Card claims are generally approved within 3 weeks presuming the claim is lodged correctly with all supporting documents, our record is 4 days but that is unfortunately not the norm. With Age Pension claims the timeframe can vary, for a ‘simple’ claim with no complex situations these are usually approved in 4-6 weeks however if you have a Private Company/Trust, SMSF or complex relationship then these claims are sent off for an extra assessment and often take 8-10 weeks. Of course this is all from our experience and others may have experienced differing time periods.
Absolute tosh… it MAY be that the much of the direct increase to age pension rates is eroded by rising costs of living. (should read HAS BEEN) But the extra benefits in the table above are not just on rates – and will HOPEFULLy mean that you are MUCH better off overall… who writes this propaganda… a failed ex priest?…$30 increase is chicken feed and the health concessions are a bureaucratic joke.
We have sold our home and are now waiting for a new retirement home to be built
It should be ready by June next year
When I use a pension calculator do I click on couples home owner or couples non homeowner .When I select homeowner our pensions vanish but when I select non home owner the pension for couples based on our current assets shows we will receive $9,311 per year
Hi Linda, when you say “retirement home” I’m presuming you mean the same as a retirement village? In which case whether you are assessed as a homeowner or not is determined by the fee you are paying. Currently, the figure used to make the determination is $224,500 which means if you pay more then that, you will be considered a homeowner and if you pay less then you will be considered a non-homeowner.
If you are building a private home for yourselves and I have misunderstood “retirement home” then whilst you are living elsewhere during the build you would be considered non-homeowners but then once you move in to the finished house you would then become homeowners.
If you retire in say November 22. Does the extra earning apply for the year from November/December 22 or financial year? ie, if you worked until 1st November do your earnings from July-October go against the extra income you can earn?
Also, is there a place you can read/learn about how you report income, date you are paid as opposed to earning period etc.
Thanks
Hi Lilian, great question! When it comes to the Age Pension, Centrelink assess your income as of the day you lodge your claim onward. Previous income earnings are not held against you nor is your previous financial year’s income. CSHC is different though and does go off the most recent FY income. Regarding how you report income, you report the income that appears on the pay slip you received during the past fortnight. If you get paid a couple of days after you were due to report, that is not an issue as you are declaring what was previously paid to you, not what you are about to receive.