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.


Check Your Entitlements