Last Sunday, March 20, the highest Age Pension increase for nine years was enacted. The majority of the 3.9 million older Australians in retirement live on a full or part Age Pension. So this is a significant, across the board, income boost. But it is more than just that. The rule changes announced last week will now also enable many more Australians to now qualify for at least a modest part-pension thus re-setting their retirement income aspirations. Today we explore the who, what, when, why and how of these important changes to assist you to better understand the many ways in which your household income will be affected.
Who?
The rate changes apply to every single or partnered Australian currently on a full or part Age Pension. They are also of acute interest to those who have previously missed out. As well as a rate increase, the qualifying thresholds have been increased. This means that more Australians will now qualify for the first time ever. If you do not know if you might or might not qualify, the first important point is age – here’s a handy article to help you understand if you are actually old enough to qualify.
What and when?
As mentioned, there has been an increase in the base rate for those already receiving the Age Pension. This increase, as per the tables below, also includes an increase to the pension supplement. The total increase amounts to 2.1%. This increase has been calculated by reviewing movements in the Consumer Price Index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI), whichever was greater. The amounts were then benchmarked against a percentage of the Male Total Average Weekly Earnings (MTAWE).
Sunday’s increase is the highest since 2013 when the introduction of the Clean Energy supplement, by the then Gillard Government, resulted in a total increase of 4.6%. Many commentators have noted that whilst a 2.1% increase this month is substantial, it still falls short of the 2.6% increase in the CPI recorded in the December 2021 quarter. Expectations for CPI for the March 2022 quarter are higher still, particularly in regard to fuel, health costs and groceries. In addition to the base rate, rental supplements have also been increased by $3 per fortnight for singles and $2.80 per fortnight for couples. This increase, however, may do little to ameliorate the substantial increase in rentals, driven by the lowest residential rental vacancy rate since 2017, now 1.1% across all Australian capital cities.
| Single (per fortnight) | Pre 20 March | 20 March 2022 | Increase (per fortnight) |
| Base | $882.20 | $900.80 | $18.60 |
| Supplement | $ 71.20 | $ 72.70 | $ 1.50 |
| Energy Supplement | $ 14.10 | $ 14.10 | $0 |
| Total | $967.50 | $987.60 | $20.10 |
| Partnered (each – per fortnight) | Pre 20 March | 20 March 2022 | Increase (per fortnight) |
| Base | $665.00 | $679.00 | $14.00 |
| Supplement | $ 53.70 | $ 54.80 | $ 1.10 |
| Energy Supplement | $ 10.60 | $ 10.60 | $0 |
| Total | $729.30 | $744.40 | $15.10 |
Why?
As covered above, the base rate and supplement increases are scheduled to be reviewed twice a year and to become law by the 20th of March and September. In recent years, the assets and income thresholds have also been reviewed at this time. It is an obligation of the government of the day to review the Age Pension against price movements and typical wage and salary earnings so that those dependent upon social welfare do not fall too far behind. However, it is also true that those non-homeowners who are on a full Age Pension generally tend to be living below the poverty line, with 30% or more of their fixed income needed for rental payments.
How (will this affect you)?
There are many ways you could be affected by these Age Pension changes. Firstly, of course, an increase of $523 for singles and $785.20 for couples (combined) per annum is significant. However, with the current high increases in petrol prices, groceries, medical bills, household goods and predictions of $7 cups of coffee, this extra income will probably not go far. For instance, the approved increases in private health insurance due, in most part, to be applied from April 1 are 2.7%. On a single’s plan of, say $2,800 per annum, this will take $75 of the increase, and with out-of-pocket expenses often $50-$100 for specialist visits, an extra $523 a year can soon disappear.
The other ways you might be affected relate to changes in income thresholds and assets thresholds for Age Pension eligibility. Today we also cover income threshold changes and asset threshold changes in more detail
Commonwealth Seniors Health Care Cards
It was disappointing to see that there weren’t any changes to the disqualifying income threshold for the Commonwealth Seniors Health Care Card. These thresholds are usually increased in September but given all the other changes and inflationary pressures an increase might have been expected now.
This card provides a safety net for many people that miss out on the Age Pension. Health costs are one of the many expenses that are significantly reduced for holders of this card. There is now very little extra that people can earn above the Age Pension income test before they also miss out on the CSHC – just over $30 a week (single). Here are the current CSHC eligibility criteria.
Here to help
Age Pension entitlement rules are complex. Understanding which assets to include, and how your assets are deemed to add to your income, can be plain confusing. That’s why the customer service team at Retirement Essentials is on hand to step you through the rules that relate to your particular situation, and how you can maximise your entitlements whilst always complying with Centrelink regulations. If you need financial planning advice we also offer affordable one-off adviser consultations to discuss the bigger issues associated with your retirement income.
Our free calculator has all the latest rates and thresholds and will help you work out what you could be entitled to receive.
The other important thing affecting pensions this month is the March review of certain asset types by Centrelink. The combination of a CPI pension increase plus an assessed reduction in some asset values may create an even nicer jump in the pension payment for some.
$20 is better then the $6 pay rise in our pension,But in all honesty what’s $20 going to buy us with the high inflation,every thing has gone up in prices exspecially petro ,No one will be able to go any where on holidays these days, the pm doesn’t have a problem with inflation with a nice pay pkt in his bank acc,he is living the high life whilst pensioners,and working people ect are doing it hard,not fair at all ,I believe that all PM needs to retire on our pen and not on a hefty pen,even then they would still have no idea as to how hard pensioners and workers are doing it,$100 will be a better choice to help every one in need see the light at the end of the tunnel,Mr Rude was the only Prime Minister that has helped pensioners emensley,we all would like pm Morrison raise our pensions by $100 FN if he had a heart at all,Mr Morrison is for the rich and not the poor but he seems to have forgotten that us old pensioners did work and payed our taxes ,You really need to be voted out and give Anthony Albanses a go as we know he will do better.
I cannot believe how stingy the government is with pension income/asset tests. Most of us have been honest hard workers in our younger years and paid huge taxes on everything, not having had a choice. Well why are pensioners penalized so much yet the politicians of this country are paid HUGE benefits and allowances even when no longer in office not to mention the mighty lurks and perks and fat wage packets they receive per annum. Ex pollies forfeit their huge wages when they retire just as anyone else who looses a job or retires. We are not paid a continual payment for services from ex employers. Get real and start treating everyone the same and it’s about time the public demanded a pollies wage review.
Wow $20 do you call this a huge increase,No I call this an insult to all pensioners ,Pensioners need a$100 a FN to be able to live just a little bit more comfortable.with all the price hike on food and petrol it’s impossible for pensioners even for working people to survive,I’m sure that Anthony Albanese would have given us pensioners the $100 rise,You just have no idea as to how pensioners live from day to day and some even go with out food to pay their rent ,Seems to me that you are for the rich and not the poor,I’m hopeing that there will be a change in parliament where it concerns Prime Ministers and gov workers retiring on a very high pension ,All prime ministers need to retire on our low pension see if you like being on a very low pay,You need to get out of parliament and give Anthony Albanese a go im sure he will do better,just have a heart and give pensioners what they really deserve which is the $100 a FN to make life a bit easier for us,,As it stands when you give your self and your workers a pay rise it’s in thousands of dollars not a $20 pay rise ,Big difference sent it,,,Tour an insult to pensioners and workers,,Need to be voted out?
Remember, it’s not the government’s money but the taxes every working Australian pays. I agree pensioners deserve more, after paying taxes all our working lives. Both parties are too busy handing out money and benefits to refugees.