Age pensioners are about to receive their biggest pension boost in seven years.
Millions of older Australians will see their fortnightly payments increase from 20 September, with Age Pension rates set to increase by 1.6 per cent.
The maximum single Age Pension rate will be $967.50 a fortnight – an increase of $14.80 – and couples will receive an extra $22.40 combined, with maximum fortnightly payments totalling $1458.60.
That takes the annual pension paid to singles to $25,155 and to couples $37,923.
“We are ensuring pensioners maintain their purchasing power in the economy, which is bouncing back strongly,” Social Services Minister Anne Ruston told The Australian.
“This change puts money in the pockets of all Australians who rely on our social security system and, in particular, older Australians.
“Since March 2013, the rate for single pensioners has increased by $159.10 a fortnight, while the rate for pensioner couples combined has increased by $239.80 a fortnight.”
Other welfare recipients will also benefit, as JobSeeker and other allowances will increase by up to $11.90 a fortnight. Rent assistance is also set to rise by between $1.80 and $2 per fortnight depending on the recipient’s situation.
Social security payments are adjusted twice a year. The 20 September boost will be the biggest increase since 2014 – a far cry from last September when there was no Age Pension increase for the first time in 23 years.
Around 2.58 million age pensioners are among almost 5.3 million people who will benefit from increased payments.
The Age Pension is routinely adjusted according to the biggest increase in either the Consumer Price Index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI) over a six-month period.
The $1.46 billion total annual increase reflects stronger inflation data, which rebounded after dropping sharply during the early months of the pandemic.
JobSeeker and related payments are linked to the CPI and will climb by 1.4 per cent.
Senator Ruston says the formula for increasing pensions this time around considered cost pressures such as healthcare and childcare.
And while, to some, that may read as the federal government taking credit for tweaking the formula in favour of older Australians, that is simply not the case, says Combined Pensioners and Superannuants Association policy manager Paul Versteege.
“This month’s pension indexation is a bit larger than what we’ve grown accustomed to in the last few years, but it simply reflects that inflation is back from the dead,” he told YourLifeChoices.
“The pension needs to go up more than usual to keep pace with rising inflation. Don’t think the government is being generous. It’s just following the pension indexation rules.”
While the increase is welcome, the benefits are blunted by the loss of income on term deposit and savings accounts with official interest rates stagnating at a record low 0.10 per cent.
“We’re now waiting for inflation to prompt interest rate increases. Interest rate increases would be bad news for homeowners but good news for long-suffering term deposit holders,” Mr Versteege adds.
Regardless of how the formula works, age pensioners will have more money in their accounts as of next week.
Council on the Ageing Australia chief Ian Yates welcomed the boost, saying that the many retirees who fund their living with a mixture of superannuation and a part pension will also be happier.
“The increase will be very welcome and it underlines the strength of the pension indexation arrangements,” he said.
“People living just on the pension always do it tough – this is a very modest standard of living.
“Pensioners who are struggling the most are those in the private rental market, and that has got worse during the pandemic.”
Check here for the full update on pension payments and other benefits.
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