Pensioners missed out on Age Pension indexation in September last year, but the early indications are they won’t have to worry about that this year.
The Australians Bureau of Statistics (ABS) released its Living Cost Indexes (LCIs) on Wednesday and all signs suggest the Australian economy is on track for an increase to the Age Pension in September.
The Age Pension (along with various other pension payments) is usually adjusted on 20 March and 20 September each year by the greater of the movements in the Consumer Price Index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI) over a six-month period.
Read more: Outlook dire for when pensioners retire
The PBLCI rose by 0.7 per cent in the March quarter and the CPI, which was announced last week, grew by 0.6 per cent.
While these figures cover only the first three months of the six-month period for which indexation is covered, the signs suggest that the economy has recovered to the point where there should be no repeat of the September 2020 situation.
Indexation did not occur in September 2020 because the CPI and PBLCI both decreased.
Noteworthy in the LCI figures released on Wednesday was the fact that age pensioner households recorded the largest rise of all household types (0.9 per cent).
The Age Pensioner LCI is separate to the PBLCI, even though the latter is the measure used for indexing of the Age Pension.
The ABS said age pensioner households suffered the biggest rise in cost of living in the March quarter because they had the largest expenditure for petrol and pharmaceutical products, which both rose significantly.
Petrol costs were a big contributing factor to index increases in the quarter with oil consumption recovering resulting in higher world oil prices.
Health also played an important role in lifting living costs. The resetting of the Pharmaceutical Benefits Scheme and Medicare safety net on 1 January increased the cost of prescription pharmaceutical products and medical and hospital services.
Over the past 12 months, the LCI for age pensioner households rose 0.5 per cent due to price rises in food and non-alcoholic beverages (+0.6 per cent) and alcohol and tobacco (+8.2 per cent).
A fall in electricity prices (-16.4 per cent) partially offset those rises.
Living costs for self-funded retiree households (+0.7 per cent) was also higher than CPI due to their higher expenditure on petrol and pharmaceutical products.
Over the past 12 months, the LCI for self-funded retiree households rose 1.3 per cent – much higher than the 0.5 per cent rise for age pensioner households.
Have you noticed the rising petrol prices and pharmaceutical costs in recent months? Did your electricity bills go down significantly in that quarter?
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