It was the biggest increase in almost a decade, but how much was the rise in the Age Pension and what is the fine print?
The Age Pension increase came through in March, and single pensioners will be $20.10 better off per fortnight, and couples up to $30.20 (where both members of the couple are eligible).
For a fortnightly payment, the maximum basic rate is now $900.80 for a single person, $679 per person for a couple, $1358 for a couple combined and $900.80 for a couple separated due to ill health.
Add on the pension supplement and energy supplement and those figures increase to $987.60 for singles, $744.40 for a couple each, $1488.80 for a couple combined and $987.60 for a couple separated due to ill health.
However, in usual fashion, what the government gives with one hand, it takes away with the other, and for people in aged care the increase in pension also increases their Basic Daily Fee. As a result, residents will receive just over $4 of that $20.10 pension increase.
The Basic Daily Fee is a fee paid towards the costs of aged care or in-home care packages and is set at a percentage of the Age Pension.
In residential care, the fee is paid directly from the Age Pension to the facility, which uses it to cover services such as laundry, food and cleaning.
In residential care, the fee is set at 85 per cent of the basic Age Pension. It was $53.56 per day and has increased to $54.69 per day, or an increase of $15.82 a fortnight. With the Age Pension increase of $20.10, residents in aged care only have $4.28 to cover the increases in the cost of living.
Financial advisory group Aged Care Gurus principal Rachel Lane said while the Basic Daily Fee does cover some of the costs in aged care, many residents need to pay extra or additional fees to cover alcohol, food, entertainment and personal services.
“Personal expenses such as clothing, medications, healthcare, other insurances, transport and communication costs remain the responsibility of the resident,” she says.
“A $4 per fortnight increase for people living in aged care is definitely a pay cut, not a pay rise.”
The assets test cut-off has also increased from $593,000 to $599,750 for singles and $891,500 to $901,500 for couples.
For couples separated by illness, whether one or both are in care, the asset limit cut-off increased from $1.05 million to $1.0635 million.
“Indexation also means that some people who were previously ineligible for a pension may become eligible as the cut-off amounts of assets and income are also increased,” Ms Lane says.
The income threshold before the Age Pension ceases increased from $2115 per fortnight to $2155.20 for singles and from $3237.20 to $3297.20 for couples. Income earned under the Work Bonus scheme is not included in this amount, which means the first $7800 of income will not be counted.
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