Older Australians should keep their expectations modest when Age Pension payments are indexed next month.
The Australian Bureau of Statistics (ABS) announced its selected cost-of-living indexes yesterday, and the news isn’t good for pensioners.
The Age Pension is indexed twice a year, on 20 March and 20 September.
Base pension rates are indexed to the higher of the increase in the Consumer Price Index (CPI) and the Pensioner and Beneficiary Living Cost Index (PBLCI).
Age Pension prediction
The CPI rose only 0.6 per cent for the December quarter – the lowest rise since 2021 – and the PBLCI rose only 1 per cent for the December quarter.
However, the CPI rose 3.4 per cent in the 12 months to December and the PBLCI rose 4.8 per cent in the same period.
It is expected the Age Pension will be indexed to just under 2 per cent for the March increase. This represents about $18 per fortnight for singles and $27 per fortnight for couples.
It’s not much, but inflation is slowing.
What is the PBLCI and why does it matter?
The PBLCI was introduced in 2009, developed following the 2009 Pension Review, and tracks the spending by households whose income is derived principally from government pensions or benefits.
It is one of six specialised indexes the government produces, one of which is the CPI.
The PBLCI places different weights on the selected ‘basket’ of products sampled for the CPI. For example, education costs are weighted to 1.91 per cent in the PBLCI indexing and 4.43 for CPI, under the supposition older Australians probably don’t have too many education costs.
A report into the PBLCI quarterly result said the December 2023 increase was mainly due to electricity costs, following a fall in the previous quarter.
“In the September 2023 quarter, age pensioner, other government recipients and PBCLI households recorded falls in electricity due to the introduction of the Energy Bill Relief Fund rebates from July 2023,” the report stated.
“The rebates reduced electricity bills for these households in all capital cities.”
Rent assistance
Costs were also curbed by an increase in Commonwealth Rent Assistance (CRA).
From 20 September 2023, the maximum rate for CRA increased by 15 per cent on top of the CPI indexation that applies twice a year, reducing housing costs for eligible households.
The CRA is a payment for Centrelink recipients who live in private rental properties.
The rising cost of insurance also put pressure on all indexes in the Selected Living Costs Indexes report.
“Insurance prices rose with higher premiums across motor vehicle, house and home contents insurance reflecting higher reinsurance, natural disaster and claims costs,” the report stated.
Tobacco prices also rose due to the flow-on effects of the introduction of a 5 per cent annual excise indexation.
Do you think the consumer indexes are accurate? Are your payments keeping up with your costs? Why not share your experience in the comments section below?
Also read: Are you missing out on a retirement ‘bonus’?