What are transitional Age Pensions?

Often when we feature pension increases, we include the rates for transitional arrangements. Many of our members want to know why transitional rates are paid and if they qualify for them.

When the then Government announced its Secure and Sustainable Pension reforms in 2009, it became clear that some people would be worse off under the new arrangements. To combat this, transitional arrangements were put in place from 20 September 2009, to ensure that no one would receive less in their pension under the reforms.

Under the transitional rules, anyone whose pension is affected by the changes from 20 September 2009 can continue to be assessed under the rules which applied prior to 20 September 2009, plus an increase of $20.20 a fortnight for singles and $20.30 a fortnight for couples combined. Or they can be assessed under the new rules, which ever provided the higher rate of payment. For example, if you were paid $500 plus $20.20 per fortnight under the previous rules as a single pensioner, but would only be paid $499 per fortnight under the new rules, then the previous rules would apply. 

The relevant pension changes that applied from 20 September 2009 were:

  • the maximum base rate of pensions for all pensioners was increased, apart from those on DSP for those under 21 with no dependent children
  • the income test withdrawal rate was increased from 40 cents to 50 cents for each extra dollar of private income above the income test ‘free area’
  • the additional income test free area for dependent children was removed
  • a work bonus was introduced which means that half of the first $500 of employment income earned a fortnight is disregarded under the income test for pensioners over Age Pension age (in addition to the usual operation of the income test free area).

To find out more about the legislation that applies to transitional payment rates, visit DSS.gov.au

Related articles:
Age Pension increases
Asset threshold changes explained

Written by Debbie McTaggart


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