The size of the September Age Pension increase has become clear with the release of the Pensioners and Beneficiaries Living Cost Index (PBLCI).
It followed hard on the heels of the June quarter Consumer Price Index (CPI) figures and the Reserve Banks’s fourth consecutive monthly rate rise. All indicators pointed to a sizeable pension increase to alleviate some of the burden on retirees struggling with rising living costs.
The Australian Bureau of Statistics’ Living Cost Indexes also showed the cost of living for employees and self-funded retirees rose 1.5 per cent in the second quarter.
Pensioners and beneficiaries faced a smaller 1.3 per cent rise because healthcare costs declined over the three-month period, in part because more consumers qualified for Pharmaceutical Benefits Scheme (PBS) subsidies, AAP reports.
Read: RBA rate rise risks leaving age pensioners behind
Over the 12 months to June, the cost of living for all groups rose by between 4.6 and 5.2 per cent, the ABS says.
How much will the Age Pension increase?
The twice-yearly indexation of the Age Pension – in March and September – is anchored to the CPI and the PBLCI, whichever is higher.
The Combined Pensioners and Superannuants Association (CPSA) reports that the Age Pension will increase by 4 per cent because between 1 January and 30 June, prices rose by 4 per cent.
The CPSA explains that the PBLCI showed an increase of 3.5 per cent, but because the CPI increase was 4 per cent, the latter would be used for the September increase.
Read: How to prepare for rising inflation and interest rates
“Centrelink will first calculate the partnered rate by adding 4 per cent,” the CPSA says. “The single rate will be calculated by taking 66.6 per cent of the partnered rate.
“This indexation information is not entirely accurate, because the pension consists of the basic pension plus the pension supplement plus the energy supplement.”
The CPSA says the energy supplement is not indexed at all and the pension supplement, which contains a number of historical supplements including compensation for GST, is indexed according to the CPI.
Pensioners doing it toughest
Treasurer Jim Chalmers says the government is committed to ensuring pensioners don’t fall further behind as inflation rises.
“We understand that pensioners are doing it incredibly tough when it comes to their costs of essentials like groceries, electricity and petrol and in other parts of the household budget,” he said last month.
“We don’t want to see pensioners fall further and further behind. And that’s why this indexation, which tries to keep up with the skyrocketing cost of living, is so important.”
In March, the single Age Pension rate, with supplements, increased by $20.10 to $987.60 a fortnight. For each member of a couple, fortnightly payments with supplements went to $744.40, an increase of $15.10.
Indexation of the Age Pension has become a hot issue, with prominent critics saying it should occur four times a year rather than two when inflation is surging.
Read: Review Age Pension rate every quarter, say experts
National Seniors chief advocate Ian Henschke says the adjustment cycle should be quarterly at times of high inflation, arguing that in real terms, the pension increase that was delivered in March had quickly been outstripped.
“The next Age Pension increase is not until September and by then inflation will have leapt ahead of the pension and [age pensioners] will be left even further behind,” he said. “It’s like the hare and the tortoise – no sooner do we try to get ahead of the cost of living and any increase has already been gobbled up by soaring inflation.”
What will a 4 per cent Age Pension increase do for you? What’s your view on more regular pension reviews? Have your say in the comments section below.
Updated 9 August 2022 8.02am. Article previously titled ‘Size of September Age Pension increase revealed’.
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Again pensioners have been screwed over. We know costs have gone up at least 5.2% but they are only giving us 4%. They comment about healthcare costs declined in the past 3 months, that did not happen for me and I am sure it did not happen for a lot of people. Everything is increasing and I mean EVERYTHING!! Perhaps the government want pensioners to go further and further behind our choices are heating or food! So we can either freeze to death or starve to death. How Out Of Touch Are These People!!
The pension should be equivalent to the basic casual wage. Currently, that’s around $28 per hour. Paid at 38 hours per week (the standard weekly working hours), that would be around $1,064 per week for each individual, with no reduction for couples living together.
This would alleviate much of the burden on pensioners’ cost of living. Add to that and make pensions tax-free.
Otherwise, permit pensioners to work as much as they like and earn as much as they can while making the pension tax-free.
Time to get real Albo…
Yes right on the nail. No evidence yet of Albo or Jim Chalmers doing the right thing to allow retirees to work without affecting pension or tax. We all need to work together to make this happen sooner. Their real plan they are not telling us is to massively up the immigrant numbers to balance the books and give jobs to them rather than us.. Someone needs to confront Albo to come clean.
Self funded retirees with savings upto $2M should receive 30% of the age pension payment with all self funded retirees with savings over $2M receiving 10% of the age pension. This then gives an incentive to save during your working years.
I agree with Wayne Ross’s comments re self funded retirees. I have been independent since I retired 12 years ago and now at age 72, am seeing my superannuation brutally smashed without any form of help coming our way. Self funded retirees are doing the Govt a favour by not being a pension beneficary, however our funds don’t last forever.
We don’t get any concessions for house rates, water and other costs where as a pensioner gets this along with twice yearly increases from the Govt…….plus certain medical matters also attract a free hand from Govt and having the Govt issued concession vcard.
Self funded retirees bare taken for greanted and we have worked hard during our working lives to be independent in retirement years. I drive a 2007 motot vehicle and my home is mortgae free and I have no debt. b
I do not know what the Government thinks Pensioners are as That rise is lousy and the ones that need to pay rent out of their pension does not leave much over to live on as they need to pay for electricity, gas plus buy food and other things, so how do they suppose to live on fresh air.
Now they are saying that elderly people need to go out and work part time to fill the areas were nobody wants to work ( young ones ), the only trouble is that nobody wants to hire them as they cannot get work cover insurance to cover them if they are 70 or older.
I thought that Labor is suppose to help the people or are they turning into the other mob that was voted out.
After a lifetime of hard work, and paying taxes to support the Aged Pensioners of yesteryear, time has brought us to our own retirement, with many Aged Pensioners suffering age related illnesses at a time when the gap between Medical Fees charged and the applicable Medicare Rebates is widening. To see a Medical Specialist, the Fees are much higher, and the Medicare Refund leaves you with a considerable out of pocket cost. People frequently need to see Specialists in the Private System, because you could meet your demise waiting to be allocated an appointment in the Public System.
All I can say is that the current rate of inflation for every conceivable item and/or service available in Australia continues to climb, and so additional financial pressure keeps mounting up on our already struggling population, leading us towards the inevitable further lowering of our living standards.
I am not at all confident about inflation reducing any time soon. Apart from the boom and bust of Real Estate throughout my life, other costs of living always rise, and never return to what they once were. The fuel increases we are currently experiencing may level out, but it is hardly likely we will ever return to under $2 per ltr ; and apart from seasonal and climatic influences on fruit & vegetable supplies and prices, general groceries and other goods & services ALWAYS continue to increase.
Have you ever experienced an overall reduction in Cost of Living expenses, because I certainly have not!
It must be recognised that living expenses for those on fixed incomes like Job Seeker, and Disability and Aged Pensions, continue to be left behind.
The more prices rise, the more GST is raked into the coffers, but I am afraid more businesses will suffer because many people will just not have the spare cash to buy anything other than the very basics of living. That is the bottom line and reality for many people on Job Seeker, and Disability & Aged Pensions. The CPI increases to Pensions has reflected a totally out of touch, unrealistic, and useless system that in no way reflects the true situation that exists in the real world.
I have never known it so bad for pensioners to try and manage. And from my circle of friends, it is SO much harder for singles. Don’t get me started on couples crying that they should both get the single pension! All I can say is – just pray one of you doesn’t leave/die, because changing to the single pension will REALLY show you how lucky you had been.
I just received my house/contents insurance renewal – has gone up 16%. My health insurance – up 7.5%. Car insurance – up 12%. I needed to see a specialist recently – charge was $385, rebate was $135. I cancelled. A close friend aged 78 was supposed to see Dr and have scans done – he couldn’t afford it so cancelled. He has just got out of hospital after major surgery for an Abdominal Aorta Dissection. Normally living alone, he was (luckily!), out for dinner with friends when he collapsed and was rushed to hospital. He was lucky enough to survive, but has totally knocked him for 6. Had he been alone at home, he would be dead.
Talk of increasing the amount seniors can earn before it affects their pension is simply that – talk. Most employers do not want seniors! Many of my senior friends only scrape through by working the underground economy…casual baby sitting, pet sitting and minding, dog walking, cleaning, lawn mowing, odd job painting, house repairs. So many have applied for ‘normal’ jobs – can’t get a look in. Seniors really are the forgotten and unwanted citizens – and I seriously doubt this, or any government, wants to or will do anything to change that.
Female in mid 60’s on disability pension (through no fault of my own) and pay $582/fortnight rent for a small one bedroom unit (more than half my pension which has increased approximately $80/week in the last 12 months)..
I don’t know how long I can survive these circumstances.