Age Pensioners, and others receiving government support, will see their payments increase on 20 March to keep up with inflation. 

Payments are indexed twice a year, in March and September, to take into account movements in the higher of two inflation measures: the Consumer Price Index (CPI) and the Pensioner and Beneficiary Living Cost Index (PBLCI). This amount is then further increased if it falls below a proportion of a measure of wages. More information about how government support payments are indexed is available here. 

Now that the most recent wages data has been released by the Australia Bureau of Statistics, we have estimated what the pension increase might be. 

The actual calculation is very complicated and involves a long series of steps. For instance, different indexation rules apply to the three separate components of the Age Pension. We won’t know the official figure until it is announced in early March. 

For the time being, we estimate that the maximum Age Pension rate per fortnight (including the base rate, supplement, and energy supplement) will be approximately: 

• Single pensioner: $1,148.10 

• Couples combined: $1,732.20 

Note that this is the maximum Age Pension amount, individuals subject to means testing would receive an amount that reflected their personal financial circumstances. 

If this estimate is correct, it would represent a $3.70 rise for single pensioners and a $7 per fortnight increase for couples combined. This is considerably lower than the corresponding September 2024 increases of $28.10 and $42.40. It reflects the significant reduction in inflation over this time, as the price of everyday goods and services is increasing at a much slower pace.

While the increase reflects changing inflation, many pensioners will be disappointed that the increase appears low.  

National Seniors Australia (NSA) believes there’s a lot more government can do to support pensioners, and we have outlined many of these policies in our recent Federal Budget submission, which you can read in full here. 

Having heard what our members say and want, we’re calling on the government to action the following much-needed policy innovations targeted at pensioners.

Even as headline inflation declines, cost-of-living pressures remain high. These pressures are felt most by those with limited means who struggle with price increases. 

In a recent NSA research report, we found that older people believe the Age Pension does not provide enough for a basic standard of living. The median amount that our survey participants estimated was required for a basic standard of living was $10,000 for singles or $15,000 for couples above the Age Pension. 

As such, we believe the Federal Government should provide a one-off increase to the base rate of the Age Pension of: 

• $10/ day for a single pensioner, and 

• $15/ day for a pensioner couple. 

NSA believes that the government should continue to freeze deeming rates while interest rates remain high and use this time to create a fair and transparent method for calculating deeming rates in the future. 

Deeming rates are used as part of the Age Pension income test, to determine eligibility for the Commonwealth Seniors Health Card, and to determine co-contributions for aged care services. 

The previous method (pre-2012), where the upper rate mirrored the RBA cash rate and the lower rate was a proportion of this, would be a fair approach. Any change to the deeming rate should be phased in when indexation of the Age Pension occurs in March and September. 

This innovation would benefit Age Pensioners who have limited means, providing additional concessions, cheaper services, and support – for example, higher concession rates on energy, council rates, and medicines. 

Income and assets (adjusted for housing wealth) are already used to determine the amount of Age Pension they receive and could be used to determine eligibility for a PCC+ based on appropriate criteria. 

The workforce is crying out for more workers, yet government policies discourage and penalise age pensioners from working and earning.  

Having more older workers would ease workforce shortages, boosting the economy and enhancing the lifestyle of those on a limited income. 

The Federal Government should exempt employment income from the Age Pension income test to simplify the pension system and encourage more older people to remain in the workforce if they need and want to. 

Read more about our Let Pensioners Work campaign here. 

People’s housing needs change as they age. However, there are barriers to moving into more suitable housing, such as impacts on pension payments.  

We recommend that excess proceeds from the sale of the principal home be exempt from the Age Pension means test. Eligibility would be limited to Home Care Package (HCP) recipients aged over 80, to support them in downsizing into age-friendly homes. 

The total amount able to be exempted could be capped, similar to the Downsizing into Super scheme. This will avoid people with significant property wealth receiving an unfair financial advantage from downsizing later in life. 

Disincentives for pensioners wanting to rent out rooms in their home should be removed. These include negative impacts on pension entitlements and liabilities for Capital Gains Tax (CGT). 

Also, the government should create an education program to ensure older people make informed decisions and investigate exempting the principal place of residence from CGT liabilities when renting out rooms.