The Australian government has announced indexation changes to the age pension, set to take effect on 20 March. These adjustments will result in a modest increase in pension payments, alongside revised income and asset thresholds that determine eligibility for a full or part pension.
According to Super Guide and The Motley Fool, these updates will influence how much retirees can earn and own while still receiving financial support. While the changes aim to keep pace with inflation, their full impact on pensioners remains to be seen.
How Much Will the Age Pension Increase?
The upcoming age pension adjustments will introduce moderate increases in payments for both single pensioners and couples, aligning with the government’s efforts to ensure financial support keeps pace with the rising cost of living.
While the increases are relatively small, they are part of the regular biannual indexation process, designed to help maintain the purchasing power of pensioners amid economic fluctuations.
From 20 March, single pensioners will see an increase of $4.20 per fortnight, bringing the base rate to $1,051.30 per fortnight. With supplements included, the total payment will reach $1,149 per fortnight.
For couples, each partner will receive an additional $3.20 per fortnight, raising the base rate to $792.50 per fortnight per person. When including supplements, the total payment will amount to $866.10 per partner per fortnight.
These adjustments are part of the ongoing indexation process, ensuring that pension payments remain responsive to inflation and economic conditions.
Updated Asset Limits for a Full and Part Pension
To qualify for a full or part pension, retirees must meet the assets test, which considers savings, investments, and superannuation but excludes the value of their primary residence.
The current limits for a full pension will remain unchanged until 30 June :
- Single homeowners: Can own up to $314,000 in assets.
- Single non-homeowners: Can own up to $566,000.
- Couple homeowners: Can own up to $470,000 in assets (combined).
- Couple non-homeowners: Can own up to $722,000.
However, the upper limits for a part pension will be adjusted from 20 March :
- Single homeowners: The upper asset limit will increase from $695,500 to $697,000.
- Single non-homeowners: The threshold will rise from $947,500 to $949,000.
- Couple homeowners: The upper limit will increase from $1,045,500 to $1,047,500.
- Couple non-homeowners: The cap will rise from $1,297,500 to $1,299,500.
These increases mean that some retirees with slightly higher assets may now qualify for a part pension.
Changes to the Income Test for a Full and Part Pension
Pensioners must also pass an income test to qualify for a full or part pension. The full pension income limits will remain unchanged, meaning single pensioners can earn up to $212 per fortnight and still qualify, while couples (combined income) can earn up to $372 per fortnight and remain eligible.
For a part pension, the upper income limits will increase on 20 March. The income cut-off point for single pensioners will rise by $9.20 to $2,510 per fortnight, while for couples (combined income), the upper limit will increase by $14 to $3,836.40 per fortnight.
This means retirees earning above the full pension threshold but below these new limits will remain eligible for a part pension.
What Assets Are Included in the Test?
The assets test considers various financial holdings, including ASX and international shares, bonds, investment properties, superannuation, and cash in savings accounts. However, the value of one’s home is not included in the assessment.
Non-homeowners are allowed a higher asset threshold before their pension is reduced.
Australians become eligible for the age pension when they reach retirement age, which is 67 years for those born on or after 1 January 1957.
