The Age Pension is set for its biannual adjustment on March 20, offering a modest boost to payments for millions of Australian retirees. While any increase is welcome, many pensioners and advocacy groups argue that the rise falls short of what’s needed to keep up with the rising cost of living.
With official figures expected in early March, National Seniors Australia (NSA) has estimated that the maximum fortnightly pension could reach $1,148.10 for singles and $1,732.20 for couples combined—a small increase of $3.70 and $7, respectively.
Compared to the September 2024 hike of $28.10 for singles and $42.40 for couples, this adjustment reflects a slowing inflation rate. But for those struggling with everyday expenses, the real question is: Is it enough?
How the Age Pension Increase Is Calculated
The Australian government adjusts pension payments twice a year—March and September—to help retirees keep pace with economic changes. The increase is based on the higher of two key inflation measures:
- The Consumer Price Index (CPI), which tracks the cost of goods and services.
- The Pensioner and Beneficiary Living Cost Index (PBLCI), which measures cost changes specifically for pensioners.
If the resulting figure is still too low compared to average wages, an additional adjustment is made to ensure pensioners don’t fall too far behind.
While this system helps protect retirees from inflation, NSA and other advocacy groups argue that it doesn’t fully reflect the true cost of living for older Australians—especially when housing, healthcare, and energy bills continue to climb.
Why the Pension Increase Might Feel Underwhelming
Despite the latest adjustment, many pensioners feel the Age Pension isn’t keeping up with real-life expenses. NSA’s research found that older Australians believe they need at least $10,000 more per year for singles and $15,000 for couples to cover basic costs.
To address this, NSA is calling for a one-off boost of $10 per day for singles and $15 per day for couples. This would mean an extra $3,650 per year for singles and $5,475 for couples—a far cry from the current increase of just a few dollars per fortnight.
The Bigger Issues Pensioners Face
Beyond pension increases, NSA and other advocacy groups are pushing for policy changes to improve financial security for retirees. Some key recommendations include:
1. Freezing deeming rates
Deeming rates determine how much income pensioners are assumed to earn from their savings. With interest rates still high, NSA suggests freezing deeming rates to prevent pensioners from losing benefits based on unrealistic income assumptions.
2. Encouraging retirees to work
Many pensioners want to work part-time but face penalties if they earn too much. NSA suggests exempting employment income from the pension income test, allowing retirees to stay in the workforce without fear of losing benefits.
3. Addressing the housing crisis
- Exempting proceeds from home sales from the Age Pension means test (for those over 80 receiving home care).
- Removing disincentives for renting out rooms, such as pension reductions or capital gains tax impacts.
4. Raising gifting limits
Pensioners face strict limits on how much they can gift to family or charity before it affects their benefits. NSA suggests increasing the limit to $17,500 for singles and $26,500 for couples, with future increases indexed to inflation.
