Pensioners have bittersweet news from today’s indexation announcement, with regular fortnightly payments to jump up to $30 but rent assistance support continuing to badly trail marketplace increases.
Minister for Families and Social Services Anne Ruston today announced six-monthly changes in social security payments.
On 20 March, age and disability support pension and carer payment rates will increase by $20.10 a fortnight for singles to $987.60 and by $30.20 a fortnight for couples to $1,488.80.
In addition, asset test limits have been increased which will allow more senior Australians to access a part pension. For example, the asset limit for a single homeowner has been boosted by $6,750 to $599,750 and for a homeowner couple by $10,000 to $901,500.
“Pensioners will see a 2.1 per cent increase to their payments – the largest increase since 2013,” Minister Ruston said.
“This is putting money in the pockets of all Australians who rely on our social security system and, in particular, older Australians.”
The increase in pension payments followed a significant increase in cost of living pressures on older Australians recorded by the Australian Bureau of Statistics in February.
However, the fortnightly maximum rate of rent assistance to pensioners will increase by only $3 a fortnight to $145.80 for single recipients with no children and by $2.80 a fortnight to $137.40 for couples with no children.
This is well below the $19 a week increase in Australia’s median rent between July and December 2021. Renters in regional areas suffered the most, with prices rising by $24 a week.
While pension increases are tied to actual pensioner-specific cost of living data, changes in the Commonwealth rental assistance amount are tied to the general consumer price index rather than rental price data.
Advocacy group National Seniors says an independent pension tribunal is needed to set the rate for the pension and pension supplements to stop it becoming a political football.
National Seniors Australia Chief Advocate Ian Henschke said: “There is a desperate need to particularly focus on Commonwealth Rent Assistance. Renters are the most likely to be living in pension poverty.”
Many over 50 land lease (or lifestyle) community residents access Commonwealth rent assistance, along with retirement village or granny flat purchasers when the purchase price is less than $214,000.
Call to exempt work income
Mr Henschke has also called for the government to exempt work income from the income test. It says the income test unfairly punishes low-wealth pensioners who need to work to boost their income and savings.
Currently an aged pensioner starts to lose 50 cents in the dollar of their pension once they earn $240 or more a week and they pay income tax as well.
“In Australia, only 2.9 per cent of aged pensioners work compared to 24.8 per cent in New Zealand. Pensioners in New Zealand simply work and pay tax without being penalised with the loss of their pension payments,” Mr Henschke said.
“Changing the income test would not be a burden on the budget. Quite the opposite. It would boost GDP and government tax revenue. They would go from being seen as a liability to an asset.”
He said pension rules were also trapping thousands of older Australians in larger, high maintenance homes or pushing them into residential aged care unnecessarily.
“Many older Australians might downsize into something more suitable, but not when selling the family home results in a hit to their pension,” Mr Henschke said. “But, if they go into residential aged care they get an exemption for two years.”
“Allowing high level home care recipients to downsize their home without impacting their pension, will improve their mental and physical health, taking pressure off the residential aged care sector. It will also give them more money to spend and stimulate the economy.”
Find out more
- Pensioners left short-changed as rents soar but government subsidy increases by just $1 a week
- Learn about the different downsizing options on offer, and insider tips on making the move, in our just-released Ultimate Guide to Downsizing 2022.
*The information contained in this article is general in nature and does not take into account any person’s individual objectives, financial situation or needs. It is not intended to imply any recommendation, opinion or advice. You should seek advice from a qualified professional about your particular financial situation, needs and objectives.
