Big Pension increase but is that enough

Big Pension increase but is that enough

From 20 September 2022 pensioners will enjoy a surprising present from the government – the biggest Age Pension increase since 2010.

In Australia more than 2.6mil people receive some form of the Age Pension payment, 39% of retirees of Age Pension age receive the full Age Pension payment and a further 24% are on part Age Pension.

Pension increase explained:

Currently pension payments are indexed twice a year. That includes Age Pension, Service Pension, Disability Support Pension and Carer Payment. The semi-annual increase is calculated based on the movements of CPI (Consumer Price Index) or PBLCI (Pensioners and Beneficiaries Cost of Living Index).

PBLCI was introduced during Rudd’s government with the idea to keep the level of the disposable income of pensioners in pace with price changes.

Whichever is greater, that number will be applied to the pension increase.

But PBLCI hasn’t really been used at all for years due to Australian wages not increasing.

So what increase of Pension payments can you expect from 20 September 2022?

Singles will receive an extra $38.90a fortnight and couples an extra $58.80 a fortnight.

When we look back, in March 2022, there was also an increase of $20.10 pf for singles and $30.20pf for couples. therefore, if you calculate the full increase in 2022, that is an extra $1,026.50pa for singles and $1,547.60 for couples, which is an increase by 6.1%, again I repeat, the highest in 12 years.

It might sound like a very good news, and it is, but is it enough? Considering that the Reserve Bank is forecasting the inflation rise up to 7.75% by the end of 2022 calendar year, I think our government could have done better. This pension rise is not keeping up with the rise of the cost of essential cost of living.

OK, since we are talking about the rise of pension payments, let’s review current maximum rates payable form 20 September 2022

• • Singles: $1,026.50 pf – $26,889pa
  • Couple per person: $773.80pf – $20,119pa
  • Couple combined: $1,547.60pf – $40,238pa
  • couple separated due to illness – each receive the single rate, therefore combined payment is $2.053.00pf – $53,378pa.

What happens when only one person of a couple is eligible?

If you are a couple, but only one is of Pension Age, therefore eligible to receive Age Pension payments, you will receive a payment of one person in a couple, therefore you will receive $773.80pf, if eligible for the full payment. It is not the case of you receiving singles rate, your payment is based on a couples rate. I received this question so many times, I thought I would quickly clarify this.

View: “Age Pension when one partner is eligible”. I think it can help you understand how to improve your Age Pension in this situation.

Pension Supplement

If you are eligible for the Age Pension, you will automatically receive a pension supplement. If you receive the full Age Pension, then you will also receive the full Pension supplement. When your Age Pension reduces under Income or Assets Test, your Pension Supplement will also reduce proportionally, until it reached the minimum payment.

• • Single – Minimum $40.70 – maximum $75.60
  • Couple living together – Minimum $30.70 each or $61.40 both – Maximum $57.00 each or $114.00 both
  • Couple separated due to illness – minimum – $40.7- each or $81.40 both – maximum $75.60 each or $151.20 both

Rent Assistance

If you are receiving Age Pension, you are a non-homeowner and you pay a rent, you could also be eligible for rental assistance, proving you meet the minimum fortnightly rent payments to qualify for the assistance, which is :

• • Singles – $135.40pf
  • Couples – $219.20pf

If you meet those requirements, and you pay more than these listed amounts, you are entitled to 75cents for rent assistance for every dollar over the threshold, up to the maximum amount.

Maximum fortnightly rent assistance:

• • Singes – $151.60pf
  • Couple combined – $142.80pf

Age Pension increase if you live outside of Australia:

• • Singles- – $772.40pf – $20,082pa – an increase of $29.70pf
  • Couple each – 645.60pf – $16,786pa – an increase of $24.80pf
  • Couple combined – $1,291.20pf – $33,571pa – an increase of $49.60pf
  • Couple separated due to illness, as mentioned before each person is receiving a rate of a single pensioner, therefore $772.40, or $1,544.80 combined – $40,165pa – an increase of $59.40pf

Read: “Retirement overseas and Age Pension” and find out how you can live overseas and still enjoy Australian Pension payments in your bank account.

If you find this retirement preparation confusing, and who doesn’t, then you can easily book a meeting with me. the little “BOOK A MEETING” button is visible on every page, so it is easy. You then will be taken to my personal calendar, and you can choose the time that suits you when we can meet face to face if you are in Melbourne or vie online meeting if you are elsewhere and we can discuss whatever problem you have.

Retirement is a Journey not a Destination, so be well prepared for the Ride