Millions of pensioners are set to benefit from a payment increase. On Monday, Services Australia announced an increase in allowances for those on the Age Pension, among other payments. This increase amounts to an extra $14.80 per fortnight for singles, and $22.40 per fortnight for couples, making it the single biggest increase in seven years. The last time an increase of this magnitude was released was in 2014.
Payments are usually increased biannually — on March 20 and September 20 — in accordance with inflation and cost of living. The formula which is used for determining a suitable increase in the Age Pension rate takes into account the financial pressures which impact pensioners’ lives. These increases ensure that the 2.58 million Australians who access the Age Pension are receiving a liveable income.
Social Services Minister, Anne Rushton, spoke with The Australian, stating “This change puts money in the pockets of all Australians who rely on our social security system and, in particular, older Australians”.
These increases come after a change in the Age Pension income and asset means tests earlier this year. In June it was announced that from July 1, 2021, new income and assets limits would apply for those claiming, or applying to claim the Age Pension. This updated indexation allows pensioners to conduct a more accurate calculation of the total amount they could claim, based on their income and assets.
The means test system applies tests based on income earned, and on assets held by the claimant. Ultimately, whichever test results in the lowest pension rate is the one which applies to the claimant. This means that many people can pass one test, yet fail the other, resulting in ineligibility for the Age Pension.
For prospective or already-claiming pensioners, the assets test threshold for a single investor is $270,500, and $405,000 for couples. Each $1,000 worth of assets over these thresholds cuts $3 off of your total pension per fortnight. It is worthwhile keeping in mind that primary dwellings are exempt from inclusion in the assets test, regardless of its market value.
Similarly, the income test combines the earnings of couples, and assesses them as one entity. The ins and outs of the Services Australia assets and income means tests are outlined here.