Age Pension Set for Biggest Boost Since 2023 as September Indexation Hits – Here’s What’s Changing

More than 5.3 million Australians will receive higher social security payments from September 20, as the twice-yearly indexation of Centrelink payments takes effect. For pensioners specifically, it’s shaping up to be the largest increase since March 2023.

How much more will pensioners actually receive?

From September 20, the maximum Age Pension rate for a single pensioner will rise by $36.80 a fortnight, bringing it to $1,237.70. Couples receiving the combined maximum rate will see an increase of $55.60 a fortnight, taking their combined payment to $1,866.00.

If you’re already receiving the pension, this increase is applied automatically – there’s nothing you need to do to receive it. The same indexation boost also applies to the Disability Support Pension and Carer Payment.

It’s not just the Age Pension

The September indexation round covers a wide range of payments beyond the pension. JobSeeker Payment recipients will also see an increase, with the maximum rate for a single person without children rising by $16.20 a fortnight to $833.70. Youth Allowance, Parenting Payment and ABSTUDY recipients will also receive higher payments, and Commonwealth Rent Assistance is set to rise by between $2.93 and $4.20 a fortnight, alongside an increase to the relevant rent thresholds.

Altogether, the federal government says the changes represent around $4 billion in additional cost-of-living support for Australians relying on income support.

The important catch: deeming rates are also going up

Here’s the detail worth understanding properly if you hold savings, shares or other financial assets, since it could affect how much of that pension increase you actually see. From September 20, social security deeming rates will also rise. The lower deeming rate will increase from 1.25 per cent to 1.75 per cent, applying to financial assets up to $66,800 for singles and $110,600 for couples combined. Assets above those thresholds will be deemed at 3.75 per cent, up from 3.25 per cent.

Deeming rates are used by Centrelink to estimate how much income your financial assets are generating, regardless of what they’re actually earning you, and that assumed income feeds directly into the pension income test. In practice, this means some part-pensioners with meaningful savings or investments could see their pension increase partly, or in some cases entirely, offset by the higher deeming assessment.

The Council on the Ageing (COTA) Australia has welcomed what it describes as a “measured approach” to the deeming rate changes, while also calling on banks to ensure the interest rates pensioners actually earn on their savings keep pace with the rate Centrelink assumes they’re earning.

Other thresholds moving at the same time

Indexation day isn’t just about the headline pension rate. Asset test thresholds, the upper limits determining eligibility for a part pension, are also reviewed and typically increase at the same time, which can bring some previously ineligible retirees into part-pension eligibility for the first time. Income test thresholds for both full and part pensions are reviewed alongside the rate change too. If you’ve previously been told you don’t qualify, it’s worth checking again after September 20 rather than assuming that remains permanent.

The wider picture

The pension boost lands in the same month other everyday costs are also moving. From September 1, Australia Post increased the price of a standard stamp by 15 cents to $1.85, following approval from the ACCC – a reminder that while support payments are rising, so too are some of the costs pensioners are managing day to day.

For anyone wanting to understand exactly how the changes might affect their own circumstances, National Seniors Australia has published an online Age Pension Indexation Estimator, though Centrelink will confirm your exact new entitlement directly after September 20.

This article is general in nature and isn’t personalised financial advice. For guidance specific to your situation, contact Services Australia directly or speak with a licensed financial adviser.