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The Age Pension remains a crucial financial cornerstone for many Australian retirees. According to Rice Warner, approximately 39% of Australians of Age Pension age are receiving the full Age Pension, while an additional 24% are on a part pension. With the new changes effective from September 20, 2023, it’s important to revisit what these mean for you—whether you are a prospective retiree or already drawing from the pension.

What Are the New Changes in Age Pension Rates?

Effective from September 20, 2023, through March 19, 2024, the maximum full Age Pension will increase by $32.70 per fortnight for a single person and $24.70 per fortnight per person for a couple. The detailed breakdown is as follows:

Single: $1,096.70 per fortnight (approximately $28,514 per year)
Couple (each): $826.70 per fortnight (approximately $21,494 per year)
Couple (combined): $1,653.40 per fortnight (approximately $42,988 per year)

The rate for couples separated due to illness will each receive the single rate, which combined is $2,193.40 (approximately $57,028 per year).

The increase also affects the individual components that make up the Age Pension. For a single person, the maximum base rate will increase by $31.00 to $1,002.50, the maximum pension supplement will be $80.10 with a $1.70 increase, and the energy supplement remains constant at $14.10.

How Are the Asset and Income Limits Adjusted?

Apart from the pension rate increase, the upper thresholds for the assets and income tests used to determine eligibility for a part Age Pension have also been updated:

Full Pension Asset Limits

Single Homeowner: $301,750
Single Non-homeowner: $543,750
Couple (combined): $451,500 for both homeowner and non-homeowner

Part Pension Asset Limits

Single Homeowner: $667,500
Single Non-homeowner: $909,500
Couple (combined): $1,003,000 for homeowners and $1,245,000 for non-homeowners

The limits for full and part pension are also applicable for couples separated due to illness.

The Role of Indexation

These pension rate adjustments and asset test changes are part of a regular review that happens in March and September every year. The Australian Bureau of Statistics evaluates these based on various economic indicators like the Consumer Price Index (CPI), Male Total Average Weekly Earnings, and the Pensioner and Beneficiary Living Cost Index.

Other Income Support Updates

While the focus is primarily on the Age Pension, it’s worth noting that other income support payments like the JobSeeker Payment, Parenting Payment Single, and Disability Support Pension will also be indexed.

In particular, Single JobSeeker Payment recipients will receive a base payment of $749.20 per fortnight, a $56.10 increase. This marks the largest permanent dollar increase ever to the main adult unemployment benefit in Australia.

The Larger Picture: Government’s Stand and Future Implications

Minister for Social Services, Amanda Rishworth, and Minister for Veterans’ Affairs, Matt Keogh, have emphasized the government’s commitment to adjusting social security payments in line with the cost of living. More than 5.5 million Australians will receive increased income support payments, effective from September 20. This is on top of a $14.6 billion cost of living package announced in the May Budget.

What Does This Mean for You?

If you’re a Wealth Factory client or considering becoming one, these changes could have a significant impact on your retirement planning. While the Age Pension serves as a safety net, additional financial planning strategies can optimize your income streams in retirement.

1. Review Your Asset Portfolio

Considering the new asset limits, a review may help you qualify for a part or full pension.

2. Update Budget Plans

The increase in pension rates may seem modest but can add up over the year.

3. Holistic Financial Planning

The Age Pension is just one part of a comprehensive retirement plan. Assess how it fits into your larger financial strategy.

4. Consult a Financial Adviser

Expert guidance can provide customised solutions tailored to your needs.

Remember, these rates and limits will likely be reviewed again on March 20, 2024. Staying updated on these changes can be crucial for effective financial planning.

For personalised financial advice, consult Wealth Factory at 07 4659 5222.

Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Always consult a qualified financial planner for personalised advice.