- 18 March, 2020
Age Pension - good news and some bad!
On the 20th of March, all age pensioners will receive a small increase in their pension payments.
Please note this has nothing to do with the Government’s stimulus package in response to the Coronavirus.
On the 20th of March and September every year the age pension is adjusted, based on the Australian Bureau of Statistics evaluation of the Consumer Price Index (CPI), Male Total Average Weekly Earnings, and the Pensioner and Beneficiary Living Cost Index.
It is a complicated process, but importantly, it will mean that the age pension for a single person will increase from $933.40 per fortnight to $944.30 per fortnight and for a couple the age pension will increase from $703.50 per fortnight each to $711.80 per fortnight each.
This increase is in addition to the Government’s one-off stimulus payment of $750, which will be paid to pensioners on the 31st of March.
For age pensioners who have monies invested in shares or managed funds, there is another little snippet of good news.
Every March and September, Centrelink and Veterans Affairs complete an automatic review and update of the share and unit values of these investments. Unfortunately, as a result of the extreme volatility of the world share markets over the last few weeks, pensioners invested in these sectors will have seen a fall in the value of their investments.
The snippet of good news is that this review should see a further increase for most pensioners invested in these areas as a result of a fall in the asset values and a decrease in the deemed income that would be assessed.
Further good news will arrive for part rate age pensioners assessed under the income test on the 1st of May. The deemed interest rates used to assess income on a person’s financial assets – bank accounts, shares, managed funds, post January account-based pensions etc. – will decrease from 1% and 3% to 0.5% and 2.5%. This again, should result in an increase in the age pension for part rate pensioners assessed under the income test.
More good news - for some residents in Aged Care facilities, changes to the deemed interest rates and downward reassessment of their investments in shares and managed funds may also see a decrease in the Means Tested Care Fee that they are paying.
However, with all this good news there is some bad news as well.
As I have mentioned, on the 20th of March and September every year the age pension increases; this increase will mean the Basic Daily Fee which all residents pay in an age care facility will also increase. This Friday, the Basic Daily Fee will jump from $51.63 per day or $722.82 per fortnight to $52.25 per day or $731.50 per fortnight.
The reason for the increase is straight forward. The Basic Daily Fee is based on 85% of the base age pension. So, when the age pension increases the basic daily fee increases.
I can understand that if you are reading this article, you may be starting to scratch your head wondering how will I know if after all these changes have occurred, over the next few weeks, that I am receiving my correct entitlement?
You will receive letters from Centrelink or Veterans Affairs advising you of the changes. These my help or they could confuse you even further.
My suggestion - you need to speak to someone, and I don’t mean your best friend or your neighbor. Talk to an expert someone who understands the pension’s income and asset test and how it relates to your circumstances.