Increase in pension rate

The Government introduced these changes as part of the Secure and Sustainable Pension reforms.

About the increase in pension rate

From 20 September 2009, the maximum rate of single pension was increased by $65 a fortnight. This included an increase of $60 a fortnight in the base pension and $5 a fortnight for the new Pension Supplement.

Part-rate singles received a partial increase in the pension, with the exact amount depending on their income and assets. The minimum increase for part-rate pensioners was $20.20 a fortnight.

From 20 September 2009, all couples received a pension rate increase of up to $20.30 a fortnight combined, regardless of their income or assets.

These increases were on top of the regular indexation of pensions which was due in September 2009.

In addition to the pension rate increase, pensioners also began to receive the Pension Supplement from 20 September 2009. The Pension Supplement combines the existing Telephone Allowance and Utilities Allowance, which used to be paid quarterly, as well as the GST Supplement and Pharmaceutical Allowance, which was already paid fortnightly with the pension.

The final quarterly payments of Telephone Allowance and Utilities Allowance were paid with the 1st pension payment received after 20 September 2009, together with the 1st payment of the Pension Supplement.

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Increase in the pension rate video

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Increase in the pension rate and the Pension Supplement [Transcript, 2 pages, RTF: 17KB]

Changes to the pension income test

The rate at which excess income affects the pension changed from 40 cents in the dollar to 50 cents in the dollar for singles. For couples, it changed from 20 cents each in the dollar to 25 cents each in the dollar.

The pension income test 'free area' is currently $142 a fortnight for singles and $248 for couples combined. Pensioners with private income below these amounts were not affected by these changes.

The higher income test free area for pensioners with dependent children was removed.
A new Work Bonus for pensioners over age pension age is now available. Under the Work Bonus, half of the first $500 of fortnightly employment income is disregarded from the income test for pensioners over age pension age. This means the maximum that can be disregarded is $250. This is in addition to the normal allowable income free area.

Pensioners over age pension age have their employment income assessed fortnightly. The Work Bonus applies to pensions assessed under the new income test but is not used in calculating the rate for pensions assessed under the transitional provisions.
Centrelink will assess the rate of pension using the employment income earned in the fortnight immediately prior to payment. This applies to all pensioners who are over age pension age.

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New income test taper and transitional payment rates video

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A transcript of the video is available:

New Income Test Taper and Transitional Payment Rates [Transcript, 1 page, RTF: 13KB]

Transitional provisions

Transitional provisions protect the entitlements of pensioners who were receiving pensions on 19 September 2009. These pensioners are now assessed under both the former means test rules and the new rules. If the new rules produce the same or a higher total income for a pensioner, their entitlement will be assessed under the new rules permanently.

If these pensioners would be worse off under the new rules, they are paid a transitional rate based on the former rules. The transitional rate continues to be payable (subject to normal entitlement rules) until the pensioner would get the same or a higher rate under the new pension rules. For example, the transitional rate might apply until a pensioner begins to earn employment income, or earns more employment than usual. Another example would be when a transitional rate pensioner earns less income than usual and so becomes eligible for the full pension, or if they have an increase in income which would make them ineligible for a pension.

Once a transitional rate pensioner has been assessed and found to be equal or better off under the new rules, they will then be assessed under the new rules permanently, even if the change in income is temporary.

Note: Transferring to the new rules is not reversible, even if the change in income is once-off or for a short duration. This should be taken into account if, for example, you are considering a brief change in employment income. A Centrelink Financial Information Service Officer can explain the likely outcomes to you.

Pensioners eligible for the transitional rate received a pension increase of $20.20 a fortnight for singles from 20 September 2009. Couples received a pension rate increase of $20.30 a fortnight combined. The transitional rate continues to be subject to Consumer Price Index (CPI) increases in March and September.

New pension recipients from 20 September 2009 are assessed under the new rules, including the new pension rates.

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