A change in Prime Minister and an increase in my age pension… did Malcolm make this his first priority as the new PM?
No, the change in the PM had nothing to do with an increase in the age pension.
Every 20 March and 20 September, the age pension is adjusted. This is based on a rather convoluted mathematical formula, which takes into account the movement in the Consumer Price Index (CPI) and the Pensioner and Beneficiary Living Cost Index (PBLCI).
This is then benchmarked to 25 per cent of Male Times Average Weekly Earnings (MTAWE).
If you think this is a long-winded exercise you are correct but for the single age pension this is not the end.
Once the index figure, which is derived when the formula mentioned above is completed, it is then only applied to the maximum benefit rate payable to a couple to come up with the new age pension rate payable to couples. To ascertain the new single rate of age pension the new rate payable to couples is multiplied by 66.33 per cent..
Simple… but what are the new pension rates you ask?
Single $860.20 $867.00
Couple $648.40 each $653.50 each
The other interesting fact is that when the pension increases, a small number of people whose assets or income may have precluded them from an age pension entitlement previously, now find that they do have an entitlement as a result of an increase in the asset and income levels at which no entitlement would be payable.
SINGLE Previous New
Upper income threshold $48,942 per annum $49,296 per annum
Upper assets threshold $779,000 $783,500
COUPLE Previous New
Upper income threshold $74,921 per annum $75,452 per annum
Upper assets threshold $1,156,500 $1,163,000
So if you do think that you may now have an entitlement make sure that you talk to your financial adviser or call Centrelink’s hotline on 132 300.
The downside to the increase in the age pension comes for those people who are residing in nursing homes, regardless of whether they are a pensioner or a self-funded retiree, the basic daily fee will increases from $47.49 per day to $47.86 per day.
Why does this payment increase?
It is based on 85 per cent of the basic single age pension, so it follows every time the pension increases the basic daily fee also increases.
So as a resident you will possible see your age pension increase by $6.80 per fortnight and your basic daily fee increase by $5.18 per fortnight – a net gain of $1.62 per fortnight! As my mum used to say: “Always be grateful for small mercies”.
And it is certainly a little difficult to get any smaller then a net gain of $1.62 per fortnight.
For those pensioners who have monies invested in the share market or in managed funds, the increase in your pension may not be the only adjustment made to your pension in March and September. Your pension can also be adjusted automatically depending on the movement in the markets to reflect the values of your investments at this time.
While you will receive notification re the changes, it can be quite confusing and so now could be a very good time to talk to me or your financial adviser about your current situation to ensure you are receiving your correct pension entitlement.