Today’s announcement of an increase to the age pension is a welcome relief. But the system needs to be adapted to ensure pensioners are better able to cope with inflation.

From 20 March 2023 the maximum rate of the single age pension will rise by $37.50 per fortnight (taking the single age pension from $1026.50 to $1064) and for couples, by $56.40 per fortnight (taking their payment from $1547.60 to $1604 combined). 

Chief Advocate Ian Henschke said under the current system, pensions are adjusted every six months, in March and September but this leaves recipients playing a costly game of catch up when inflation is unusually high. 

“The Federal Government should index the pension every three months during times of high inflation to help those most vulnerable,” Mr Henschke said. 

“Pensioners will welcome today’s increase yet rightly worry there won’t be another rise in payment until September. They’ll have to wait six months and then play catch-up again. The increase in pension is because the cost of living has been driven by an inflation rate of 7.8% over the past six months." 

Other payments will also increase. The maximum rate of Commonwealth Rent Assistance for a single without children will increase by $5.60 to $157.20 per fortnight.

Some income and asset limits may also change due to indexation.

“National Seniors Australia recognises our system adjusts for rising cost of living, but it is critical during times of high inflation that we adjust four times a year instead of two,” Mr Henschke said. 

“For pensioners struggling to cover necessities such as food, fuel, and electricity, how often is as important as how much.

"We also want a two-year trial for pensioners who want to work and work more. We need an NZ style system that eliminates Centrelink reporting and requires pensioners to pay an agreed rate of income tax. It's simple, fair, will help solve critical workforce shortages and boost the budget bottom line.

"We will continue to fight for a system that improves people's lives. In our budget submission we have called on the government to index the pension quarterly during times of high inflation and to let pensioners work. Both measures will boost confidence in the retirement system and grow the economy.”