Budget Fact Sheet - Seniors and Age Pension
Australians are living longer, and our population is ageing rapidly. While we have more retirees than ever before, we also have many people who are working longer or are able to support themselves financially after they retire. We need a well-targeted means tested income support system that delivers support to those most in need, while encouraging self-provision whenever possible.
What was announced in the 2014 Budget?
The Budget is part of the Australian Government’s Economic Action Strategy to build a strong, prosperous economy and a safe, secure Australia.
Changes were announced in the 2014 Budget to ensure the Age Pension system is sustainable and able to meet future demand.
From July 2025, the qualifying age to receive the Age Pension will continue to increase from 67 years, by six months every two years, until it reaches 70 years in July 2035. This change does not affect people who currently receive the Age Pension or those born before 1 July 1958.
From July 2017, the rate of the Age Pension (and other pension payments) will be indexed according to the Consumer Price Index (CPI) only, which will make indexation arrangements consistent across social security payments and equivalent Veterans’ Affairs payments, except for the Defence Force Retirement Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme, which have different arrangements. The change will take effect at the September 2017 indexation point.
There will be changes to the income test and assets test to help ensure the Age Pension is well-targeted into the future and to slow growth in the cost of pensions. This also recognises that some pensioners have the capacity for greater self-provision. Changes include:
- Income test and assets test free areas will be fixed for a period of three years from 1 July 2017.
- From 20 September 2017, the deeming thresholds for financial investments will be reset. The upper deeming rate will apply above these reduced thresholds.
The Government will not include an individual’s principal home in the assets test.
Other changes include:
- The Seniors Supplement for Commonwealth Seniors Health Card holders will no longer be paid beyond the June 2014 quarterly payment.
- From January 2015, eligibility for Commonwealth Seniors Health Card holders will be more equitable and in line with the Age Pension by including income from superannuation account-based income streams in the income test. This will not apply to existing superannuation account-based income streams held by current card holders.
- From September 2014, more people will be eligible for the Commonwealth Seniors Health Card because the income threshold will be indexed annually in line with the CPI.
- Age pensioners and Commonwealth Seniors Health Card holders will continue to receive the Energy Supplement (formerly the Clean Energy Supplement), with the rate of payment as of 30 June 2014 fixed for future payments.
- The previously announced Housing Help for Seniors pilot will not proceed.
- These changes will save the Budget more than $2.1 billion over five years.
- Increases to the age at which people qualify for the Age Pension will be gradual.
- From July 2025, the qualifying age to receive the Age Pension will continue to increase from 67 years, by six months every two years, until it reaches 70 years in 2035.
- Changes to automatic indexation arrangements for pensions coming into effect in 2017–18 will see the pension rate pegged to rises in the CPI only. The change will apply to Parenting Payment Single from 1 July 2014 and will take effect at the September 2014 indexation point. This will bring pension indexation into line with indexation arrangements for all other social security payments.
- Indexation changes to payment rates apply to recipients of the Age Pension, Carer Payment, Disability Support Pension, Parenting Payment Single and other pension payments, including equivalent Veterans’ Affairs payments.
- Fixing the value of the income test and assets test free areas for three years from 1 July 2017 will help ensure the Age Pension is sustainable and well-targeted into the future.
- While there will no longer be carbon pricing, the Energy Supplement will continue to be paid to pensioners, income support recipients, family assistance recipients, Commonwealth Seniors Health Card holders and veterans.
For more information about this measure and other Department of Social Services’ Budget measures, go to www.dss.gov.au
For information about the 2014 Budget, go to www.budget.gov.au