According to the most current Consumer Price Index (CPI) figures for the June quarter, the Age Pension will grow by at least 2.2 percent come September indexation time.
Even though the national headline inflation rate dropped from 7 to 6 percent during this quarter, the CPI nevertheless fell, which is good news for both consumer prices and the cost of living. However, it raises the possibility that the September 20, 2023, Age Pension increase may be less substantial than anticipated.
A 2.2 percent increase for single pensioners equates to a monthly increase of $23, or $1087. Couples would pay a total of $1639 per fortnight after the increase of $35.
This anticipated growth represents a significant drop from the March rate of 3.7 percent, which economists and campaigners deemed to be insufficient.
This anticipated increase fits with a continuous declining trend, according to the Combined Pensioners and Superannuants Association (CPSA).
“The inflation rate is clearly on the decline. As a result, the CPSA predicts that pension increases after the September 2023 indexation will be less significant.
While this may be depressing, it also shows that the price increase has not been as significant as previously thought.
Indexation is applied to all government payments twice a year, on March 20 and September 20.
Even though it hasn’t been finalized, the Age Pension’s actual indexation rate is anticipated to be announced in the following month.
On ABC’s Insiders, the Minister for Social Services stated that the September boost will likely be the last step taken this year to reduce the cost of living.
“The changes we are implementing—whether it pertain to Rent Assistance or JobSeeker — are structural modifications,” said the minister of social services. The increases will be applied continuously. As a result, the situation when it comes to last year’s surplus is very different from the continuing and fundamental reforms we have implemented. These changes have been adjusted to be prudent and benefit those who are struggling.
Age Pension Indexation Calculation
Twice a year, in March and September, respectively, the Age Pension is adjusted to reflect inflation.
Three metrics—the CPI, the Pensioner and Beneficiary Living Cost Increase (PBLCI), and the Male Total Average Weekly Earnings (MTAWE)—are used to calculate the rate of increase.
The CPI is used as a gauge of price changes for a broad ‘basket’ of goods and services that the typical family commonly uses.
Similar to this, the PBLCI employs a similar strategy, but the items in the basket are chosen to better resemble the purchases of someone relying on a pension.
After indexation, Centrelink evaluates the PBLCI and the CPI and applies the one that results in a bigger rise in pension.
To make sure that the rates continue to be in line with community living standards, this rate is then compared to the MTAWE and modified.
Is a 2.2% rise adequate, or should the government take additional action to assist senior Australians who are struggling?
