Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 453

Age pension is increasing: what you need to know

Australia’s age pension rose in March reflecting rising inflation and the growing cost of living pressures. This represents a pay rise of just over 2% and is the biggest increase in the payment in almost a decade.

Single pensioners will be $20.10 better off per fortnight, and couples up to $30.20 per fortnight (where both members of the couple are eligible).

Indexation also means that some people who were previously ineligible for a pension may become eligible as the cut-off amounts of assets and income are also increased.

But older Australians receiving aged care need to know that an increase in the pension also means an increase in their Basic Daily Fee. This means they’ll only see $4 of the $20 pension increase.

In this article, we’ll walk through the changes step by step and what they mean for you.

Payments

The maximum rate of age pension payment for singles increased by $20.10 per fortnight from $967.50 to $987.60. The maximum rate for couples increased by $15.10 each from $729.30 per fortnight for each eligible member to $744.40.

A couple where both members are eligible to receive the maximum payment can receive $1,488.80 per fortnight or $38,708.80 per year combined.

Source: Services Australia

The assets and income level before pensions are disqualified under the means tests have also increased.

Assets

For homeowners who are single, the asset test cut-off increased from $593,000 to $599,750. For couples it increased from $891,500 to $901,500.

For couples who are separated by illness, as is the case when one or both move into aged care, the cut-off increased from $1,050,000 to $1,063,500.

*It’s important to remember that the value of your home is not included in these assets.

Income

For singles, the amount of income you can earn before the age pension ceases has increased from $2,115 per fortnight to $2,155.20. For couples, the cut-off has increased from $3,237.20 per fortnight to $3,297.60.

*It’s important to remember that income earned under the work bonus (up to $7,800 per year) is not included. Income from investments is based on deemed income, rather than the actual income earned.

In announcing the changes Minister Anne Ruston said, “This is putting money in the pockets of all Australians who rely on our social security system and, in particular, older Australians.

But older Australians receiving aged care, whether that’s a Home Care Package or residential aged care, need to know that an increase in the pension also means an increase in their Basic Daily Fee.

The Basic Daily Fee you pay towards your cost of aged care is set based on a percentage of the Age Pension. In a Home Care Package, the maximum Basic Daily Fee is set at 17.5% of the basic Age Pension (and applies to people on a Level 4 Package) it was $11.02 per day and has increased to $11.26 per day from 20 March.

In a Home Care Package, the Basic Daily Fee is based on the level of your package:

  • Level 1 was $9.88 per day increasing to $10.08
  • Level 2 was $10.44 per day increasing to $10.66
  • Level 3 was $10.74 per day increasing to $10.97
  • Level 4 was $11.02 per day increasing to $11.26

So, if the fortnightly pension increases by $20.10, up to $3.36 will be needed to meet the increased cost of a home care package.

In residential aged care, the Basic Daily Fee is set at 85% of the basic Age Pension, it was $53.56 per day, increasing to $54.69.

This means that the Basic Daily Fee increase is $15.82 a fortnight, so of the extra $20.10 in Age pension, people living in aged care will only have $4.28 per fortnight to cover increases in their cost of living.

While the Basic Daily Fee does cover some of the cost of living in aged care such as meals, utilities and insurances, many aged care residents need to pay extra or additional service fees to cover alcohol, food, entertainment, and personal services. Personal expenses such as clothing, medications, health care, other insurances, transport, and communication costs remain the responsibility of the resident.

A $4 per fortnight increase in the Age Pension for people living in aged care is definitely a pay cut, not a pay rise.

 

Rachel Lane is the Principal of Aged Care Gurus where she oversees a national network of adviser dedicated to providing quality advice on retirement living and aged care. She is also the co-author of a number of books with Noel Whittaker including the best-seller 'Aged Care, Who Cares?' and their most recent book 'Downsizing Made Simple'. To find an adviser or buy a book visit www.agedcaregurus.com.au.

 

RELATED ARTICLES

12 tips for ‘aged care season’

Biggest change in the Aged Care Interest Rate since the GFC

Recent age pension changes impact non pensioners too

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Latest Updates

Investment strategies

Finding income in an income-starved world

With term deposit rates falling, bonds holding up but with risks attached, and stocks yielding comparatively paltry sums, finding decent income is becoming harder. Here’s a guide to the best places to hunt for yield.

Economy

Fearful politicians put finances at risk

A tearful Treasury chief, a backbench rebellion, and crashing bonds. What just happened in the UK and why could Australia’s NDIS be headed for the same brutal fiscal reality?

Shares

Investing at market peaks: The surprising truth

Many investors are hesitant to buy into a market that feels like it’s already climbed too far, too fast. But what does nearly a century of market history suggest about investing at peaks?

Shares

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

Investment strategies

Will stablecoins change the way we pay for things?

Stablecoins have been hyped as a gamechanger for the payments industry. But while they could find success in certain niches, a broader upheaval of Visa and Mastercard's payments dominance looks unlikely.

Infrastructure

An investing theme you can bet on for the next 30 years

Investors view infrastructure as a defensive asset class rather than one with compelling growth prospects. These five tailwinds for demand over the coming decades suggest that such a stance could be mistaken.

Investment strategies

A letter to my younger self: investing through today's chaos

We are trading through one of history's most confounding market environments. One day, financial headlines warn of doomsday scenarios. The next, they celebrate a new golden age. How can investors keep a clear head?

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.