From 20 March 2025, income support payments and pensions are set to increase by 0.4%
The figures are in – pensions to rise by 0.4% from March 20
The Age Pension, Disability Support Pension (DSP), Carer Payment and JobSeeker Payment rates are indexed twice a year. Indexation is meant to ensure that pensions and income support payments keep up with inflation. Increases take effect on 20 March and 20 September.
Indexation is built into the Social Security Act 1991 (Cth.) and is largely an automatic process – though of course, the Australian Government will claim that they are doing a good thing to help when indexation figures are high, and deny their involvement when indexation figures are low.
How does indexation work?
Indexation is based on several figures. The key ones are Consumer Price Index (CPI) and the Pensioner and Beneficiary Living Cost Index (PBLCI).
CPI is the official measure of inflation in Australia. It is calculated monthly to measure how much prices have gone up for a selected list, or ‘basket’, of goods and services. Unfortunately, CPI isn’t a perfect measure because this ‘basket’ doesn’t always reflect the actual expenses that many people have, nor does it reflect the amount that different people may pay for different parts of the basket. Rents, for example, make up around 6% of the CPI basket. However, for most renters, rent accounts for one of the single largest expenses from their regular pay cheque. Just 7.5% of renters pay less than 15% of their weekly income on rent.
The PBLCI was introduced in 2009 and reflects prices for things people who are living on a pension (or other government benefit) are more likely to spend their money on. For example, it does not include the cost of buying a new home.
When it’s time to calculate the next indexation figure for the Age Pension, DSP and Carer Payment, CPI and PBLCI figures for the past 6 months are compared. The highest of the two will determine the amount that payments are increased.
CPI has increased by 0.4% over the past 6 months, but PBLCI actually went backwards in the December quarter. This means that the 6-monthly figure of CPI is used – a measly 0.4%.
The JobSeeker Payment will also be indexed, but it is always increased by CPI.
How much will pensions and payments go up?
| Age Pension, Disability Support Pension (DSP), Carer Payment | Current max fortnightly rate | Expected rate from March 2025 | Amount extra each fortnight |
| Single/Couple separated due to ill health | $1,144.40 | $1,149 | $4.60 |
| Couple (combined)
| $1,725.20 | $1,732.20 | $7
|
| Couple (each) | $862.60 | $866.10 | $3.50 |
| JobSeeker Payment | Current max fortnightly rate | Expected rate from March 2025 | Amount extra each fortnight |
| Partnered | $712.30 | $715.10 | $2.80 |
| Single, no children | $778 | $781.10 | $3.10 |
| Single, 55 or older (after 9 continuous months on an income support payment) | $833.20 | $836.50 | $3.30 |
| Single, principal carer of child (exempt from mutual obligations) | $1,007.50 | $1,011.50 | $4 |
Why so low?
This low CPI increase means that the cost of living is still going up but has slowed considerably. In fact, 0.2% is the lowest quarterly CPI increase since 2021. Annual inflation is currently at 2.4% and has been steadily dropping since its peak of 7.8% in December 2021.
What does this mean? Well, it’s good news for households who are hoping to see interest rates drop in coming months, but it’s a double-edged sword for those who are relying on income support payments or pensions as it means the March increase will be much lower than one might hope.
Whilst every dollar counts, those who are already struggling to make ends meet won’t see much relief after the upcoming indexation kicks in. For reference, the last indexation increased pensions and payments by 2.6%.
CPSA’s position
The upcoming indexation only serves to add peanuts to a pittance, as income support payment rates leave recipients struggling to survive far below the poverty line.
Despite being one of the wealthiest countries in the world, Australia offers the lowest rate of unemployment payment in the OECD. The Australian Government can, and must, do better. There are many reasons that people face barriers to employment, and none of them are mitigated by forcing people to live in poverty.
Pension recipients fare slightly better due to a higher daily rate, but the retrospective nature of our current indexation method means that pensioners are put in a difficult position when prices rise rapidly in a short period. This is particularly difficult for those who haven’t got much, or any, superannuation. Without a financial buffer, 6 months is a long time to stretch your budget until the next CPI increase, and many households have felt the impact of this over the past few years.
CPSA believes that everyone deserves to live a dignified life, and supports the Australian Council of Social Services’ (ACOSS) call to raise the rate of JobSeeker payment as an urgent priority.
