Pension to go up by at least 1.8% in March 2024

Article published 31 January 2024

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The first 2024 pension increase is coming up

Are you looking for information on the March 2024 Pension Increase? You can find an update here

The Consumer Price Index (CPI) increase has been announced for the December 2023 quarter, and it’s sitting at 0.6%. This is down from the previous quarter (July to August), which saw a CPI increase of 1.2%.

This means that prices are still going up, but not as fast as they have been. In fact, this is the lowest quarterly CPI increase since 2021.

Annual inflation is currently at 4.2% and has been steadily dropping since its peak of 7.8% in December 2021.

The fact that inflation has slowed down to the lowest rate in two years has people with mortgages hoping that the Reserve Bank will announce an interest rate cut.

Pensioners should also be interested in this CPI update, as it gives a good indication of the next pension increase.

Pension Indexation

The Age Pension, Disability Support Pension, Carer Payment and Service Pension are indexed twice a year. Increases are applied in March and September.

Indexation is based on a few different figures. The two big ones are CPI and the Pensioner and Beneficiary Living Cost Index (PBLCI).

The PBLCI was introduced in 2009 and reflects prices for things that people who are living on a pension are more likely to spend money on. For example, it does not include the cost of buying a new home.

Changes to the cost of groceries and healthcare will make the PBLCI go up more than they do for the CPI, as pensioners spend more of their money on these things. The cost of education affects CPI more.

When it’s time for a pension increase, the CPI and PBLCI for the past 6 months are compared. The highest of the two will determine the increase to the base rate of the pension.

The December 2023 PBLCI figures will be released on 7 February 2024. Hopefully it will be more than the 1.8% increase promised by the most recent CPI increase, but this seems a bit unlikely as the September quarter saw only a 0.5% increase to the PBLCI.

Basically, the PBLCI would need to be more than 1.4% to make any difference – so it seems pretty likely that we’re looking at a 1.8% increase to the base rate of the pension.

There’s another figure –Male Total Average Weekly Earnings (MTAWE). This hasn’t actually affected the pension for about 15 years and you can read about it here.

What does this actually mean?

If the CPI increase over the past 6 months is higher than the PBLCI, the base pension rate will go up by around $18 for singles and $27 for couples on a combined pension.

The pension supplement is indexed at the same time, based on CPI only. So, from March 2024 the maximum pension supplement will increase by about $1.45 for singles and $2.15 for couples, depending on rounding.

Very helpful, we’re sure.

If you’re lucky enough to receive it, the energy supplement will stay the same. It is not indexed and has been closed to new eligibility since 2016.

What next?

It’s good news that inflation is easing, but many of us are still struggling with increased expenses. Indexation is welcome but an extra $10 a week just isn’t going to cut it for most pensioners.

In 2023, the Interim Economic Inclusion Advisory Committee (EIAC) delivered a report which recommended that the Australian Government undertake further investigation into the adequacy of social security payments.

The EIAC stated that existing payments, as well as their indexation methods, are outdated.

CPSA feels that it’s past time for a boost to the base rate for pensioners and other beneficiaries.

In the meantime, we’ll be on the lookout for those PBLCI figures on 7th February, and will be sure to keep CPSA News readers updated on the March 2024 pension increase.

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