No pension rise for the first time since 1931

Article published 12 August 2020

No pension rise for the first time since 1931

“Many pensioners, especially singles with the pension as their sole source of income, will be very disappointed that at the forthcoming September pension indexation their pension will not be increased to keep pace with the cost of living”, said CPSA Policy Manager Paul Versteege.

“Pensions are indexed on the basis of inflation and wages and the rule is it can’t go down. However, the last time the pension did not increase was in 1931, when it was reduced from $104 to $78 a year.

“The current rates are $944.30 for singles and $1,423.60 for couples combined per fortnight.

“The rates applicable from 20 September 2020 have not yet been formally announced but a simple calculation shows that they will not change.

“The basis for indexation on 20 September will be the Pensioner Beneficiary Cost of Living Index (PBLCI), which is a special inflation rate for pensioners used when it increases by more than the CPI.

“The Pension Supplement is always indexed according to the CPI, while the Energy Supplement does not get indexed at all. So, both the Pension Supplement and the Energy Supplement stay the same as well.

“By law the combined couple pension must at least be 41.7 per cent of the average weekly wage, which stands at $1,498.20. .

“The Governor of the Reserve Bank of Australia is on record as saying that the CPI will start to pick up again during the September 2020 quarter, so the pension is likely to go up again in March 2021.

“The pension staying the same this September is a little unfair, because both the CPI and the PBLCI saw a small increase in the March 2020 quarter. This means that the cost of living did go up in those three months. However, the numbers for the March and September quarters are not used in the calculation of the pension.”

(Postscript: it has since been pointed out to CPSA that on one occasion prior to September 2020 and since 1931 pension indexation produced no increase.)

 

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