Payments jump delivers welcome financial relief for pensioners

The numbers might surprise you. While you've been focused on rising grocery prices and energy bills, your Age Pension has been steadily climbing behind the scenes. Since the current government took office in 2022, pension payments have increased by almost $5,000—and there's more financial support coming your way than you might realise.

For many Australian pensioners, the bi-annual pension increases can feel modest when they're announced.

But the cumulative effect tells a very different story, one that's worth understanding as we head into what could be a challenging economic period.

Starting 20 September, those on the Age Pension, Disability Support Pension or Carer Payment will receive up to $29.70 extra each fortnight—a timely update that lands in your bank account automatically, with no action needed.

What You're Receiving Now

Single pensioners now receive $1,149 per fortnight as of March 2025, while couples receive $866.10 each per fortnight. These figures include your pension supplement and energy supplement, representing the maximum full pension rate.

To put that in perspective, if you're a single pensioner, you're receiving approximately $29,874 per year, while couples are getting around $45,037 combined annually.

But here's where it gets interesting—single pensioners are now receiving more than $3,913 additional per year as a result of indexation over the past three years, and pensioner couples are receiving $5,902 additional per year combined.

The latest increase came in March 2025, when single pensioners saw their payments rise by $4.60 per fortnight, while couples received an additional $7 combined.

While that might seem modest, it's part of a systematic approach to keeping pensions in line with cost-of-living changes.

Beyond Your Pension - The Complete Support Package

Your pension increase is just one piece of a broader cost-of-living support package that many pensioners don't fully understand. Here's what else is working in your favour:

Energy Bill Relief That Continues

Households will receive a $150 energy rebate off their electricity bill in two quarterly payments throughout 2025.

This comes automatically—you don't need to apply. The rebates will be automatically applied to your electricity bill in two $75 quarterly instalments.

This extends the energy relief that began in 2024, when households received $300 in energy bill assistance. The ongoing support recognises that energy costs remain a significant concern for pensioners living on fixed incomes.

Cheaper Medicines on the Way

From January 2026, there's more relief coming for your medicine cabinet. The maximum co-payment will be lowered from $31.60 to $25.00 per script for those without concession cards, while it remains frozen at $7.70 for pensioners with Pensioner Concession Cards.

For many pensioners taking multiple medications, this change could save hundreds of dollars annually. The government estimates four out of five PBS medicines will become cheaper under the new arrangement.

Deeming Rates Frozen to Help Your Assets

Here's a change that could be worth significant money if you have savings or investments. The freeze on deeming rates has been extended to 30 June 2026. Currently, the first $62,600 of your financial assets is deemed to earn 0.25 per cent, with any amount over $62,600 deemed to earn 2.25 per cent.

This freeze means Centrelink calculates your pension as if your savings are earning these low rates, even if your actual returns are higher. For many pensioners, this translates to higher pension payments than they would otherwise receive.

How the Pension Indexation System Actually Works

Understanding how your pension increases are calculated can help you better plan your finances. The base rate is indexed using a mix of three different measures: Consumer Price Index, Pensioner Beneficiary Living Cost Index and the Male Total Average Weekly Earnings.

This system is designed to ensure your pension keeps pace with both general cost increases and wage growth across the economy. These rates are adjusted in March and September each year based on movements in the CPI.

Other Payments Getting Increases Too

The pension isn't the only payment seeing regular increases. Several income security payments increased from 20 September 2024, including the Disability Support Pension (DSP), Age Pension, Carer Payment and JobSeeker Payment.

If you're caring for someone, Carer Allowance is $159.30 each fortnight. Those on Disability Support Pension receive the same base rates as Age Pension recipients, ensuring consistent support across different types of pensions.

For those still receiving some income support while working, there's good news too. Pensioners, including age pensioners, can earn up to $300 per fortnight without impacting on their pension entitlement through the Work Bonus scheme.

Getting Your Full Entitlement

Many pensioners don't receive their full entitlement simply because they don't understand the system or haven't updated their circumstances. Here are key steps to ensure you're getting everything you're entitled to:

Check Your Assets and Income Regularly

The pension is subject to both income and assets tests. Centrelink uses income and assets tests to work out how much Age Pension you get. Your circumstances may have changed since you first applied, potentially affecting your payment rate.

If you own your home, you may be eligible for a higher assets limit. The system is complex, but understanding it could mean the difference between a part pension and a full pension.

Don't Forget Rent Assistance

If you're paying rent, you might be eligible for additional help. For every $1 of rent you pay above a certain amount, you'll get 75 cents of rent assistance, up to a set maximum payment.

A single person who pays at least $149 for two weeks' rent might be eligible for up to $212 of rent assistance each fortnight.

Essential Medical Equipment Payments

If you need help with energy costs, you may get an Essential Medical Equipment Payment each year if you need heating, cooling or certain eligible equipment for medical needs. This is an often-overlooked entitlement that could provide additional annual support.

The Broader Economic Context

These pension increases don't exist in isolation. They're part of the government's broader response to cost-of-living pressures that have affected all Australians, but particularly those on fixed incomes.

Commonwealth and state energy bill relief has already helped to lessen electricity price increases, with prices dropping 25.2 per cent across 2024.

This means your energy rebates are working alongside broader market changes to keep your power bills manageable.

Healthcare costs are also being addressed beyond just medicine price reductions. The government is expanding bulk-billing incentives and opening new Medicare Urgent Care Clinics, which should make it easier and cheaper to access healthcare services.

What About Other Support?

Beyond your pension, there are other forms of government support you might not be aware of:

Home Equity Access Scheme

If you need a little extra to live on each fortnight, you can apply for a voluntary non-taxable loan if you qualify for Age Pension and own a property in Australia through the Home Equity Access Scheme. This allows you to access some of the equity in your home while continuing to live there.

Concession Cards and Their Benefits

If you get Age Pension, you'll also get a Pensioner Concession Card which provides access to discounted healthcare, medicines, and often public transport and utility concessions. These savings can add up to hundreds of dollars annually.

Looking Ahead

The Age Pension rates will next potentially change on 20 September 2025. The Australian Bureau of Statistics evaluates the extent of the increase based on changes in the Consumer Price Index (CPI), Male Total Average Weekly Earnings, and the Pensioner and Beneficiary Living Cost Index.

While we can't predict exactly how much the next increase will be, the system is designed to ensure your pension keeps pace with cost-of-living changes. Increases are not always certain—for example in September 2020 the Age Pension rates did not increase, although that was for the first time since 1997.

The economic indicators suggest that regular, modest increases are likely to continue, maintaining the purchasing power of your pension over time.

Some considerations to keep in mind

While this news is overwhelmingly positive, it's worth noting that some concurrent changes may affect certain pensioners.

Deeming rates—which determine how your savings and investments are assessed for pension purposes—are being adjusted for the first time in several years.

According to National Seniors Australia, the indexation increase will lift the maximum single Age Pension rate from about $1,149 to $1,178.70 per fortnight, while couples will see a combined rise from $1,732.20 to $1,777.00.

At the same time, the government has introduced a 0.50 percentage point increase in previously frozen deeming rates, which may reduce payments slightly for those with significant financial assets.

NSA Chief Executive Chris Grice described the outcome as a 'mixed bag,' noting that while the timing of the changes helps soften the impact, some pensioners may still feel the pinch.

He also highlighted that NSA will continue advocating for reforms—such as exempting employment income from the pension income test—ahead of the next indexation round in March.

Making Sure You Don't Miss Out

The pension system can seem complex, but the basic principle is straightforward: it's designed to provide you with a basic standard of living that adjusts with economic conditions. The key is making sure you're getting your full entitlement.

If you haven't reviewed your pension circumstances recently, it might be worth contacting Services Australia to ensure your details are current. Changes in your living situation, health needs, or financial circumstances could affect what you're entitled to receive.

Remember, these increases and supports are automatic for most pensioners—you don't need to apply for pension indexation or energy rebates. But other entitlements like rent assistance or medical equipment payments might require you to notify Centrelink of your circumstances.