Turning 67 is a significant milestone for Australians – the age when you finally qualify for the Age Pension after decades of hard work. You’d expect to kick back and enjoy your well-earned retirement.​

Instead, many find themselves tangling with Centrelink, navigating a complex web of forms, rules and thresholds just to secure the support meant to guarantee their golden years.

In this entertaining yet insightful look at the Age Pension system, we’ll explore why something designed as a safety net can often feel like an obstacle course. With a conversational dive into recent developments and trends, let’s unpack the limitations and challenges of the Age Pension, and the ideas on the table to improve it – all without getting lost in international comparisons (we’ll keep our focus strictly on the Aussie experience).

So grab a cuppa, settle in, and let’s make sense of the pension puzzle that has so many older Australians talking.

The Age Pension: A Lifeline for Two-Thirds of Seniors​

For most older Australians, the Age Pension isn’t a fringe benefit – it’s the bedrock of retirement income. In fact, roughly two in every three Aussies over 65 rely on an age pension payment to some extent. That’s about 2.6 to 2.8 million people, a number that underscores how central this system is to our social fabric. The Age Pension, funded by general taxpayer revenue, is designed as a means-tested safety net.

In plain English, that means it’s targeted to those who need it most – your eligibility and rate depend on your income and assets. The majority of pensioners end up qualifying for a full pension rather than just a part-rate – over 60% of age pension recipients get the maximum rate. For generations, this model has aimed to ensure a “fair go”: provide a minimum standard of living for seniors who might not have hefty superannuation or savings, while tapering off support for those with other resources.

Australia’s Age Pension has often been praised as one pillar of our retirement system (alongside compulsory superannuation and private savings). It has indeed been effective at preventing destitution among most older people. A comprehensive government review in 2020 found that the Age Pension, combined with other supports like healthcare and concessions, generally lets most retirees achieve a basic acceptable standard of living.

Unlike some countries’ contributory pensions, here you don’t pay an earmarked “social security tax” across your career – instead, the pension is funded from the budget each year and available to all who meet the age (now 67) and means criteria. This keeps it sustainable in theory, as higher-income retirees get little or no pension, focusing funds on those in genuine need. But as we’ll see, the devil is in the details: what constitutes “genuine need”? Is the pension payment enough to live on? And how easy (or not) is it to navigate the system you’ve paid into through taxes all your life?

To appreciate the scope of the Age Pension’s impact, consider that as of 2019 about 71% of Australians over 65 received either the Age Pension or a similar pension payment, and for most of those households the family home was their main asset while superannuation formed only a small part of their wealth. That picture is gradually changing as compulsory super contributions (introduced in the 1990s) swell future retirees’ nest eggs. Over the coming decade or two, more retirees will have had a lifetime of super savings, potentially reducing reliance on the full Age Pension.

However, this transition coincides with other headwinds – like declining rates of home ownership – that could increase reliance on the pension in new ways. In short, the Age Pension remains, and will remain, hugely important for the foreseeable future. It’s essentially the income floor beneath hundreds of thousands of seniors, ensuring that even those who outlive their savings or never had much super can afford the basics. At least, that’s the idea. The reality on the ground is more complicated, as many age pensioners will tell you.

A Question of Adequacy: Can You Live on the Pension?​

The first thing most people ask about the Age Pension is simply: is it enough to live on? The maximum Age Pension rate is adjusted twice a year (every March and September) in line with inflation and wages, by a formula set in legislation. These automatic indexation increases are meant to preserve pensioners’ purchasing power. For example, on 20 March 2025 the base pension went up – but only by a modest amount, reflecting a recent easing of inflation. Single pensioners got an extra $4.60 a fortnight, and pensioner couples got $7.00 more (combined). This took the maximum full pension to about $1,149 per fortnight for a single, or roughly $29,900 a year, and $1,732 for a couple combined (around $45,200 a year for a couple).

Any boost is welcome, but let’s put those numbers in context: that single rate works out to about $57 per day. Think about all your living expenses – housing, food, bills, healthcare, maybe running a car – and ask yourself if $57 a day would cover it, even with some concessions and discounts. It’s a tight squeeze, to say the least.

Indeed, many age pensioners find themselves counting pennies and making painful trade-offs. National Seniors Australia (NSA), an advocacy group for older Australians, points out that even after the latest indexation, “It’s not enough for some pensioners who face day-to-day poverty and continue to scrimp to survive.”. NSA’s chief executive, Chris Grice, painted a stark picture: “Cost-of-living pressures continue to force lifestyle changes for disadvantaged pensioners – from buying powdered milk to living on credit cards and returning to work or working more”.

He noted that today’s small increase would be “disappointing for pensioners choosing between putting petrol in the car or groceries in the trolley, or those delaying dental visits or trips to the doctor.” These everyday sacrifices underscore a troubling reality: the Age Pension is clearly not enough for a segment of retirees who rely on it as their main (or only) income.

Just how widespread is pensioner poverty? Different reports offer different metrics, but one recent analysis by The Australia Institute found that over one in five Australians over 65 live below the poverty line as commonly defined (meaning their income is less than half of median household income). In fact, by that measure the maximum single Age Pension itself sits below the poverty line – roughly $572 per week vs a poverty threshold of about $612 per week for a single person.

To put it bluntly, even a senior receiving every cent of their full pension entitlement is arguably being asked to live on an amount that falls short of basic adequacy. It’s little wonder, then, that 22.6% of older Australians are in poverty by this standard, a rate that some researchers call disturbingly high for a country as wealthy as Australia.

Of course, the Age Pension isn’t meant to guarantee luxury – it’s meant to prevent poverty. And to its credit, it does include add-ons like the Pension Supplement and various concessions (cheaper medicines under the PBS, discounted rates on utilities, etc.) that improve retirees’ real living standards. Pensioners also benefit from free or subsidized services (for example, seniors healthcare cards, public transport concessions, and so on). Government analysts argue that when you add the value of these services, the effective support for pensioners is higher than the raw dollar stipend suggests.

Even so, there’s growing consensus that the base pension rate has not kept up with the real costs faced by seniors, especially those living alone. Advocacy groups often highlight that single pensioners (mostly women, often widowed) are at particular risk – the single pension is roughly 66% of a couple’s combined pension (a reflection of assumed shared living costs), but a single person doesn’t spend that much less on essentials like rent or power than a couple. That gap can translate to hardship.

The limitations of the current pension amount become even more glaring during times of high inflation. Australia’s recent bout of cost-of-living pressure (with spikes in food, fuel, and electricity prices in 2022–2023) hit low-income retirees hard. While the indexation formula did yield larger-than-usual rises in 2022 and 2023, those increases often lagged the rapid price rises for essentials. By the time a pension bump arrived, many had already depleted savings or incurred debt to stay afloat.

Now, with inflation easing in 2024, the indexation is smaller – but prices haven’t fallen back to pre-inflation levels, they’ve just stopped rising as fast. In other words, the higher cost base is here to stay, and pensioners must permanently adjust to it. Even the Government acknowledges pensioners are doing it tough: it has provided some one-off “cost of living” sweeteners, such as energy bill relief payments for concession card holders, and (as we’ll discuss later) significant increases to Rent Assistance for those renting. But on the core issue of the pension rate and how it’s set, there is increasing debate about whether a more fundamental rethink is needed.

To illustrate, National Seniors Australia has launched a campaign bluntly titled “Fix Pension Poverty.” They have put forward proposals including a one-off boost of $10 per day to the base Age Pension for singles (and $15 per day for couples combined). That would translate to roughly a 35% increase in the maximum rate – a very substantial bump aimed at closing the poverty gap. NSA argues this is necessary to give pensioners “a little extra cash, and a little less worry”. It’s a big ask, no doubt carrying a multi-billion-dollar price tag, and so far no government has bitten at such a dramatic raise.

However, the mere fact that a mainstream seniors group is calling for double-digit increases shows how inadequate many feel the current payments are. Short of a large permanent increase, others have suggested the indexation method could be tweaked – for example, benchmarking the pension to a higher percentage of average wages, or having an independent tribunal periodically review and recommend rate changes (similar to how we have the Fair Work Commission for minimum wages).

The government’s official stance is that the indexation formula is fair – it already uses a mix of price indices and a wages benchmark to ensure pensions don’t fall behind broader living standards. But for those “choosing between petrol in the car or food in the trolley”, such reassurances ring hollow.

The Rental Trap: When Home Isn’t Owned​

If there’s one group of Age Pensioners for whom the system’s challenges hit hardest, it’s those who rent their homes. The Age Pension assumes, in a sense, that by the time you’re 67, you ideally have paid off a home to live in. Home ownership has long been the great Australian retirement plan – your house provides shelter without ongoing rent, and it’s an asset you can potentially lean on in hard times.

In fact, the family home is completely exempt from the pension asset test, no matter its value, reflecting a view that your home should not be counted against you for pension eligibility. But this also means the system’s implicit model of a modest but secure retirement really works best if you are a homeowner. If you’re not, living on the pension becomes far more precarious.

The statistics are sobering. According to a 2025 report by the Grattan Institute, about two-thirds of retirees who rent privately are living in poverty – yes, roughly 67%. Grattan’s analysis found that more than half of renting retiree households have less than $25,000 in total assets to fall back on. In other words, many entered retirement without having been able to buy a home or accumulate wealth, and now they must use a large chunk of their $57-a-day pension on rent. It doesn’t help that market rents have skyrocketed in recent years, with vacancy rates low and competition fierce. Brendan Coates, a researcher at Grattan, bluntly stated that “Australia is failing too many retirees who rent… they’re really struggling, and the problem is going to get worse”. Why worse? Because today’s middle-aged Australians have lower home ownership rates than the generations before them.

Many more people in their 50s and 60s are still paying off mortgages – or stuck renting – than was the case 30–40 years ago. “Home ownership is falling, and it’s falling fast. Today’s older renters who are in work are tomorrow’s renting retirees,” Coates warns. This means the pipeline of future age pensioners will include a larger share who face housing stress, unless something changes.

The government does offer Commonwealth Rent Assistance (CRA) – an extra payment for those on pensions or other benefits who rent in the private market or community housing. Rent Assistance, however, is relatively small: even after recent increases, the maximum CRA for a single pensioner is around $211 per fortnight (if you’re paying enough rent to hit the cap). Think about typical rents in our cities – that $105.60 a week in assistance often barely makes a dent. In recognition of the intense rental affordability crisis, the Albanese Government actually hiked Rent Assistance by 15% in 2023, the largest increase in 30 years, and followed up with another 10% increase in 2024.

Combined with regular indexation, by mid-2024 the maximum Rent Assistance was over 40% higher than it had been two years earlier – a historically significant boost. Yet, even these gains amount to only a few extra dollars a day. Rent has been rising much faster.

Coates notes that even after these recent increases, the numbers don’t look good for a penniless renter. A single retiree relying solely on the pension (plus rent assistance) can afford only around 4% of one-bedroom rentals in Sydney, and roughly 13% in Brisbane and 14% in Melbourne. In other words, well over 80–90% of rentals in our major cities are out of reach for someone on government support. The situation outside the big cities can be a bit better (rents are lower in some regional areas), but then other costs or lack of services can offset that. And moving away from your support networks or healthcare providers isn’t always a viable option for an older person just to find cheaper rent.

It’s no exaggeration to say housing costs are the single biggest poverty risk factor for older Australians. If you own your home outright, the Age Pension – while not generous – can often cover a frugal lifestyle with the help of concessions. But if you’re paying $300 a week in rent, that same pension suddenly falls short. NSA research highlighted that after covering basic essentials like food, transport and healthcare, a single pensioner has “less than $300 per week to spend on rent” on average – and plenty of modest one-bedroom flats in cities cost more than that, meaning even skipping meals might not balance the budget. Little surprise then that older Australians who rent are over-represented among those seeking emergency relief and even homelessness services. (Charities report seeing increasing numbers of pensioners, especially single older women, coming in for food hampers or emergency housing – a heartbreaking trend in what should be the ‘retirement’ phase of life.)

Policymakers are grappling with this challenge. Beyond boosting Rent Assistance (which, as noted, the current government has done in unprecedented back-to-back fashion), there are calls for more structural solutions. Some argue Australia needs a lot more social and affordable housing designated for seniors – giving older renters secure, below-market rent homes. Others suggest tying rent assistance to local rent levels (for example, a higher payment for Sydney vs a regional town) to better reflect need.

The 2020 Retirement Income Review bluntly stated that “a significant number of older Australians who are renting need additional assistance” and that simply increasing Rent Assistance “will only have a small impact”, implying that a new approach is required to support this vulnerable group. In the near term, the government’s strategy seems to be to at least cushion the pain by financial boosts: aside from higher CRA, there have been one-off cost-of-living bonus payments targeted at pensioners and extra subsidies for energy bills, since utilities and rent have been the two big budget-busters for pensioner households lately.

There’s also a deeper, more controversial debate emerging: Should more retirees tap into their home equity to fund their retirement? This is especially aimed at the many “asset-rich, cash-poor” older Australians – those who do own a home that may be worth hundreds of thousands (if not millions) of dollars, but who have very little income aside from the pension. Traditionally, the family home has been off-limits – both culturally (it’s your castle; selling or borrowing against it was seen as a last resort) and policy-wise (it’s not counted in the pension means test).

But with property values having skyrocketed over decades, there’s a huge amount of wealth locked up in retirees’ homes – an estimated $1.3 trillion in home equity is held by older Aussies. Accessing even a fraction of that could vastly improve living standards for some. Ideas such as reverse mortgages, the government’s own Home Equity Access Scheme (which lets pensioners borrow against their home equity with the government as lender), or encouraging downsizing to free up cash, have all been floated and, to some extent, implemented.

In fact, the government has expanded the Home Equity Access Scheme and lowered barriers to downsizing (for example, allowing proceeds from selling a home to be put into superannuation with special concessions).

Yet, the notion of forcing or expecting people to use their home to fund retirement can be unsettling. One recent paper by the Actuaries Institute argued that we need to “change the narrative on the role of the home” and make it more acceptable for retirees to spend some of their housing wealth. It pointed out that over 80% of people aged 65 to 74 are homeowners, but many live very frugally despite sitting on considerable equity.

The Actuaries Institute proposed several policy tweaks to encourage voluntary use of home equity – such as removing stamp duty for over-55s who downsize, or relaxing the pension asset test for a portion of money gained from selling or reverse-mortgaging a home. More radically, it also broached what was once unthinkable: including extremely valuable homes in the pension means test. Specifically, they recommended that the value of a principal residence above a threshold (e.g. $2.1 million) be counted in the asset test. This would only affect a minority of very well-off homeowners, and the idea is that it could redirect pension dollars to those who truly need them, while nudging wealthy retirees to draw on their property wealth for income.

The reaction to this idea among seniors has been, to put it mildly, mixed. For many pensioners, the family home is sacrosanct – a tangible reward after a lifetime of work, and often intended to be left as an inheritance. Some see the suggestion of including the home in the asset test as “a betrayal, a slap in the face after decades of hard work”, as one commentary described it. The prospect of having your “cherished family home counted against you” for pension eligibility stirs deep anxiety.

Critics of the idea worry it could force cash-poor seniors in expensive housing markets to sell or take on debt just to keep receiving a pension – potentially undermining the very security and peace of mind that home ownership is supposed to provide in later life. At the moment, the government has reassured retirees that the family home will remain exempt (aside from the existing downsizing incentives and the like, which are voluntary). Any move to means-test the home above a high threshold would be politically explosive.

Still, the conversation is gaining traction among experts, if not among politicians – it reflects the tough question of intergenerational equity and targeting: should a retiree living in a multi-million dollar property get the same taxpayer-funded pension as one with no assets? There are no easy answers, but the debate underscores how housing and the Age Pension are becoming ever more intertwined policy issues.

Red Tape and Roadblocks: Navigating the System​

Beyond dollars and cents, another major challenge of the Age Pension system lies in accessing and maintaining it. The bureaucratic hoops one must jump through have become a running joke (or nightmare) for many seniors. Applying for the Age Pension is famously tedious – the paper application form runs about 28 pages long, a form so thick and convoluted that it’s been described as a “tome”. Applicants must divulge extensive personal and financial details, often having to gather and submit numerous supporting documents (from bank statements to shares, superannuation details, property valuations, you name it).

Even after one manages to get on the pension, there are ongoing obligations: you must report any changes in your circumstances (income, assets, marital status, etc.) promptly to Centrelink, and periodically confirm details, to ensure you’re being paid the correct amount. It’s not a “set and forget” affair – slip-ups or delays in reporting can lead to overpayments that you’ll be asked to repay, or underpayments that leave you short.

For a generation that didn’t grow up with the internet, the push to digital services is a double-edged sword. The government encourages pensioners to use online tools (via MyGov) to claim and manage their payments. But as National Seniors heard time and again from older people, there’s a “lack of trust and confidence” in the online systems. Many seniors fear “making a mistake” with an online form that they don’t fully understand – after all, the rules are complex, and the questions can be confusing.

As a result, a high proportion of people choose paper forms and face-to-face visits at Centrelink offices, rather than navigating the process online. In one workshop, Services Australia (the agency that runs Centrelink) staff acknowledged that when an applicant encounters a question on the form that “doesn’t make sense” to them, there’s no easy way to get an answer except to endure the call centre hold music or trek down to a Centrelink centre in person. Not exactly user-friendly.

These roadblocks create real stress. Anecdotally, some people delay or avoid claiming the Age Pension even when they’re eligible, simply because the process is too daunting or frustrating. Others rely on family members or paid advisers to help fill out forms and liaise with Centrelink. It’s not just the initial application – even fully compliant pensioners often fret about accidentally doing something wrong.

For instance, withdrawing some money from a super account, receiving an inheritance, or even just a fluctuating bank balance due to interest can all require reporting and can affect one’s pension rate. The fear of unwittingly triggering a debt or penalty can lead people to “play it safe” – sometimes at the cost of not fully utilising their own money because they worry about means test implications.

Recognizing these issues, seniors’ advocacy groups like NSA and COTA (Council on the Ageing) have been pressing the government to simplify pension processes. In April 2025, NSA and COTA representatives sat down with Services Australia in a special workshop aimed at improving the Age Pension experience (without changing policy rules, just the delivery). The mantra for the day was “make it simpler”. They identified numerous “pain points” in the system.

One big one was exactly that lack of trust and fear – people are so anxious about filling something in wrong that they avoid the more convenient online claims and fall back to in-person service. The catch is that the paper form is arguably even more cumbersome: because it has to cover every possible situation, all 28 pages are presented to everyone, even though only some sections might apply. The online system can skip irrelevant sections based on your answers (a bit of built-in guidance), but a paper form just sits there with a forest of questions, leaving the poor applicant to figure out which parts apply to them. It’s easy to see how that could confuse or overwhelm someone, especially if English isn’t their first language or if literacy or eyesight is an issue.

Another issue raised was the sheer volume of information and documentation required. To complete a claim, you may need details of every financial asset, identification documents, rental agreements or rates notices, etc. If something is missing or a figure doesn’t match exactly, processing can stall. It’s not uncommon for pension claims to take weeks or even a few months to be approved, particularly if there are follow-up queries or corrections needed. That wait can be stressful for someone who perhaps stopped working at 67 expecting the pension to kick in soon, only to find their paperwork in limbo.

The workshop discussed ideas like greater automation and data linkage – for example, if Services Australia could automatically pull some info from the Tax Office or bank records (with permission), it might spare seniors the scavenger hunt for documents. This kind of reform would need significant investment in IT, but it’s a vision for the future: a more “hands-off” pension claim where much is verified behind the scenes, reducing the burden on the applicant. Of course, robust privacy and consent safeguards would be needed, and not everyone will be comfortable with government agencies sharing data in the background.

Interestingly, one idea floated was to “provisionally approve” straightforward cases – say, someone with very low income and minimal assets – before every bit of documentation is submitted. If it’s clear they’re entitled to the full pension, they could start getting payments while the last pieces of paperwork catch up, rather than waiting with nothing. This could help people who have almost no resources from facing hardship during lengthy processing times. Such an approach would require a change in procedures and perhaps legislation, but it shows the thinking: triage the easy cases, and don’t let red tape delay help for those who obviously need it.

Maintaining the payment can be another headache. In the past, Centrelink would send out periodic reminder letters to pensioners to update their details. This apparently had a downside: it “worried people unnecessarily”, causing panic and a spike in calls and visits, even when nothing major had changed. So they dialed back those generic reminders. The unintended result? Some pensioners stopped updating at all, even when they should (like those on part pensions whose income/assets change). So the workshop suggested a more targeted approach – maybe remind only those likely to have changes (for example, part-rate pensioners or those known to have investments that fluctuate) to update regularly. It’s a tricky balance between keeping information current and not unduly alarming people.

The bottom line is that the Age Pension system, while vital, is complicated and often difficult to navigate, especially for older individuals who may not be tech-savvy or who might have health issues making paperwork onerous. Even as policy wonks debate big-picture reforms, there’s a parallel effort needed to deliver services more humanely and efficiently. After all, what good is a safety net if it’s so hard to climb into that people get tangled up or give up? The government’s collaboration with seniors’ groups is a promising step, indicating that they know there’s a problem.

We might see, in coming years, a push toward plain-language forms, better phone assistance, perhaps even personalised case managers for older clients (one can dream!). Some have suggested investing in Centrelink staffing and training so calls are answered quicker and guidance is more empathetic – essentially reversing years of cost-cutting that led to automated debt letters and interminable wait times. While we won’t wade into that saga here, it’s safe to say trust and confidence in the system need rebuilding. Older Australians deserve to feel that the pension is their right and that the government is on their side in helping them get it – not that it’s some grudging handout wrapped in red tape.

Work and the Pension: Striking a New Balance​

One of the quirks of the Age Pension system is how it interacts with any work or extra income a retiree might have. Many people imagine that once you hit pension age, you’re done working – off to enjoy permanent leisure. But reality is often different. A substantial number of Australians keep working in some capacity past age 67, whether by choice or necessity. They might do a day or two of consulting, drive the grandkids to school and get a little money from family, help out in a family business, or take a casual job to make ends meet. Some simply find that the pension alone isn’t covering their costs, so a part-time job is the only way to stay afloat financially. Others are healthy and willing to work, and in an economy with labour shortages (as we’ve seen in sectors like caring and hospitality), why shouldn’t willing over-67s contribute their skills?

Historically, the Age Pension rules have been seen as discouraging work. The logic of the means test is that if you can earn income, you should rely less on the pension. Currently, pensioners can earn a small amount of income without reducing their payments – about $212 per fortnight for singles (or $372 for couples combined). Beyond that, any additional income reduces the pension at a rate of 50 cents in the dollar (for singles) under the income test. This is where the complaints come in: a 50% withdrawal rate is quite steep. If a pensioner takes on a bit of work and earns, say, an extra $100 a week, their pension would drop by $50 of that, effectively taxing their effort at 50%. If they earn enough, their pension can be reduced to zero (though they might remain eligible for a concession card). Many older Australians felt that working wasn’t “worth it” because by the time you lose part of your pension and pay some tax on earnings, the net gain is small and you might even hassle with paperwork to report earnings.

In recent years, however, there’s been momentum to make it easier for pensioners to work without penalty. The government has a scheme called the Work Bonus, which is essentially a special allowance that lets age pensioners earn more from work before the income test bites. Under the Work Bonus, the first $300 of income per fortnight from employment is not counted toward the pension income test. This is on top of the regular $212 free area. In practice, it means a single pensioner can earn up to about $512 a fortnight from work ($300 + $212) and still get the full pension.

And it doesn’t stop there: if you earn less than $300 in a fortnight, the unused portion accumulates in a “Work Bonus bank” as a credit. You can build up a credit of up to $11,800 that can offset future earnings. For example, if you didn’t work for a few months and then took a short-term job, you could use accrued credits to exempt a bigger chunk of those earnings from the pension test.

During the pandemic and subsequent workforce shortages, there were calls to temporarily relax these rules even more to lure willing older workers into jobs. In late 2022, the government responded by giving a one-time $4,000 boost to the Work Bonus bank for age pensioners and increasing the bank’s cap (that $11,800) – effectively allowing more income to be earned without affecting the pension. Initially a temporary measure, this change proved popular and has since been made permanent from 1 January 2024. New pensioners now even start off with that $4,000 Work Bonus credit in their “bank” by default, as an incentive and buffer if they want to try working.

These changes mark a significant shift in mindset: rather than viewing retiree employment as double-dipping to be discouraged, policymakers are recognizing it can be a win-win. Pensioners who work can supplement their income (improving their standard of living) and the economy gets experienced workers. It’s also good for personal health and wellbeing in many cases – staying active and engaged can be very positive in one’s late 60s or 70s. Older Australians have a wealth of skills that, for example, the retail and care sectors value, especially when labor is in short supply.

Advocacy groups like National Seniors have been particularly vocal on this front. Their slogan is “Let Pensioners Work”, and they argue the system should stop punishing older people for wanting to earn a bit extra. NSA has even proposed completely exempting employment income from the Age Pension means test – essentially allowing pensioners to work as much as they like and still receive the pension (they’d pay normal income tax on any earnings, but their pension would be unaffected). That’s a bold idea and would fundamentally change the character of the pension (making it closer to a universal basic payment for all seniors, regardless of income).

Proponents say it could alleviate pensioner poverty and help fill workforce needs. Critics worry it might encourage some people to claim pension who otherwise wouldn’t (since they could double dip with a full wage and a full pension), potentially ballooning costs. There’s also the philosophical point: the Age Pension is meant as a safety net, not as a supplement for those earning a substantial salary.

The middle-ground approach has been to relax the existing rules, as the government has done, but not scrap them entirely. And those relaxations have been quite substantial by historical standards. A senior can now earn up to about $11,800 a year from working ($300 per fortnight ongoing) without any reduction in pension, and even more if they had accrued Work Bonus credit. That covers small casual jobs like a day of consulting a week or seasonal work. It may not help someone who wants to work, say, three days a week at a decent wage – they will still see a pension reduction once they exceed the limits. But at that stage, one could argue they have sufficient employment income to rely less on the pension anyway.

One benefit of these changes is psychological as much as financial: removing the fear. In the past, a pensioner might reject a one-day-a-week job offer for fear it would muck up their pension. Now they might take it, knowing the first $300 each fortnight is “free” and even above that the taper is not as punitive as it used to be (effectively, you keep at least half of what you earn, plus whatever is offset by Work Bonus credits). The NSA’s chief executive put it this way: “It’s time government stops punishing pensioners who need and want to work… This will not only enable pensioners to better support themselves but also help attract and retain desperately needed workers.” Many in the business community and even some unions have echoed this sentiment – seeing older workers as part of the answer to skill shortages.

Of course, not every senior can work or wants to. Health issues, caregiving responsibilities (many are busy looking after even older parents or babysitting grandkids), or simply wanting to enjoy retirement mean a majority will likely not take up work even if encouraged. But for those who do, removing barriers makes sense. It’s worth noting, too, that a number of age pensioners already do some form of work or have other income like investments – that’s why about 40% of pensioners are on a part-rate pension rather than the full rate (their other income or assets reduce the amount they get).

There’s a fine balance to strike between incentivizing self-provision (through work or savings) and providing support. Tilt too far one way, and you create perverse incentives (like someone spending down or hiding their savings just to get a pension). Tilt too far the other, and you might trap people in poverty or idleness. The tweaks in recent times indicate a recalibration: acknowledging that we can encourage seniors to earn more without jeopardizing the integrity of the pension system.

Debating Reforms: Ideas on the Table​

Given all these challenges – adequacy, housing stress, complexity, and incentives – what changes are being proposed to improve the Age Pension? Over the past few years, a range of ideas and reforms have been floated by advocacy groups, think tanks, and various inquiries. While we won’t advocate for any specific one here, it’s useful (and maybe a bit entertaining) to survey the smorgasbord of pension reform proposals doing the rounds. Some are incremental fixes, others are transformative. Here are some of the notable ones:

• Boost the Base Rate: Perhaps the most straightforward idea is simply to increase the pension amount, especially for those on the maximum rate. Various groups argue for different amounts – National Seniors’ headline grabber is a one-off increase of $10 per day for singles (and $15 for couples), which would permanently lift the pension well above the poverty line. Others suggest smaller but steady increases, or at least a larger rise for single pensioners to narrow the gap. Proponents point out that Australia spends a relatively low percentage of GDP on age pensions compared to many developed countries (in part because our system is means-tested), and that we could afford to be more generous to ensure no senior falls into poverty. Opponents (usually governments mindful of budgets) respond that any increase multiplies across millions of people and quickly becomes very costly to the taxpayer, and that the current system with indexation and supplements is adequate if targeted properly. Political appetite for a big across-the-board pension increase seems limited at the moment – but pressure is mounting as cost-of-living issues persist.
  
  
• Improve Targeted Support (“Pension Plus”): Instead of (or in addition to) raising base rates, some advocate extra help targeted at the most vulnerable pensioners. For example, National Seniors has proposed a new “Pensioner Concession Card+” that would provide additional discounts and assistance for those with limited means. This could mean extra rebates on energy bills, council rates, or health services for the poorest pensioners. The idea is to give more relief without boosting payments for those who might not need it. Similarly, there are calls to further increase Commonwealth Rent Assistance beyond the recent hikes (since that directly aids renters) or even to create a special higher rent supplement for older renters specifically. The government’s recent moves – a total 40%+ increase in Rent Assistance since 2022 – are a sign they’re heeding this targeted approach for renters. Another targeted idea floated has been to raise the pension for people as they get older, on the premise that expenses (especially healthcare and support needs) rise in your 80s and 90s. For instance, someone over 80 might get a higher pension rate than someone at 67. Japan has done something similar. This hasn’t gained much traction here yet, but it’s an interesting concept to ensure “older old” pensioners don’t languish in poverty.
  
  
• Adjust the Means Tests (Income and Assets): There is perennial debate about the strictness of the means tests. Some say they are too harsh, creating disincentives to save for retirement. Others say they could be tighter at the upper end to save money or redirect it. One idea often mentioned is changing the assets test taper rate (currently, after a certain threshold, your pension reduces by $3 per fortnight for every $1,000 in assets above the limit – that’s about a 7.8% annual withdrawal rate). This taper was doubled in 2017, which made the assets test much harsher: many retirees with moderate assets lost part or all of their pension overnight. Critics argue this creates a “black hole”: someone with just a bit more in savings can be worse off than if they had less, because the pension cut is so sharp. A proposal here is to soften the taper (e.g., back to $1.50 per $1,000) or to raise the asset thresholds, so that having some extra savings isn’t penalized so severely. On the income test side, proposals include further expanding the Work Bonus (or as mentioned, excluding work income entirely). Another suggestion is to lower the deeming rates more or change how investment income is assessed – though currently deeming rates are very low and even frozen, which actually benefits pensioners by not overestimating their investment returns. Still, when interest rates were higher, deeming was contentious, and ensuring those rates reflect reality (or err on the generous side) is an ongoing ask.
  
  
• Include the Home – or Not: As discussed, one highly contentious idea is to include part of the value of expensive homes in the asset test. The concrete proposal from the Actuaries Institute is to count home value above $2.1 million for pension purposes. This would affect only those owning very high-value properties – likely in the top few percent of home values. The Henry Tax Review back in 2010 floated a similar notion (above $1.2 million at that time). The argument is about equity: someone in a $3 million house with modest other savings currently gets the full pension, while someone with a $300,000 apartment and $600,000 in the bank might get very little pension – yet one could argue the former is “richer” overall. Including the home would reduce pensions for the asset-rich (or require them to downsize or borrow against equity to generate income). However, it’s a political third rail. There’s also a regional fairness issue: $2.1 million might buy a mansion in one area or a basic bungalow in another (think Sydney vs rural town). So if not designed carefully, it could have weird effects. No major party has endorsed this as policy to date, but expect the idea to resurface whenever budgets are tight, often to be swiftly ruled out amid public outcry from grey voters. It’s on the table academically, if not realistically.
  
  
• Move Toward a Universal Pension: On the flip side of means-testing debates, there’s a school of thought that asks: why have a means test at all? Some experts propose a universal age pension – essentially, every Australian of Age Pension age would get the pension (at least the base rate), regardless of income or assets, and those with higher incomes would just pay more tax on it. This would hugely simplify the system: no more complex applications, no intrusive means tests, far less administrative burden, and no one falling through cracks. Interestingly, a submission to the 2020 Retirement Income Review by global consultancy Mercer called for a universal Age Pension, scrapping the means tests entirely. They argued the means test as designed was actually an obstacle to people saving and using super effectively, and noted that about two-thirds of seniors end up on a pension anyway – so why not make it universal and adjust elsewhere? In practice, a universal pension would mean even wealthy retirees get the pension – which on the face of it seems counter-intuitive (why give Gina Rinehart an Age Pension?). But proponents say you’d recoup a lot of that by taxing high incomes and super payouts, and by eliminating the costly bureaucracy of means-testing. New Zealand, for example, has a near-universal pension and manages it by taxing retirement income through the normal tax system. The catch is cost: a modelling exercise suggested making the pension universal here could increase its cost from, say, $24 billion to $35 billion a year (these figures are a bit dated, but it illustrates a big jump). That extra $10+ billion has to come from somewhere (higher taxes likely). And politically, it’s hard to justify giving full pensions to millionaires even if you claw it back later in taxes. So while academically neat, universal pension talk hasn’t translated into serious political momentum in Australia. Still, it remains one of those bold ideas that periodically gets dusted off by think tanks and policy wonks, especially when pointing out the complexity and compliance costs of the current approach.
  
  
• Independent Pension Commission: Another idea floating around (often championed by welfare groups) is to take the politics out of pension rates by establishing an independent commission or tribunal to assess and set social security payment levels (including Age Pension, JobSeeker, etc.). The idea is akin to how we set the minimum wage – a panel looks at evidence on cost of living, community standards, and budget capability, then determines what the rate should be. This could potentially recommend higher rates than a government might otherwise choose (since governments fear appearing “unsustainable” or “too generous”). An independent body could also recommend structural changes to indexation or supplements in a depoliticized way. The U.K. and other countries have had pension commissions to guide long-term policy (though not necessarily binding for governments). In Australia, this idea hasn’t been implemented, but we’ve seen hints of it with the temporary Economic Inclusion Advisory Committee (which in 2023 advised the government on social security increases, though its recommendations were only partly adopted). For Age Pension specifically, since it’s already indexed in a formula, the commission idea would probably focus on adequacy benchmarks – e.g., should the single pension be, say, 33% of the average full-time wage? Because currently it’s around that mark, and some say it should be higher.
  
  
• Raise (or Lower) the Pension Age: While not currently a hot topic domestically, the age of eligibility is an important parameter of the system. Australia recently completed a long-scheduled increase of the pension age from 65 to 67 (a gradual rise over several years). There had been a proposal in the mid-2010s to further raise it to 70, but that was abandoned after public backlash. For now, 67 is the set age, and neither major party is openly considering raising it further. That said, with people living longer and healthier on average, some economists quietly suggest that in the future it might inch up again (perhaps to 68 or 70) to keep the system sustainable. On the other hand, some argue it should stay put or even be lowered for certain groups – for example, those in physically demanding jobs or with health issues who can’t reasonably work to 67. There have been discussions about allowing early access to Age Pension for people who retire early due to poor health or unemployment (currently they often go on JobSeeker or Disability Pension if eligible, which pay less). While raising the pension age saves money and reflects longevity trends, it can be quite unjust for people who can’t easily extend their working life. It’s a debate that’s somewhat on the backburner now, but will surely resurface as the population ages further. For the large cohort of Baby Boomers now entering their late 60s and 70s, any mooted change in pension age is a moot point – it won’t affect them. But younger generations might face a higher bar by the time they get there. We’ll see.

Each of these proposals has pros and cons, winners and losers. Implementing any of them would require careful planning (and in many cases, significant funding). What’s clear is that there is no shortage of ideas on how to tweak or overhaul the Age Pension. Some, like improving Centrelink service delivery or modestly increasing rent assistance, are already happening in part.

Others, like big payment increases or including the family home in the asset test, would be major shifts requiring political courage (and capital). The current government has so far taken a cautious, incremental approach: boosting rent assistance, extending deeming rate freezes to avoid cutting pensions due to higher interest rates, encouraging work by expanding the Work Bonus, and investing in some cost-of-living relief targeted at seniors. They’ve avoided massive changes to the core pension settings.

For the opposition and minor parties, the Age Pension is usually something to protect (no one wants to be seen cutting it) or to top-up if possible. We occasionally see minor parties propose things like a universal pension or extra payments, but these rarely get near law. Any major pension reform tends to be approached gingerly – as the saying goes, “pensioners vote,” and older Australians are a large, politically engaged demographic.

Perhaps the real question is not lack of ideas, but which combination of ideas will best address the identified problems without breaking the bank or unfairly shifting burdens. That’s a nuanced conversation, often drowned out by simplistic slogans. But it’s a conversation worth having as Australia’s population ages and we seek to honour the social contract with those who contributed to society over long lives.

The Road Ahead: Securing Dignity in Retirement​

At the end of the day, the Age Pension is about dignity and security in later life. It’s one of those hallmark institutions – like Medicare – that reflects our values of looking after each other. Australia’s system has strengths: it targets support to those who need it, it has built-in adjustments for inflation, and it’s credited with reducing old-age destitution that was more common generations ago.

But as we’ve explored, it’s far from perfect or sufficient in today’s environment. Many older Australians still feel financially vulnerable, whether it’s the widow struggling to pay rent, the couple navigating complex rules after downsizing, or the 67-year-old first-time claimant flummoxed by a mountain of paperwork.

The current wave of reforms and proposals, from small to large, indicates a system in evolution. How far that evolution goes will depend on political will, economic conditions, and the voices of seniors themselves. It’s heartening to see seniors’ advocacy groups at the table with bureaucrats working on improvements, and to see public debate on issues like pension adequacy and the treatment of the family home.

These discussions mean we’re not simply accepting the status quo, but actively asking: Can we do better for our elders?

One thing is certain: the need for the Age Pension isn’t disappearing. Even as superannuation matures, not everyone will have a generous super balance – especially those (predominantly women) who took time out of paid work for family, or people in low-paid jobs. And with rising living costs, even a decent nest egg can evaporate quicker than expected in a longer lifespan. The Age Pension will remain a pillar of our retirement system, giving peace of mind that there’s at least a floor income if all else fails. Ensuring that floor is high enough to live on, and that it’s accessible without undue stress, is the challenge ahead.

So where does all this leave us? Perhaps with an appreciation that the Age Pension is not a static entitlement, but a contract between generations – one that can be adjusted and must be safeguarded. For Australians in their 60s and beyond, it’s a subject that hits close to home (quite literally, when we talk about housing). We’ve seen the limitations and heard the calls for change. The big question now is: what combination of tweaks or transformations will best uphold the promise of a comfortable, or at least decent, retirement for all?

As we look to the future, with more Australians entering their senior years, it’s worth reflecting on our collective priorities. After a lifetime of contributions to society, what do we owe our older citizens in return? Are we content that the current Age Pension system is doing them justice, or is it time to reimagine how we support Australians in later life? These are questions that concern not just policy wonks and politicians, but every one of us who hopes to age with security.



The Age Pension conversation continues, and it’s a conversation about values as much as dollars. We might not have all the answers yet, but by shining a light on the problems and debating the solutions, we take a step closer to a system that truly lets people retire with dignity, comfort, and peace of mind. In the meantime, for those of you nearing pension age or already on it, stay informed, speak up about your experiences, and know that you’re far from alone – the nation is listening, and change, however slowly, is afoot.

After all, a fair and caring society is ultimately measured by how it treats its oldest members. The Age Pension is a big part of that story. Where do you think we should go from here – is the Age Pension delivering for Australians, or is it time to rethink our approach to retirement security?