Federal Budget 2009 » Social security changes

Unless otherwise stated, all measures in this section are proposed to take effect on 20 September 2009.

Pension payments to increase

The Government announced an increase to the Age Pension to take effect from 20 September 2009. The full rate single pension will be increased by $32.49 a week, while the full rate pensioner couples (combined) pension will be increased by $10.14 a week.

These increases will be provided in two forms: through an increase in the base rate of pension for singles and an increase through the new Pension Supplement for both singles and couples.
For the basic single pension rate, the Government will provide a $30 per week increase. For the new Pension Supplement, the Government will provide a:

• $2.49 per week increase for singles; and
• $10.14 per week combined increase for couples.

The above increase will also apply to pensioners who receive the Veterans' Service Pension and Income Support Supplement.

Another important change is the consolidation of the existing Goods and Services Tax Supplement, Pharmaceutical Allowance, Utilities Allowance and Telephone Allowance together with the increases noted above, into the new Pension Supplement.

These increases in assistance will apply to recipients of the Age Pension, Service Pension, Disability Support Pension, Carer Payment, Bereavement Allowance, Widow B Pension, Wife Pension, Income Support Supplement and to War Widow/ers. The new Pension Supplement will also be provided to Widow Allowees, Partner Allowees and other income support recipients over Age Pension age.

For Commonwealth Seniors Health Card holders and veterans eligible for the Gold Card, a new Seniors Supplement will be introduced. The existing Seniors Concession Allowance and the Telephone Allowance will be consolidated into the new Seniors Supplement. The single rate of the Seniors Supplement will include an extra $129 a year, to bring it to two thirds of the rate paid to couples combined.

New index for pensioners

To ensure base pension rates keep up with community living standards, the Government announced a new price index will be developed to index base pension rates. Designed specifically for households who rely on the pension, the new Pensioner and Beneficiary Living Cost Index will generally be higher than the CPI. The CPI will still be used to index relevant eligibility thresholds.

Age Pension age to increase
Date of effect: 1 July 2017

The qualifying age for the Age Pension and the Commonwealth Seniors Health Card for men and women will be increased to 67 years, at a rate of six months every two years, beginning in 2017, to reach 67 on 1 July 2023.

The qualifying age for the Veterans’ Service Pension will remain at 60.

Pension income test taper rate change

The income test taper rate will change from 40% to 50%. The asset test taper rate is unchanged at $1.50 per $1,000 of assets above threshold.

Pension Bonus Scheme to close

While the scheme will close to new entrants, existing members may continue to accrue entitlements. Instead it is proposed that 50% of the first $500 per fortnight of employment income will not be counted in the income test.

Changed income definition for Commonwealth Seniors Health Card
Date of effect: 1 July 2009

The definition of adjusted taxable income for the purposes of the Commonwealth Seniors Health Card will not include the gross tax-free superannuation pension income which was previously announced in the 2008/09 Budget. However, the Government will proceed to include income that is salary sacrificed to superannuation in the income assessment with effect from 1 July 2009.

Increased assistance for veterans

For veterans who do not receive the Service Pension or Income Support Supplement, the Government will simplify the payment of allowances by incorporating the Pharmaceutical Allowance and Telephone Allowance into a new Veterans' Health Care Supplement.

The Veterans' Health Care Supplement will be paid fortnightly from 20 September 2009. There will be two rates of payment – $156 per year where only one of either the Pharmaceutical Allowance or Telephone Allowance is received; or $312 per year to replace both allowances.

The Service Pension qualifying age will remain at the current level (60 for men, and progressively increasing to 60 for women).

Residential aged care fees to increase

The Government has decided that of the $32.49 per week increase in the single base pension, $22.40 per week will flow to the residential aged care provider and $10.09 will flow to the pensioner. This is to enable older Australians who reside in aged care facilities to have some money left after paying their fees and to meet the rising health and care costs they face.

Residential aged care fees to be protected for self-funded retirees

As the rate charged to self-funded retirees is linked to the rate paid by pensioners, an increase in the Age Pension of this size would normally mean the fees faced by self-funded retirees would increase.

The Government recognises a sudden cost increase for existing self-funded retiree residents would be an unfair burden. It has therefore decided that those in residential aged care on 19 September 2009 will have their existing fee levels protected until they leave. Those that enter aged care after this date will have any cost increase phased in over four years.

The arrangements for self-funded retirees will also apply to protected part-rate pensioners who do not receive the full pension increase.

Carer Supplement to be introduced
Date of effect: 30 June 2009

Those receiving Carer Payment and Carer Allowance will receive a non-taxable, non-means tested payment. The payment amount will be:
• $600 pa to all Carer Allowance recipients for each person in care, and
• $600 pa to all Carer Payment recipients.

As people receiving Carer Allowance almost invariably receive Carer Payment, they will receive at least $1,200. The first payment will be made before 30 June this year, while regular payments will commence from 1 July 2010.