Secure and Sustainable Pension Reform: Simpler and more flexible pension system
Pension payments will be simpler, fairer and more flexible under the Australian Government’s Secure and Sustainable Pension Reforms.
The reforms provide certainty for Australian pensioners and prepare Australia for the challenges of the future.
The reforms will simplify the complex maze of pensioner payments and provide increased financial security with a built-in, ongoing Pension Supplement.
Payments will be simpler to understand and available on a more flexible basis.
The new Pension Supplement will incorporate four existing payments into one new flexible supplement.
Currently, pensioners face complex and often confusing payment arrangements, subject to different rules, indexation and timing.
The Government’s Secure and Sustainable Pension Reform will provide age, wife and disability support pensioners, carer payment recipients and veteran income support recipients with two primary payments:
- a base fortnightly rate of pension; and
- a Pension Supplement, that includes the value of the current GST pension supplement, Pharmaceutical Allowance, Utilities Allowance and Telephone Allowance into one payment.
For pensioners on the full rate the reforms will deliver:
- For singles: an increase of $30.00 a week in the base pension, $2.49 a week in the new Pension Supplement; and
- For couples: an increase of $10.14 a week in the new Pension Supplement.
From 20 September 2009 the new Pension Supplement will be worth up to:
- $1462.76 a year for singles, or $28.13 a week
- $2199.60 a year for couples, or $42.30 a week
These amounts will be paid to most pensioners.
The Pension Supplement will be paid at the above rates until the last dollar of base pension and then reduces by the standard withdrawal rate until they reach a minimum payment of:
- $790.40 a year for singles, or $15.20 a week
- $1190.80 a year for couples, or $22.90 a week
Singles will receive their supplement at two-thirds of the rate paid to couples combined, consistent with reforms to the base pension.
The Pension Supplement will initially be provided fortnightly.
From July 2010, pensioners will be able to choose to take around half of the new Pension Supplement in quarterly instalments. This will give pensioners greater flexibility over the way they receive payments, and therefore provide greater choice and capacity to manage their finances.
These changes will also align more closely the minimum level of Pension Supplement paid to part rate pensioners and the new Seniors Supplement paid to recipients of the Commonwealth Seniors Health Card.
The Pension Supplement will be indexed twice a year by movements in the Consumer Price Index. This will occur in March and September at the same time as regular indexation of the base pension.
From July 2011, the Carbon Pollution Reduction Scheme household assistance will be added to the Pension Supplement.
The Australian Government is also modernising the advance payment arrangements to better reflect the needs of pensioners and improve flexibility.
From 1 July 2010, we are increasing and indexing the maximum advance amounts, increasing from $500 to almost $1000 for singles and $1500 for couples combined. Pensioners will also be able to access more than one advance in any 12 month period.
These are the most significant reforms to the pension since it was introduced 100 years ago, and are a vital investment in preparing Australia for the future.
The changes are part of the Government’s Secure and Sustainable Pension Reforms to deliver a stronger and fairer pension system and provide security and sustainability into the future.