Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 453

Age pension is increasing: what you need to know

Australia’s age pension rose in March reflecting rising inflation and the growing cost of living pressures. This represents a pay rise of just over 2% and is the biggest increase in the payment in almost a decade.

Single pensioners will be $20.10 better off per fortnight, and couples up to $30.20 per fortnight (where both members of the couple are eligible).

Indexation also means that some people who were previously ineligible for a pension may become eligible as the cut-off amounts of assets and income are also increased.

But older Australians receiving aged care need to know that an increase in the pension also means an increase in their Basic Daily Fee. This means they’ll only see $4 of the $20 pension increase.

In this article, we’ll walk through the changes step by step and what they mean for you.

Payments

The maximum rate of age pension payment for singles increased by $20.10 per fortnight from $967.50 to $987.60. The maximum rate for couples increased by $15.10 each from $729.30 per fortnight for each eligible member to $744.40.

A couple where both members are eligible to receive the maximum payment can receive $1,488.80 per fortnight or $38,708.80 per year combined.

Source: Services Australia

The assets and income level before pensions are disqualified under the means tests have also increased.

Assets

For homeowners who are single, the asset test cut-off increased from $593,000 to $599,750. For couples it increased from $891,500 to $901,500.

For couples who are separated by illness, as is the case when one or both move into aged care, the cut-off increased from $1,050,000 to $1,063,500.

*It’s important to remember that the value of your home is not included in these assets.

Income

For singles, the amount of income you can earn before the age pension ceases has increased from $2,115 per fortnight to $2,155.20. For couples, the cut-off has increased from $3,237.20 per fortnight to $3,297.60.

*It’s important to remember that income earned under the work bonus (up to $7,800 per year) is not included. Income from investments is based on deemed income, rather than the actual income earned.

In announcing the changes Minister Anne Ruston said, “This is putting money in the pockets of all Australians who rely on our social security system and, in particular, older Australians.

But older Australians receiving aged care, whether that’s a Home Care Package or residential aged care, need to know that an increase in the pension also means an increase in their Basic Daily Fee.

The Basic Daily Fee you pay towards your cost of aged care is set based on a percentage of the Age Pension. In a Home Care Package, the maximum Basic Daily Fee is set at 17.5% of the basic Age Pension (and applies to people on a Level 4 Package) it was $11.02 per day and has increased to $11.26 per day from 20 March.

In a Home Care Package, the Basic Daily Fee is based on the level of your package:

  • Level 1 was $9.88 per day increasing to $10.08
  • Level 2 was $10.44 per day increasing to $10.66
  • Level 3 was $10.74 per day increasing to $10.97
  • Level 4 was $11.02 per day increasing to $11.26

So, if the fortnightly pension increases by $20.10, up to $3.36 will be needed to meet the increased cost of a home care package.

In residential aged care, the Basic Daily Fee is set at 85% of the basic Age Pension, it was $53.56 per day, increasing to $54.69.

This means that the Basic Daily Fee increase is $15.82 a fortnight, so of the extra $20.10 in Age pension, people living in aged care will only have $4.28 per fortnight to cover increases in their cost of living.

While the Basic Daily Fee does cover some of the cost of living in aged care such as meals, utilities and insurances, many aged care residents need to pay extra or additional service fees to cover alcohol, food, entertainment, and personal services. Personal expenses such as clothing, medications, health care, other insurances, transport, and communication costs remain the responsibility of the resident.

A $4 per fortnight increase in the Age Pension for people living in aged care is definitely a pay cut, not a pay rise.

 

Rachel Lane is the Principal of Aged Care Gurus where she oversees a national network of adviser dedicated to providing quality advice on retirement living and aged care. She is also the co-author of a number of books with Noel Whittaker including the best-seller 'Aged Care, Who Cares?' and their most recent book 'Downsizing Made Simple'. To find an adviser or buy a book visit www.agedcaregurus.com.au.

 

RELATED ARTICLES

12 tips for ‘aged care season’

Biggest change in the Aged Care Interest Rate since the GFC

Recent age pension changes impact non pensioners too

banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

UniSuper’s boss flags a potential correction ahead

The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

Investing

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

Investment strategies

A closer look at defensive assets for turbulent times

After the recent market slump, it's a good time to brush up on the defensive asset classes – what they are, why hold them, and how they can both deliver on your goals and increase the reliability of your desired outcomes.

Financial planning

Are lifetime income streams the answer or just the easy way out?

Lately, there's been a push by Government for lifetime income streams as a solution to retirement income challenges. We run the numbers on these products to see whether they deliver on what they promise.

Shares

Is it time to buy the Big Four banks?

The stellar run of the major ASX banks last year left many investors scratching their heads. After a recent share price pullback, has value emerged in these banks, or is it best to steer clear of them?

Investment strategies

The useful role that subordinated debt can play in your portfolio

If you’re struggling to replace the hybrid exposure in your portfolio, you’re not alone. Subordinated debt is an option, and here is a guide on what it is and how it can fit into your investment mix.

Shares

Europe is back and small caps there offer significant opportunities

Trump’s moves on tariffs, defence, and Ukraine, have awoken European Governments after a decade of lethargy. European small cap manager, Alantra Asset Management, says it could herald a new era for the continent.

Shares

Lessons from the rise and fall of founder-led companies

Founder-led companies often attract investors due to leaders' personal stakes and long-term vision. But founder presence alone does not guarantee success, and the challenge is to identify which ones will succeed in the long term.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.