The 2024 federal budget has been handed down, with Treasurer Jim Chalmers spruiking cost-of-living relief measures.
Here’s what the budget means for seniors on the age pension.
What’s in the budget for pensioners?
In his speech, Mr Chalmers made few mentions of pensioners.
He didn’t call out any budget measures that were specifically for people on the age pension.
However, here are three key items that could have an impact:
Deeming freeze
There will be a freeze on social security deeming rates for another financial year — that’s just extending a freeze that was already in effect.
You might remember that both parties pledged to halt deeming rates back in 2022 as they were heading into the federal election.
Mr Chalmers said this extension of the freeze would benefit 450,000 aged pensioners.
But this is something that will only benefit pensioners who get income from deemed financial investments.
PBS freeze
There will also be a freeze on the cost of medications on the Pharmaceutical Benefits Scheme (PBS) for the next five years.
So that means that medications will continue to cost $7.70.
Changing Medicare levy thresholds
The government will increase the Medicare levy low-income thresholds.
The goal of this is to ensure “low income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate,” the budget papers say.
For single seniors and pensioners, the threshold has been increased from $38,365 to $41,089
The family threshold for seniors and pensioners has been increased from $53,406 to $57,198
But they’re only being increased to keep up with inflation — not as a major policy change.
Is there a special payment for pensioners?
No, there was no announcement about a specific payment for pensioners.
Pensioners will benefit from a $300 reduction in power bills, but this is something every household will get.
The energy rebates are not payments — they’ll be deducted from power bills.
And keep in mind that they’ll be applied in quarterly instalments, not all in one hit.
So your next quarterly power bill will likely be $75 cheaper, not $300 cheaper.
Will the age pension be increased?
There was no announcement about increasing the age pension.
Pensions are typically increased four times a year to keep up with inflation and wage measures as part of sweeping indexation applied to all social security payments.
The last increase was in March, when age pensions were increased by $19.60 a fortnight for singles and $29.40 a fortnight for couples.
We’re expecting the next round of indexation to be announced in July.
What is deeming?
It’s part of the income test for Centrelink payments, including the age pension.
Deeming is a set of rules the government uses to work out how much income people earn from their financial assets — things like shares, superannuation and bank accounts.
It assumes people receive a set income from the interest on those investments, whether they actually get that much or not.
But here’s the kicker: if your investment return is higher than the deemed rate, the government doesn’t count that extra money as part of your income.
That means anything you earn above that rate isn’t counted in the income test for the age pension.
So, the lower the deeming rate, the more people can earn from their investments without it affecting their pension payments.
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