Age Pension rates set to change overnight

Key points:

• The rates of most social security payments are usually increased on March 20 and September 20 of each year — a process known as ‘indexation’

• The single Age Pension will be increased by a further $32.70 each fortnight to $1,096.70 per fortnight from Wednesday

• The couple-combined Age Pension will also be increased 1,604 to $1,653.40

The Age Pension will increase from September 20, 2023, with more changes tipped to hit the aged care sector in future.

Given the inflationary environment and cost of living pressures, indexation — an increase of social security rates — is used to help people maintain the value of their social security payments.

The single Age Pension will be increased by a further $32.70 dollars per fortnight to $1,096.70 fortnightly, which means that the Pension has increased $109.10/fn since September last year.

As the Daily Care Fee is indexed to 85 percent of the single Age Pension, the new rate will also be increased to $60.86 daily.

The Maximum Permissible Interest Rate, known as the MPIR, will move from 7.90 percent to 8.15 percent from October 1, 2023. The shift will mark an increase of $1,375 yearly on a $550,000 Refundable Accommodation Deposit.

What does this mean for aged care rates?

• The Daily Care Fee will increase by $1.88 per day; from $58.98 daily to $60.86 each day — equal to an increase of $686 each year which is quite significant

• For home care, the daily rates start at $11.22 per day for Level One support and scale up to $12.53 per day for Level Four

• The minimum threshold for assets has increased from $57,000 to $58,500

• The first asset test threshold has increased to $197,735

• The annual cap for the MTCF has increased to $32,718 and the lifetime cap has now increased to $78,524

• The refurbished Daily Accommodation Contribution rate has increased to $66.94 per day, resulting in an equivalent Refundable Accommodation Contribution of $299,793 from October 1, 2023

The Aged Care Taskforce, established in the May Federal Budget, has recently completed a round of consultation questions focused on fairness, sustainability and feasibility for aged care funding.

The next step in the process is for the Taskforce to provide an interim report to the Government in October and a final report in December, likely to coincide with the Mid-Year Economic Financial Outlook. All indications are pointing towards a likely implementation in July, 2024.

Excited about the increase to your Age Pension or is it just a drop in the bucket of an inflated economy? Let the team at Talking Aged Care know!