Pension Payday: Retirees Get a Raise

Age pensioners will benefit from a payment boost from 20 September 2025. The maximum Age Pension for singles will rise by $29.70 per fortnight, taking the payment to $1,178.70. For couples, it will increase by $22.40 each per fortnight, taking the combined payment to $1,777.00.

Simultaneously, a rise in deeming rates—the assumed return on financial assets—will reduce payments for some pensioners under the income test, potentially offsetting the gain. Chris Grice, National Seniors Australia Chief Executive Officer, described the change as “a mixed bag for pensioners”.

Indexation occurs every six months on 20 March and 20 September and is the way that the Federal Government ensures the retirement income support provided by the Age Pension remains in touch with both prices and wages earned by others in the community.

As well as an increase to the base rate of the pension and the supplements, the thresholds for both the income and assets tests will also go up. Thresholds for the full Age Pension are adjusted annually as are deeming rate thresholds.

Let’s start by considering the role the Age Pensions plays in helping older Australians fund their retirements. (Just a note that people often refer to the Aged Pension, but its official name is the Age Pension, so that’s worth bearing that in mind if you’re Googling information!)

First introduced in the early 1900s, the Age Pension was established as a safety net for ordinary Australians, to ensure they did not fall into poverty when they could no longer work. The Australian Age Pension remains a significant support for most retired Australians. According to Treasury’s Retirement Income Review (2020), about 67% of Australians start their retirement with an Age Pension entitlement. By the time they are in their 80s, about 80% of Australians receive a full or part-Age Pension.

Here are the latest (September 2025) rates for a full Age Pension.

To be eligible for an Age Pension you must satisfy three main requirements:

• Be aged 67 or older
• Be an Australian resident
• You must pass the means test

The means test is based upon an income test and an assets test. You must pass both tests – if you fail either one, you are automatically disqualified.

The means test comprises two parts: the income test and the assets test. You must pass both to be eligible for a full or part Age Pension. The amount you receive is dependent on the value of your assets and/or the income you receive.

You can have a certain amount of income and assets before your pension is affected. Once you go over this limit, your pension payment is gradually reduced until you reach a final cut-off point.

To calculate your Age Pension, Services Australia looks at the income you and your partner receive from all sources. For financial assets like savings, shares, or superannuation, they use a process called ‘deeming’ to estimate the income you earn.

Deeming is the set of rules that Services Australia uses to determine the income earned from your financial assets. It assumes these assets earn a set rate of income, no matter what they really earn.

From 20 September 2025 deeming rates will increase as follows:

• The lower deeming rate will increase from 0.25% to 0.75%
• The upper deeming rate will increase from 2.25% to 2.75%

Up-to-date information about the Income Test, including the income you can earn, is available on the Services Australia website

When you apply for an Age Pension, Services Australia assesses all asset types as part of the assets test. Your assets include any property or possessions you own in full, in part, or have an interest in.

How much Age Pension you receive depends on the value of your assets, your home ownership status and whether you’re in a relationship. There are limits to how much you can have to be eligible for an Age Pension. These assets test limits and cut off points are reviewed in March, July and September each year.

Up-to-date information about the Assets Test, including limits and cut off points, is available on the Services Australia website.

Most Australians entering retirement will have at least modest savings in superannuation. At preservation age (usually 60) these savings can be accessed to help Australians fund their retirement.

For many, especially those partway through their working lives before the advent of compulsory super, these savings are often used for special projects. Think renovations, taking that longed-for holiday or mortgage reduction. Consequently, the Age Pension is often viewed as the ‘workhorse’ of retirement funding for the majority of recipients.

Applications can be made up to 13 weeks before you reach Age Pension age. They are made through Services Australia. You can apply online (via a myGov/Centrelink account), by mail (filling in the 18-page application and posting it) or at a dedicated Centrelink services centre.

There are also businesses that specialise in helping you apply for the Age Pension, such as Retirement Essentials.

This is a challenging question to answer — it depends upon your lifestyle and current spending habits, as well as any urgent needs.

With singles on a full Age Pension now receiving $30,646 per annum and couples (combined) receiving $46,202, it is clear that tight budgeting will be the order of the day.

If you own your own home, you may find the expenditure juggle much easier than those exposed to the rental market.

Unlocking some of the wealth in your home may help you bridge the gap between a frugal retirement and one with greater certainty and choice.

Why not check whether your home equity could enhance your retirement journey?