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Navigating the financial landscape of retirement can be a complex affair, especially when government rates and policies are subject to change. Effective 20 March 2024, the Australian government has implemented a significant update to the Age Pension rates, a move that directly impacts many retirees’ financial planning strategies. Given the upcoming change in the Maximum Permissible Interest Rate (MPIR) from 7.90% to 8.34% on 1st April 2024, the timing of these alterations is crucial for those entering aged care.

In this article, we aim to elucidate what these changes mean for you and how Aged Care Financial Advisers can help you navigate these shifts. For personalised advice, don’t hesitate to call us at 1300 550 940.

The Significance of the Age Pension

Even with the proliferation of superannuation funds over the last three decades, the Age Pension remains a critical source of income for the majority of Australian retirees. According to Rice Warner, about 39% of Australians of Age Pension age are on a full pension, and an additional 24% receive a part pension.

What Are the New Age Pension Rates?

Starting 20 March 2024, the maximum full Age Pension increases $19.60 per fortnight for a single person, and $14.70 per person per fortnight for a couple.

The new maximum full Age Pension rates for the period 20 March 2024 to 19 September 2024 are as follows:

Single: $1,116.30 per fortnight (approximately $29,028 per year)
Couple (each): $841.40 per fortnight (approximately $21,876 per year)
Couple (combined): $1,682.80 per fortnight (approximately $43,753 per year)
Couples separated due to illness: Each receives the single rate which is $1,116.30, which combined is $2,232.60 (approximately $58.048 per year).

These rates include both the pension and energy supplements.

Age Pension Rates for Single Persons

Maximum base rate: $1,020.60 (increased by $18.10)
Maximum pension supplement: $81.60 (increased by $1.50)
Energy supplement: Remains at $14.10
Total: $1,116.30 (per fortnight) or $29.023 (per year)

Breakdown for Couples

Maximum base rate: $769.30 each (increased by $13.60)
Maximum pension supplement: $61.50 each (increased by $1.10)
Energy supplement: Remains at $10.60 each
Total: $841.40 (per fortnight) or $21,876 (per year)

How Does This Impact Aged Care Costs?

From 1st April 2024 to 30 June 2024, the MPIR rate is 8.34%, affecting the Daily Accommodation Payments (DAP) for those entering aged care after this date. Given that a significant portion of retirees rely on the Age Pension to fund their aged care, this is a critical change.

While the increase in Age Pension rates provides some relief, it may not entirely offset the increase in aged care costs due to the MPIR change. This highlights the importance of financial planning and why you should consider consulting with experts like us at Aged Care Financial Advisers.

Factors affecting the Age Pension Increase

These increases in Age Pension are determined by several factors, including changes in the Consumer Price Index (CPI), Male Total Average Weekly Earnings, and the Pensioner and Beneficiary Living Cost Index.

Navigating the financial aspects of retirement and aged care requires comprehensive planning, especially in the face of changing government rates. The new Age Pension rates and upcoming change in MPIR underscore the importance of reviewing your aged care financial strategy. To understand how these changes affect your individual circumstances and to make informed decisions, consider seeking professional advice. For tailored solutions, contact Aged Care Financial Advisers today at 1300 550 940.