In a significant win for older Australians, the federal government has announced a 3.6% increase to pensions starting March 20, 2025. This is one of the most substantial pension adjustments in recent years, aimed at easing the pressure from rising living costs while keeping the system sustainable for the long term.
With over 2.6 million people currently receiving the Age Pension, and thousands more on Disability Support, Carer Payment, and veteran pensions, these changes will impact household budgets across the country.
What Is Changing in 2025?
The Department of Social Services has confirmed that all key pension categories will receive a 3.6% increase from March 20, 2025. This adjustment reflects higher-than-expected inflation and wage growth, specifically measured using the Pensioner and Beneficiary Living Cost Index (PBLCI)—a tool that tracks how inflation affects pensioners directly.
Updated Pension Rates
Single Age Pensioners
- Old Rate: $1,096.40 per fortnight
- New Rate: $1,135.87 per fortnight
- Annual increase: $1,027.22
- Total annual payment: $29,532.62
Pensioner Couples (combined)
- Old Rate: $1,653.00 per fortnight
- New Rate: $1,712.51 per fortnight
- Annual increase: $1,545.26
- Total annual payment: $44,525.26
These figures represent the maximum base rates and exclude supplements like the Energy Supplement or Pension Supplement, which many recipients are also entitled to.
Who Else Will See an Increase?
The same 3.6% increase applies to other government-supported pension payments, including:
- Disability Support Pension
- Carer Payment
- Veteran Service Pensions
- War Widow(er)’s Pensions
- Veteran Income Support Supplement
- Veteran Disability Pensions
These payments are indexed using the same formula and ensure parity across the broader pension system.
When Does It Take Effect?
- Effective Date: March 20, 2025
- First Payment: Pensioners will see the increase reflected in their next payment after this date (late March or early April depending on schedule)
- Notification: Services Australia will send letters to all recipients with details of their new payment rate around 2–3 weeks before the increase takes effect
No action is required from pensioners. The increase will be applied automatically.
Why a 3.6% Increase?
Australia uses a biannual indexation system (March and September) to ensure pensions keep pace with the cost of living. This system uses three key metrics:
- Consumer Price Index (CPI)
- Pensioner and Beneficiary Living Cost Index (PBLCI)
- Male Total Average Weekly Earnings (MTAWE)
For March 2025, the PBLCI figure exceeded the CPI, making it the benchmark used for this round of increases. It better reflects the specific basket of goods and services that affect pensioners more directly—such as rent, healthcare, and food.
Adjustments to Income and Asset Tests
To complement the pension rate increase, the income and asset thresholds have also been adjusted—helping more people qualify for full or part pensions.
Income Test Thresholds
Single Pensioners
- Old income free area: $204/fortnight
- New income free area: $211.50/fortnight
Couples (combined)
- Old: $360/fortnight
- New: $373.10/fortnight
The taper rate (50 cents deducted per dollar earned over the threshold) remains unchanged.
Asset Test Thresholds
Homeowners (Single)
- Free area: Increased from $301,750 to $312,613
- Upper limit: Increased from $626,750 to $649,713
Homeowners (Couple)
- Free area: $467,754
- Upper limit: $973,840
Non-homeowners have higher thresholds, recognizing the added cost of renting.
These updated thresholds mean more Australians may become eligible for a pension, or see their current rate increased.
Additional Support in 2025
One-Time Energy Assistance Payment
To ease energy costs, the government will provide:
- $250 for singles
- $375 for couples (combined)
Expected to be delivered in April 2025.
Pharmaceutical Benefits Scheme (PBS)
The Safety Net threshold for concession holders will drop from $280.00 to $275.00, helping pensioners access free or cheaper medications earlier in the year.
Commonwealth Seniors Health Card
Income thresholds will increase to:
- $70,240 for singles (up from $67,800)
- $112,720 for couples (up from $108,800)
This expands access to discounted health care and medicines for more self-funded retirees.
How to Check Your New Pension Rate
After March 20, pensioners can confirm their updated payment through:
- myGov/Centrelink online
- Centrelink Express Plus mobile app
- Notification letters from Services Australia
- Centrelink Older Australians line (Call 132 300)
What Should Pensioners Do Now?
- Check eligibility: If you were previously excluded due to income or assets, the new thresholds may qualify you for a pension.
- Update your details: Make sure your income, assets, and relationship status are current.
- Review entitlements: The new payment rate may affect eligibility for concessions at the state or territory level.
- Seek advice: A retirement financial advisor can help you maximize your entitlements.
Conclusion
The 3.6% pension increase for March 2025 is a meaningful financial boost for Australia’s retirees, carers, veterans, and people with disabilities.
When combined with updated test thresholds and extra support measures like the Energy Assistance Payment and PBS changes, this adjustment will ease pressure on households facing rising costs.
It may not drastically change living standards, but it ensures older Australians maintain purchasing power—and that’s a vital part of a secure retirement.