The Federal Government’s announcement today that around 2.5 million Age Pensioners will see an increase to their pension payments from 20 March, will come as important relief at a time of continued cost-of-living pressure, COTA Australia says.
At the same time, the Government has confirmed that deeming rates will step up by 0.5 percentage points from 20 March 2026, rising to 1.25 per cent for financial assets below the threshold and 3.25 per cent for financial assets above the threshold.
COTA Australia Chief Executive Officer Patricia Sparrow said with many older Australians struggling to make ends meet, any increase to the pension is welcomed.
“Any increase in the Age Pension is welcome. Many older Australians are carefully managing every dollar, and additional income will help ease pressure on household budgets,” Ms Sparrow said.
“COTA’s recent State of the Older Nation report showed for one in four older Australians, poverty is not an abstract concept, but a lived experience.
“While it won’t solve the cost of living pressures many people face, an increase in the pension will make a small difference when it comes to managing rising costs for essentials like food, energy, insurance and healthcare.”
Ms Sparrow said while changes to deeming rates will impact many older people, a gradual transition rather than a sudden adjustment is a sensible move.
“A measured ‘step up’ reduces the risk of sudden impacts on pension payments and provides greater certainty for older Australians managing tight budgets,” Ms Sparrow said.
“Deeming rates were frozen for several years, which protected pensioners during a period of economic volatility and rising interest rates. Rather than reverting immediately to the full rate, this measured approach provides important stability for older Australians managing tight household budgets.”
“It is, however, very important to consider how the updated rates interact with the real-world experiences of older Australians.”
Ms Sparrow said the Australian Government Actuary’s assumptions include access to higher-interest products such as online savings accounts, yet COTA Australia’s latest State of the Older Nation research shows around one in seven pensioners are not confident using online services, including online banking.
“We know some older Australians are not digitally confident and may not access higher-interest online products,” Ms Sparrow said.
“COTA receives reports that many people who are not comfortable online just use their everyday account for lower level of funds and do not ‘invest’ their money in online savers.
“It is important that deeming rates reflect realistic returns for all older Australians – including those who are not comfortable banking online.”
“Everyone should be checking whether they are on the most suitable banking product, so they are not deemed to be earning interest they do not actually receive.
COTA Australia will continue to monitor the impact of the new deeming framework and advocate to ensure it delivers fair and workable outcomes for older Australians.
Media contact: Tamara Kotoyan, 0430 291 890 or Alana Mew, 0419 929 722