Pensioners are falling behind as inflation surges to 6.1%.
Australian pensions are indexed twice a year to account for increases in living costs and benchmarked against average wage inflation. The pension increases occur in March and September, the next increase is due on the 20th September 2022.
Currently the single pension is $987.60 per fortnight.
This process is known as indexation. The first step in the process is to assess CPI change over a six-month period. To do this, government uses the highest of the following two inflation calculations, either:
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the Consumer Price Index (CPI) – which is a measure of changes in the prices paid by households for a fixed basket of goods and services and is calculated four times a year for each three-month period ending 31 March, 30 June, 30 September and 31 December,
or…
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the Pensioner and Beneficiary Living Cost Index (PBLCI) – which measures the effect of price changes on the out-of-pocket living expenses experienced by households whose main source of income is government payments.
These are then benchmarked against the Male Total Average Weekly Earnings (MTAWE), which is set by the Australian Statistician, to ensure pensioners maintain a certain standard of living, relative to the rest of the population.
Historically, the CPI base quarter used for the March Age Pension indexation is December and June for the September indexation. This means the Age Pension indexation typically lags behind the latest inflation figures.
The last rise of a touch over $20 last March (on inflation of 1.8%) has been outstripped by the current 6.1% inflation figure.
Does your pension keep up or are you similarly disadvantaged?