What the 2024 Federal Budget Means for Australian Seniors and Pensioners

By Darren Moffatt

May 17, 2024


Treasurer Jim Chalmers announced a $9.3 billion surplus in this year’s Federal Budget, marking a significant achievement with back-to-back surpluses for the first time in nearly two decades. 

This budget introduces several measures designed to ease the cost-of-living for Australians, including seniors. 

Notably, there’s energy bill relief and an enhancement to Commonwealth Rent Assistance, both expected to help curb inflation, which is projected to fall to 2.75% by the end of the year.

These developments are particularly crucial for seniors, as they impact both your pocket and your peace of mind.

Deeming Rates Freeze

Are you relying on income from investments to complement your pension? Then you’ll want to know about the recent government decision to extend the freeze on deeming rates. 

Deeming rates are a critical part of how the government calculates how much income it thinks you’re earning from your financial investments, like savings and shares. These rates impact how much Age Pension you receive.

With the freeze extended for another year, there’s no increase in deeming rates despite potential rises in actual returns from these investments. 

Therefore, your assessed income for pension purposes won’t increase, which could help you keep a larger portion of your pension payments. It’s a relief for many who rely on every dollar of their pension for daily expenses.

This extension could make a significant difference in your financial planning. By understanding the steady deeming rates, you can better predict your monthly budget and possibly find comfort in a bit more financial stability during these uncertain times.

Pharmaceutical Benefits Scheme (PBS) Freeze

As you manage your health and budget, it’s crucial to know about the recent freeze on the costs of medications under the Pharmaceutical Benefits Scheme (PBS) for the next five years. This decision means that the price you pay for PBS-listed medications will remain steady, providing significant relief especially if you’re managing chronic conditions or require regular medications.

For example, whether it’s medications for high blood pressure, cholesterol, or diabetes, the cost will continue to be capped, making it easier for you to predict your healthcare spending. This freeze is particularly beneficial during times when other living costs might be on the rise, giving you one less thing to worry about.

By keeping these costs constant, you can better plan your finances without the added stress of rising medication prices. This measure ensures that essential drugs remain accessible and affordable, helping you maintain your health without straining your wallet.

[ RELATED POST: How a Reverse Mortgage Can Help Seniors with Healthcare Costs ]

Changes to the Medicare Levy Low-Income Thresholds

The government has raised the thresholds to better align with current economic conditions, meaning more low-income seniors and families can reduce or completely avoid the Medicare levy.

  • For single seniors and pensioners, the threshold has increased from $38,365 to $41,089
  • If you’re part of a family, the threshold has risen from $53,406 to $57,198

These adjustments ensure that you continue to be exempt from the Medicare levy or pay a reduced rate, helping to alleviate some of the financial pressure you might face.

This change is crucial as it acknowledges the need to support those on lower incomes, ensuring healthcare remains affordable. 

By understanding these new thresholds, you can better plan your yearly finances, knowing that you have one less tax burden to worry about. 

Cost-of-Living Relief Measures: Energy Rebates and More

The government has rolled out several cost-of-living relief measures:

  • $300 Energy Rebate: Automatically applied to your electricity bills in $75 increments over the next year.
  • Commonwealth Rent Assistance: Notable increases to help with rising rental costs, particularly beneficial if you’re renting.

[ RELATED POST: Breaking Point: Cost of Living Hits Australia’s Seniors ]

Aged Care Reforms and Investments

The 2024 federal budget introduces significant reforms and investments in aged care. Key highlights include a substantial allocation of funds aimed at improving various facets of aged care.

Here are the crucial points about the aged care funding and initiatives:

  • $2.2 billion over five years: This funding is dedicated to key aged care reforms and the continuation of implementing recommendations from the Royal Commission into Aged Care Quality and Safety.
  • Additional Home Care Packages: $531 million is allocated in 2024–25 to release 24,100 more home care packages, helping more seniors receive care in the comfort of their own homes.
  • Support for Aged Care Workers: An investment of $66 million over four years will go towards attracting and retaining aged care workers, ensuring a higher standard of care.

These investments are designed to significantly enhance the level of care you receive, whether at home or in an aged care facility. The focus on expanding home care packages means more seniors can live independently for longer, with the necessary support structures in place. 

Additional Support Measures for Carers and Volunteers

The 2024 federal budget introduces new flexibility rules for Carer Payment recipients that are set to make a significant difference for those of you who balance caregiving with work, study, or volunteering. These changes are designed to support your commitment to caregiving while allowing you to engage more fully in other aspects of life.

Under the new system, the participation limit for employment has been adjusted to 100 hours over four weeks, rather than the previous limit of 25 hours per week. This means you have more flexibility to distribute your working hours as needed without losing your Carer Payment. 

Importantly, the participation cap no longer includes time spent on study or volunteering, nor does it include travel time to and from care and work. This change acknowledges the broad scope of activities you might be involved in and supports a better balance between them.

Additionally, if you exceed the participation limit, your payments will now be suspended for up to six months instead of being cancelled. This provides a safety net, allowing you to return to receiving benefits without needing to reapply, should your circumstances change temporarily.

These changes are expected to significantly enhance your financial stability and quality of life. By allowing more flexibility, the government is helping to ensure that you can continue to provide care without compromising your personal growth and financial health. This shift reflects a deeper understanding of the needs and challenges faced by carers, ensuring that you receive the support you deserve.

No Specific Increase in Age Pension

Typically, pensions are adjusted twice a year—in March and September—to reflect the cost of living and wage increases, ensuring that pension rates keep pace with economic conditions.

The last adjustment occurred in March, with age pensions increasing by $19.60 per fortnight for singles and $29.40 per fortnight for couples. This increment is part of a regular review process that considers changes in the Consumer Price Index and average wages, providing a measure of security that your pension will not fall behind the rising cost of living.

Looking ahead, you can expect this mechanism to continue functioning as usual, with the next review scheduled for September. These reviews are crucial as they ensure that your pension reflects real-world economic conditions, providing a reliable base for your financial planning. 

While the budget did not introduce new increases, the existing system is designed to maintain the purchasing power of your pension over time, aligning with inflation and cost-of-living changes.

Downsizing Incentive 

One of the new items in the budget is the so-called downsizing incentive, which extends the means test exemption of excess proceeds if you sell your home from one year to two. This brings in line with the exemption offered if a senior homeowner enters residential aged care. 

However, National Seniors Australia believes that this will not do much to encourage seniors to downsize because many are still concerned about the effect on their pension after the two-year limit is over. 

Many seniors are also not keen to downsize because of some hidden costs as we discussed in our previous blog. 

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