The Australian government Thursday announced a pension increase that would benefit the 3.4 million elderly population.

From 20 September this year, pensions will increase by 2.7 per cent, which for people receiving the maximum rate will equate to an extra $19.50 per fortnight for singles and $29.60 per fortnight for couples.

COTA Australia, the peak body for older Australians, said pensioners will welcome the upcoming pension increase announced today by the federal government.

Chief executive Ian Yates said: “Pensioners are on low fixed incomes, and price rises have a tremendous impact on their weekly budgets.

“The cost of essential services such as electricity and water are going up substantially, and food prices continue to increase. Pension increases are critical to ensuring older Australians are not disadvantaged.”

There are three indexes used by the federal government when reviewing pensions. As a result of this government’s Pension Reform in 2009, pensions are indexed each six months to whichever is the highest measure.

In the six months to June 2011 the Pensioner and Beneficiary Living Cost Index rose by 2.7 per cent – which becomes the pension rise – compared to a 2.5 per cent rise in the Consumer Price Index and a wages benchmark increase of 2.1 per cent.

Two of the last four pension increases have been driven by the Pensioner and Beneficiary
Living Cost Index, with the other two increases based on the wages benchmark.

“This government’s reforms mean that pensioners now receive higher increases than used to be the case, protecting them significantly from falling behind price rises,” said Yates.

From 20 September 2011, total pension payments for people on the maximum rate will be $748.80 a fortnight for singles, and $1,129.00 a fortnight for couples.