Share Market Boom Slashes Centrelink Pension Payments
Australia’s share market has been powering ahead in recent months, with values rising to record highs. While that may sound like good news for investors, there’s another side to this story that isn’t as positive—especially for many age pensioners who rely on Centrelink payments. What’s happening is that the very success of the market is about to reduce, or in some cases cut altogether, the government support these retirees receive.
Here’s why. Centrelink uses an income and assets test to decide how much age pension a person is entitled to. Even if people aren’t selling their shares and cashing in on the market boom, the value of their investments is still assessed. When share portfolios, managed funds, or superannuation balances go up, those higher values are counted by Centrelink. As a result, the payment rates are reduced, because on paper it looks like pensioners have more wealth available to them.
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This process is automatic and it’s based on what’s known as “deeming rates.” These rates assume that certain assets are earning a particular return, whether or not they actually are. With the market climbing as strongly as it has, pensioners who may have seen little change to their actual spending power are nevertheless being told their age pension will shrink. In some cases, payments are being cut by hundreds of dollars a fortnight, and for others, the pension might be cancelled altogether.
What makes this especially frustrating is that many retirees aren’t really feeling wealthier. Yes, their shares are worth more today, but unless they sell them, that’s just a number on paper. At the same time, the cost of living continues to climb—groceries, electricity, health costs, and insurance bills all demand cash in hand. Losing a portion of the pension can therefore leave some people worse off in real terms, even though their “assets” are supposedly growing.
Financial advisers have been quick to point out the gap between perception and reality. On one side, there is the government system that treats rising markets as if retirees suddenly have more disposable income. On the other side, there are everyday expenses that continue to squeeze household budgets. For people relying on the pension to top up modest investment earnings, this creates real pressure.
It’s a reminder of just how sensitive the age pension system is to market conditions. A soaring stock market may be cheered on by younger investors and businesses, but for pensioners, it can feel like punishment for simply having saved and invested during their working years. As the share market remains strong, it is expected that more retirees will be notified of reduced Centrelink payments in the coming months.
For now, pensioners are being advised to review their financial positions carefully and, if needed, seek advice. While the system is designed to provide support only to those deemed in need, the reality is that its calculations don’t always reflect the lived experience of older Australians trying to make ends meet.
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