It’s That Time of Year Again
It feels like March was only the other week, but here we are again – September is here, which means it’s time for the next Age Pension indexation.
Twice a year, in March and September, the Australian Government reviews and updates the Age Pension to help keep pace with changes in the cost of living. While most people are pleased to see a little extra in their pension payments, it’s worth knowing that these increases can also have a flow-on effect when it comes to aged care fees.
So, what can this mean?
A Little More in Your Pocket
For many older Australians, the Age Pension is a significant source of income. The September increase is designed to help pensioners keep up with rising living costs and assist with everyday expenses such as groceries, utilities, fuel and healthcare.
While the increase may not seem substantial, every little bit helps.
It Can Also Mean Changes to Residential Aged Care Fees
If you or a loved one is receiving, or considering, residential aged care, it’s important to understand that some aged care fees are linked to the Age Pension.
The Basic Daily Fee
The Basic Daily Fee (BDF) is payable by everyone living in residential aged care, whether they are receiving respite or permanent care.
Because this fee is calculated at 85% of the single Age Pension, it generally increases each time the pension is indexed.
It’s a relatively small adjustment, but one that’s worth being aware of when planning your ongoing care costs.
What About Permanent Residential Aged Care?
If you’re a permanent resident, an increase to your Age Pension may also increase your assessable income. Depending on your personal financial circumstances, this could affect some of the income-tested contributions you pay towards your care.
For people who entered residential aged care on or after 1 November 2025, these may include:
- Hotelling Contribution
- Non-Clinical Care Contribution
Not everyone pays these contributions, but it’s something to keep in mind whenever pension rates change.
And What About Support at Home?
The September indexation doesn’t just affect residential aged care.
If you’re receiving services through the Support at Home program, some of your co-contributions may also change.
Contributions towards independence services and everyday living services can increase in line with the Age Pension. The lifetime contribution cap is also indexed every March and September.
If you’re currently receiving Support at Home, it’s worth keeping an eye out for any updates from your provider about how these changes may affect your individual contributions.
The Takeaway
While it’s always nice to receive an increase to your pension, it’s equally important to understand the bigger picture.
Changes to the Age Pension can influence:
- Your residential aged care fees
- Your Support at Home contributions
- Your overall aged care budget
If you’re planning ahead or helping a loved one navigate the aged care system, understanding these changes can help you avoid surprises and make more informed decisions.
If you’re unsure how these updates might affect your situation, we’re always happy to explain how the aged care system works and what fees may apply.
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A Quick Disclaimer
Retirement Care Solutions provides general information to help individuals and families better understand the aged care system. We are not licensed financial advisers, and the information in this article should not be considered personal financial advice. We recommend speaking with a qualified aged care financial adviser for advice specific to your circumstances.



