Feeling the pinch this month? Your welfare payments may be rising

Last month, the Australian government announced that millions of welfare payments will receive a cash boost this month to help offset the rising cost of living. These will include Age Pension, Disability Support Pension and Carer Payment recipients. In Australia, indexation of government payments is typically linked to the Consumer Price Index (CPI), which measures the changes in the prices of a basket of goods and services purchased by households. What does this mean exactly?

DSP and other welfare payments are increasing

Due to the rise of everyday goods going up, the Government increases their payouts to ensure families and those most vulnerable don’t feel the pinch. But is this truly effective and enough?

The cash boost is expected to provide some financial relief to Australians who are struggling with the rising cost of living, especially in the wake of the COVID-19 pandemic. However, in a Channel 7 article recently published, Australian Council of Social Service’s CEO Edwina MacDonald called on the government to deliver a real increase to JobSeeker and related payments to at least bring them in line with the pension.

“People on JobSeeker and related payments cannot afford to eat enough, cannot get essential medication or healthcare, and often go into debt to pay their energy bills,” MacDonald said.

“While every little bit extra helps, this indexation will not ensure that people can cover basic costs because their incomes were grossly inadequate before prices rose.”

A Sky News article, also being published last month, uncovered which welfare payments will be receiving an increase. From September 20, the aged pension, disability support pension and carer payment will increase by $38.90 per fortnight for singles, and $58.80 for couples. As a breakdown – this is $2.70 a day, around the same price. Less than a bottle of Coles Milk (1L, priced at $4.50).

What other options outside of the Disability Support Pension do those suffering have?

In Australia, both Total and Permanent Disability (TPD) insurance and Disability Support Pension (DSP) provide financial assistance to individuals who are unable to work due to a disability. While both programs aim to provide financial support, they differ in their eligibility requirements, application process, and payment structure.

TPD is paid for through your super fund, due to the premium insurances you pay. It is not a Government funded payment – but rather an insurance you are entitled to if you become permanently disabled.

According to the Australian Institute of Health and Welfare around 754,000 people aged 16 and over received the DSP in June 2020. Disability support payments work on a criteria basis, but as an example, according to Services Australia, the Maximum basic rate, you could be eligible for up to $485.70 per week.

Compared to a 2019 report by APRA, estimating the average sum insured for TPD was $211,138. This is paid via a lump sum. Looking at this over a 40 year period, it works out to be $101.50 per week. This can be used on top of a disability support pension. Of course, with financial advice and planning, it could be used in many different ways providing alternative revenue streams.

What is the difference in eligibility requirements?

To be eligible for TPD insurance, you must have an insurance policy in place and have suffered a total and permanent disability that prevents you from working. The definition of “total and permanent disability” is different among insurance providers, but generally, it means that you would be unable to perform any occupation or work for which you are qualified by education, training, or experience.

On the other hand, to be eligible for DSP, you must meet certain age, residency, and impairment criteria.You must be between the ages of 16 and 65, an Australian resident, and have a physical, intellectual, or psychiatric impairment that is expected to last for at least two years and prevents you from working more than 15 hours per week at or above the minimum wage. There are many criteria and income thresholds which can affect your eligibility.

While both programs aim to provide financial support, they differ in their eligibility requirements, application process, and payment structure. TPD insurance provides a lump-sum payment to the individual, while DSP provides ongoing fortnightly payments. They are able to be paid for together, as they are paid by two different organisations.

Need more advice on your DSP, or would like to find out if you are eligible for TPD?

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