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Updated ,first published
Australia’s $62 billion age pension system has been found to be only “partly effective”, riddled with administrative failures that led to $5 billion in incorrect payments and left seniors waiting weeks for help.
The Australian National Audit Office report, released on Tuesday, found more than seven in every 10 incorrect payments were overpayments over three years to 2023-24. Of the $5 billion wrongly paid, $3.67 billion – 73.4 per cent – was overpaid, while $1.33 billion, or 26.6 per cent, was underpaid to pensioners entitled to higher benefits.
The age pension is the second-largest Australian government program, costing $62.2 billion in 2024-25, or 8.4 per cent of the federal budget. It accounts for 42.5 per cent of all social security payments. As of June, 2.67 million Australians were receiving the pension, which is means-tested and requires recipients to be at least 67 years old and meet residency requirements.
Services Australia, which administers the pension on behalf of the Department of Social Services, was found to have only partly effective processes for assessing eligibility and payment rates. The audit said the agency relied heavily on income and assets declared by applicants and did not make full use of available data sources to verify the information, limiting its ability to correctly assess eligibility.
Fortnightly pension rates are calculated using automated IT systems, but the auditor-general found Services Australia had not fully assessed the risks associated with its reliance on automation, including system reliability and the limited training of staff to manually calculate payments when required. Quality checks of staff work fell below internal targets, and Services Australia failed to meet its 97 per cent payment accuracy benchmark in both 2022-23 and 2023-24.
Service delivery delays were also a major concern, with seniors waiting an average of 48 days for age pension claims to be processed during the period examined. Phone wait times exceeded one hour on 435 days, representing 57.3 per cent of all days reviewed.
Complaints related to the age pension increased by almost 80 per cent between 2021-22 and 2023-24 despite the number of recipients growing by just over 2 per cent.
The audit found Services Australia’s compliance activities did not correspond with the areas of greatest risk to payment accuracy and were not evaluated to determine whether they were delivering intended outcomes, such as savings or improved correctness of payments.
The Department of Social Services’ oversight of the program was also criticised. While the department ensured the continued payment of fortnightly income support and monitored coverage and payment accuracy, it did not evaluate the impact of the age pension on recipients, as required under the law. The audit said this limited the government’s understanding of whether the program was achieving its intended outcomes.
Oversight of the Department of Veterans’ Affairs was also singled out as a particular weakness. A memorandum of understanding governing DVA’s delivery of the age pension to veterans and their partners has not been reviewed since 2013, raising concerns about whether the scheme is being administered in line with legislation and agreed performance standards.
The auditor-general concluded that administration of the age pension could be improved by tightening eligibility verification, better targeting compliance activities, simplifying claims processes, improving digital accessibility for older Australians and reducing wait times. Without reform, the report warned, errors, delays and dissatisfaction would continue to undermine confidence in one of Australia’s most significant social safety net programs.
In response the department said: “Steps have been taken to address some matters, with further work planned for coming months.”
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Rob Harris is the national correspondent for The Sydney Morning Herald and The Age based in Canberra. He is a former Europe correspondent.Connect via email.From our partners
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